Time-Barred GST Orders Under Section 73 Cannot Be Enforced: Relief by Allahabad High Court

Introduction A landmark judgment from the Allahabad High Court has provided significant relief to taxpayers facing time-barred assessment and recovery orders under Section 73 of the U.P. GST Act, 2017. The ruling, delivered in the case of SK Metal Industries, Lucknow vs. State of U.P., Order No. Writ Tax No. - 123 of 2025 reaffirms that proceedings under Section 73(9) must strictly adhere to the statutory limitation period as prescribed under Section 73(10).

Background of the Case The petitioner, SK Metal Industries, challenged an assessment order dated 15th December 2023 and a preceding show cause notice dated 20th September 2023, related to the financial year 2017-18. The petitioner contended that these actions were initiated beyond the legally permitted time frame and thus were without jurisdiction.

Statutory Provisions and Court’s Interpretation Under Section 73(10) of the UP GST Act, any order under sub-section (9) must be issued within three years from the due date of filing the annual return for the relevant financial year. For FY 2017-18, the due date for filing the annual return (as extended by notification) was 5th February 2020. Therefore, the statutory limitation period expired on 5th February 2023.

Although a subsequent notification dated 24th April 2023 attempted to extend this limitation to 31st December 2023, the High Court held that this extension was not valid for orders where the original time limit had already lapsed before 31st March 2023. Since the three-year limitation for FY 2017-18 expired on 5th February 2023, the extended deadline could not apply.

High Court’s Verdict The Allahabad High Court held that:

• The proceedings initiated and concluded after 5th February 2023 for FY 2017-18 are time-barred.
• The show cause notice dated 20.09.2023 and the order dated 15.12.2023 were beyond jurisdiction.
• Accordingly, the Court quashed the impugned orders, and directed that any consequences arising (e.g., bank account freeze) should be reversed.

The court relied on a coordinate bench judgment passed in Writ Tax No. 264 of 2024 (M/s A.V. Pharma vs. State of U.P.), which had clearly laid down that orders issued after the expiry of the limitation period could not be sustained in law.

Key Takeaways for Taxpayers

1. Strict Limitation Period: Orders under Section 73(9) must be passed within three years from the due date of annual return filing (Sec 73(10)).
2. Retrospective Extension Not Valid: If the original time limit lapsed before 31.03.2023, the extension via notification dated 24.04.2023 does not apply.
3. Legal Remedy Available: If any taxpayer receives a GST assessment or recovery order after the statutory time limit, they can approach the High Court to get such orders quashed.
4. No Need for Counter Affidavit: In this case, the High Court saw the facts as self-evident and did not require further reply from the department.

Conclusion This judgment sets an important precedent and strengthens the rule of law in GST proceedings. Taxpayers facing delayed proceedings beyond the permitted period under Section 73 of the UP GST Act should examine the timelines closely and consider seeking judicial relief if orders are issued beyond the permissible period.

Advisory to Taxpayers: If you have received any GST order related to FY 2017-18 after 5th February 2023, you may be eligible to challenge the order as time-barred and seek relief from the High Court.