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Quashes GST Show Cause Notice to Tata Steel for Lacking Details
The has quashed a issued to under , holding that generic allegations of or cannot extend the limitation period. The bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran ruled that the notice lacked the necessary to justify the five-year extended period under Section 74.
From Audit Objection to ''
The controversy stemmed from an audit by the , which flagged alleged mismatches in input tax credit (ITC) for the financial years 2018-2019, 2019-2020, and 2020-2021. The Revenue issued a SCN on , invoking Section 74—a provision that permits a when there is , , or . However, the department later placed the SCN in a "" (kept in abeyance) after Tata Steel contested the audit objection. A subsequent notice revived the matter, describing it as a "," a concept the noted is alien to the GST regime.
The Case for Limitation
At the heart of the dispute was the timeline. Under , where no is alleged, the proper officer must issue an order within three years from the date of furnishing the annual return. For the years in question, the last date for filing returns was extended by notifications and further by the 's pandemic-related order excluding the period from , to . The for all three financial years expired on . The SCN, issued on , was thus beyond that date. To sustain it, the department had to rely on the five-year window under Section 74—requiring clear allegations of or suppression.
'' Won't Do
The court scrutinized the SCN and found it failed to meet the threshold. The Revenue had argued that
—which states that "suppression" includes non-declaration of facts—applied. But the court noted this Explanation was omitted from
. More critically, the judgment observed that the SCN contained only a "
" about ITC being availed
"without documentary evidence and suppress the facts"
without any supporting details.
"It is not
to the provisions that is intended when an
is provided,"
the court held.
"The
which led to the inference arrived at of
/
/suppression should be evident from the notice itself. The mere employment of such words will not indicate an
."
The bench also emphasized that proceedings under Section 73 or 74 can only be initiated on the
.
"Even if observations/objections are made on audit, the Assessing Officer should enter his satisfaction before a notice is issued,"
the judgment stated. Here, the fact that the matter was placed in the '
' and the objections were taken up with the
indicated that the officer had not reached the requisite satisfaction.
A Blow to 'Protective Assessments'
The court rejected the department's argument that the proceedings were initiated before the expiry of the , clarifying that refers to the time limit for issuing an order, not a notice. It also condemned the concept of "" as having no statutory basis in the GST Act.
The Way Forward
The set aside both the SCN dated , and the consequential dated . However, it granted the department liberty to initiate a fresh proceeding under Section 74, provided the are clearly set out in the notice and a final order is passed before .
The judgment reinforces that tax authorities cannot mechanically invoke extended limitation periods by merely reciting statutory language. For Tata Steel and the broader taxpayer community, the ruling underscores the importance of specific allegations and recorded satisfaction before invoking -based provisions.
