Understanding the Time Limits for Issuance of Show Cause Notices and Orders under Section 73 and Section 74 of the GST Act

The Goods and Services Tax (GST) law in India is governed by the Central Goods and Services Tax (CGST) Act, 2017, and its corresponding State GST Acts. A critical aspect of this legislation pertains to the issuance of show cause notices (SCNs) and assessment orders in case of short payment or non-payment of tax. Sections 73 and 74 of the CGST Act deal specifically with these scenarios.

Summary 

Under the GST Act, there is no explicit due date mentioned for the issuance of a Show Cause Notice (SCN) under Sections 73 and 74. Instead, the Act prescribes the time limit for issuance of the final assessment order-which is within 3 years from the due date of furnishing the annual return under Section 73, and within 5 years under Section 74. Further, it is stipulated that the Show Cause Notice must be issued prior to a specific period before passing the final order: at least 3 months prior in cases covered under Section 73, and 6 months prior under Section 74. This implies that while the Act does not independently fix a last date for issuing the SCN, it effectively does so by requiring that the SCN be served within the overall timeline available for passing the final order, minus the mandatory notice period (3 or 6 months). Failure to adhere to these timelines may render the proceedings invalid, as observed in judicial interpretations.

This article aims to clarify the statutory time limits for issuance of:

1. Show Cause Notices (SCNs)
2. Assessment Orders

and to explain the recent judicial interpretation in this regard by the High Court of Andhra Pradesh in W.P. No. 1463 of 2025.

Section 73 of the CGST Act - Non-Fraud Cases

Section 73 deals with cases not involving fraud, willful misstatement, or suppression of facts.

• Section 73(10) -

The proper officer shall issue the order within three years from the due date for furnishing the annual return for the relevant financial year.

• Section 73(2) -

A show cause notice shall be issued at least three months prior to the time limit specified in Section 73(10) for issuance of the order.

Interpretation:

• If the due date for filing the annual return is 28th February 2022 (for FY 2020-21), the last date to issue the assessment order would be 28th February 2025.
• Therefore, the show cause notice must be issued by 28th November 2024.

Section 74 of the CGST Act - Fraud Cases

Section 74 deals with cases involving fraud, willful misstatement, or suppression of facts.

• Section 74(10) -

The order must be issued within five years from the due date for furnishing the annual return for the relevant financial year.

• Section 74(2) -

A show cause notice shall be issued at least six months prior to the time limit specified in Section 74(10) for issuance of the order.

Interpretation:

• If the due date for filing the annual return is 28th February 2022 (for FY 2020-21), the last date to issue the assessment order would be 28th February 2027.
• Therefore, the show cause notice must be issued by 28th August 2026.
•  

Issuance of Show Cause Notice and Assessment Order under Section 73 and Section 74 of the GST Act: A Legal Analysis Based on AP High Court Ruling

A recent ruling by the High Court of Andhra Pradesh in W.P. No. 1463 of 2025 has clarified the mandatory timelines and legal implications of delay in issuing Show Cause Notices (SCNs) and assessment orders under these provisions.

Legal Framework:

Section 73 - Non-Fraud Cases:

• Assessment Order: Must be issued within three years from the due date of filing the annual return for the relevant financial year (Section 73(10)).
• Show Cause Notice: Must be issued at least three months prior to the expiry of the above three-year period (Section 73(2)).

Section 74 - Fraud/Willful Misstatement Cases:

• Assessment Order: Must be issued within five years from the due date of the annual return for the relevant financial year (Section 74(10)).
• Show Cause Notice: Must be issued at least six months prior to the expiry of the above five-year period (Section 74(2)).

AP High Court Judgment (W.P. No. 1463 of 2025):

Facts of the Case:

• Petitioner: M/s The Cotton Corporation of India
• Issue: SCN under Section 73 was issued on 30.11.2024 for FY 2020-21
• Due date for Annual Return (FY 2020-21): 28.02.2022
• Final date for issuance of order (Section 73): 28.02.2025
• Therefore, as per Section 73(2), SCN should have been issued by 28.11.2024

Court’s Observation:

• The SCN was issued two days late (on 30.11.2024 instead of 28.11.2024)
• The Court held that the timeline under Section 73(2) is mandatory, not merely directory
• Any delay in issuance of SCN vitiates the proceedings

Key References Cited:

• State of Himachal Pradesh vs. Himachal Techno Engineers (2010) 12 SCC 210
• Dodds vs. Walker (1981) 2 W.L.R. 609 (House of Lords)

Conclusion by Court:

• The SCN dated 30.11.2024 was barred by limitation and hence quashed
• Time limits under Section 73(2) are mandatory and not condonable

Summary of Key Points:

1. Section 73 (Non-Fraud):
2. Section 74 (Fraud Cases):
3. AP HC Ruling: Missing the SCN deadline invalidates the proceedings, even by 1-2 days

This ruling serves as a significant precedent ensuring that procedural safeguards for taxpayers are strictly enforced, especially in matters involving statutory time limits.

Key Takeaways:

Conclusion

The GST Act mandates strict timelines for initiation and completion of assessment proceedings. The issuance of show cause notices must precede the last permissible date for passing the order by a fixed number of months, depending on whether the case involves fraud or not.

The Andhra Pradesh High Court’s ruling reinforces the mandatory nature of these time limits, ensuring greater procedural fairness for taxpayers. Any delay, even by a single day, can nullify the entire assessment process.

Taxpayers and authorities alike must adhere to these statutory timelines to ensure legality and due process under GST law.

Important Advisory for Taxpayers, Tax Consultants, and Chartered Accountants:

If you receive a GST Assessment Order, it is crucial to verify the following statutory timelines to ensure the validity of the proceedings:

Assessment Order Date Check:

• Under Section 73 (Non-fraud cases): The assessment order must be issued within 3 years from the due date of filing the annual return for the relevant financial year.
• Under Section 74 (Fraud or willful misstatement cases): The assessment order must be issued within 5 years from the due date of the annual return.

Show Cause Notice (SCN) Date Check:

• Section 73: The SCN must be issued at least 3 months before the limitation period for passing the order.
• Section 74: The SCN must be issued at least 6 months before the limitation period for passing the order.

Any deviation from these prescribed timelines renders the entire assessment process invalid.

In such cases, you are advised to file an appeal, and the assessment order is likely to be quashed on grounds of limitation and procedural lapse.