Time Limit for issue of demand order under Section 73(10) of CGST Act, 2017 for Financial Year 2017-18

Time Limit for issue of demand order under Section 73(10) of CGST Act, 2017 for Financial Year 2017-18

The Government, vide Notification No. 13/2022-Central Tax, dated 5^th July, 2022 (w.e.f. 01.03.2020), has extended the time limit specified under sub-section (10) of section 73 for issuance of order under sub-section (9) of section 73 of the Central Goods and Services Tax Act, 2017 (the CGST Act, 2017), for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, up to the 30th day of September, 2023.

Further, it has also been provided vide Notification No. 13/2022-Central Tax, dated 5^th July, 2022 (w.e.f. 01.03.2020), that the period from the 1st day of March, 2020 to the 28th day of February, 2022 for computation of period of limitation under sub-section (10) of section 73 of the said Act for issuance of order under subsection (9) of section 73 of the said Act, for recovery of erroneous refund;

It has also been further provided vide Notification No. 13/2022-Central Tax, dated 5^th July, 2022 (w.e.f. 01.03.2020), that the period from the 1st day of March, 2020 to the 28th day of February, 2022 shall be excluded for computation of period of limitation for filing refund application under section 54 or section 55 of the said Act.

The relevant provisions of sub-section (9) & (10) of section 73 of the CGST Act, 2017 are as under-

“(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten percent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. 

(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.”

The proper officer shall issue an order within

• 3 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to, or
• within 3 years from the date of erroneous refund, as the case may be.

It is to be noted that in case the proceedings were started under section 73 of the CGST Act, 2017, but no order was issued within the prescribed time period of 3 years of date of filing of annual return of relevant year, the proceedings will come to an end due to reason of expiry of limitation period. Any order issued after the expiry of limitation period of 3 years will be treated as defective order thus ineffective.

Normally, due date for filing return is nine months from close of financial year i.e. 31^st December. However, in initial stages of GST, the due dates were extended as follows-

These dates should be considered for calculating period of 3 years for issuing SCN and confirming Demand. CBI&C Instruction No. 2/2021-GST-Investigation dated 22-09-2021. 

Time Limit for issuance of SCN [Section 73(2) of the CGST Act, 2017]. 

The notice required to be issued under section 73(1) shall be issued by proper officer as per time limit given in sub-section (10) i.e., three months before issuance of the time limit for issuance of order. The proper officer shall issue show cause notice at least 3 months prior to the time limit of 3 years for issuance of order i.e.

• Before completion of 3 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to, or
• Within 3 years from the date of erroneous refund, as the case may be. 

Remark– Please note that adjudication order will be issued within three years from the due date of filing of annual return for the year to which the discrepancy is noticed. It is also to be noted that the last date of filing of annual return for the financial year 2017-18 was extended upto 5^th & 7^th February, 2020, as the case may be, vide Notification No. 06/2020-Central Tax dated 03.02.2020. Therefore, the time limit specified under sub-section (10) of section 73 for issuance of order under sub-section (9) of section 73, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the FY-2017-18, shall be up to the 4^th & 6^th February, 2023, as the case may be,

Now, the Government, vide Notification No. 13/2022-Central Tax, dated 5^th July, 202 (w.e.f. 1.03.2020), has extended the time limit specified under sub-section (10) of section 73 for issuance of order under sub-section (9) of section 73 of the Central Goods and Services Tax Act, 2017 (the CGST Act, 2017), for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, up to the 30th day of September, 2023. 

As sub-section (2) of Section 73 of the CGST Act, 2017 provides that “the proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.” Accordingly, the time limit for issuing SCN under section 73(1) i.e., three months before issuance of the time limit for issuance of order, shall be extended automatically and SCN for the FY-2017-18 can be issued upto 30^th June, 2023.

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