The Hon’ble Bombay High Court (Nagpur Bench) in the case of A. M. Marketplaces Pvt. Ltd. v. The Union of India and Ors. [WRIT PETITION No. 7943 of 2025, order dated January 17, 2026] held that it is mandatory to keep gap of three months between issuance of notice under sub-section 2 read with sub-section 10 of Section 73 of the CGST Act.
Facts:
A. M. Marketplaces Pvt. Ltd., New Delhi (‘the Petitioner’) challenged the Show Cause Notice dated November 18, 2024 and the final order dated January 31, 2025 passed by the Union of India through, Department of Revenue, New Delhi and Others (‘the Respondents’) under Section 73 of the CGST Act, resulting in a time gap of about two months 13 days.
The Petitioner’s contention was that the time gap of three months should be maintained between issuance of notice under Section 73(2) and passing order under 73(10) of the CGST Act to ensure meaningful opportunity of hearing. Hence approaching the Court via Writ Petition No. 7943 of 2025.
Issue:
Whether time gap of three months should be maintained between issuance of notice under Section 73(2) and passing order under 73(10) of the Central Goods and Services Tax Act, 2017?
Held:
The Hon’ble Bombay High Court in WRIT PETITION No. 7943 of 2025 held as under:
- Noted that, the rationale behind three months time is to afford meaningful opportunity of hearing to the persons like the petitioner.
- Held that, if this time is shortened, the requirement of sub-sections 3 and 5 of Section 73 of CGST Act, which provide for service of a statement upon the noticee, giving all the details of the demand proposed to be raised and option to the assessee by paying tax by doing a self-assessment and to pay the amount, will not be achieved.
- Observed that, when there is a possibility of an adverse order being passed against tax payer, the facility of obtaining at least three adjournments for personal hearing etc. will be rendered otiose, if the assessment is to be done within the time lesser than three months which will fall short of giving reasonable opportunity of hearing.
- Held that the protection guaranteed under the provisions of the CGST Act will not be extended, if the gap of three months between the issuance of notice and passing final order is not maintained.
- Quashed and set aside the Show Cause and the Order and remanded the matter to Respondents for fresh consideration in accordance with law.
Our Comments:
The judgment refers to Delhi High Court in the case of C.H. Robinson Worldwide Freight India Pvt. Ltd. v. Additional Commissioner, CGST-Delhi-South and Ors. [W.P.(C) 15508/2024, dated October 29, 2025)], interpreting Sections 73(2) and 73(10) CGST Act by relying on Tata Play Limited v. Sales Tax Officer [W.P.(C) 4781/2025 order dated July 29, 2025], holding that a 3-month gap mandatory to ensure time for reply and hearing, as Section 73(2) mandates notice at least 3 months prior to outer limit under 73(10) for proper adjudication. This aligns with current case by extending rationale to all SCNs under 73(2), emphasizing natural justice via sub-sections 3 and 5 for statement service and self-payment option.
Further the Andhra Pradesh High Court in The Cotton Corporation of India v. Assistant Commissioner [Writ Petition No. 1463/2025, dated February 5, 2025], holding Section 73(2) time mandatory under Section 75 for personal hearing and adjournments, rendering protections otiose without minimum gap.
Relevant Provisions:
Section 73 of the CGST Act, 2017
“73. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-
(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
(2) 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.
(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under subsection (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
(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 per cent. 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.
(11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.
(12) The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24.”
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