2025 (6) TMI 830 - HC - GST

Challenge to notice of intimation of tax ascertained as being payable under Section 74(5) of the Goods and Services Tax Act 2017 - non-speaking order - violation of principles of natural justice - HELD THAT - A perusal of the directions issued by the learned Single Judge would reveal that original order passed on 29.07.2021 and appellate order passed on 14.02.2023 were quashed and the Deputy Commissioner was directed to grant an opportunity of hearing and pass a reasoned order by taking into consideration the reply filed by the petitioner. The show cause notice was not quashed by the Court and therefore apparently there was no necessity to issue the fresh intimation under Section 74(5) of the Act. A perusal of the provision of Section 75(3) of the Act reveals that any order which is required to be issued pursuant to the remand the same shall be issued within a period of two years from the date of communication of the said order. Conclusion - i) It cannot be said that the proceedings pursuant to the directions of the learned Single Judge cannot be continued beyond a period of three months. ii) The challenge laid by the petitioner to the notice issued under Section 74(5) of the Act and questioning the continuance of proceedings pursuant to the order passed by learned Single Judge dated 06.02.2024 has no substance. Petition dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the intimation of tax under Section 74(5) of the Goods and Services Tax Act, 2017 ('the Act') issued on 04.04.2025 is barred by limitation as per Section 74(10) of the Act.

- Whether the direction of the learned Single Judge to complete the order under Section 74 of the Act within three months creates a limitation period overriding the statutory limitation under Section 75(3) of the Act.

- Whether issuance of a fresh intimation under Section 74(5) of the Act was necessary after the remand order by the learned Single Judge.

- Whether the proceedings pursuant to the remand order of the learned Single Judge can continue beyond the three-month period indicated in the remand order.

- Whether the petitioner was denied a proper opportunity of hearing as directed by the learned Single Judge.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation on issuance of intimation under Section 74(5) of the Act

Relevant legal framework and precedents: Section 74(10) of the Act prescribes the limitation period for issuance of intimation under Section 74(5). Section 75(3) provides that any order required to be issued pursuant to directions of a court or appellate authority must be issued within two years from the date of communication of such directions.

Court's interpretation and reasoning: The Court noted that the petitioner contended the intimation dated 04.04.2025 was barred by limitation under Section 74(10). The respondents argued that the limitation under Section 75(3) applies, allowing two years from the communication of the remand order. The Court held that the limitation under Section 75(3) governs the issuance of the order pursuant to the remand, not the shorter statutory limitation under Section 74(10).

Key evidence and findings: The remand order by the learned Single Judge was communicated on 06.02.2024. The intimation was issued on 04.04.2025, within the two-year period allowed under Section 75(3).

Application of law to facts: Since the intimation was issued within two years from the remand direction, it was not barred by limitation.

Treatment of competing arguments: The petitioner's argument that the intimation was time-barred was rejected as the Court emphasized the primacy of Section 75(3) over Section 74(10) in cases of remand.

Conclusions: The intimation under Section 74(5) issued on 04.04.2025 is not barred by limitation.

Issue 2: Effect of the learned Single Judge's direction to complete the order within three months

Relevant legal framework and precedents: The learned Single Judge had directed that the order under Section 74 be passed within three months. However, Section 75(3) of the Act prescribes a two-year period for issuance of orders pursuant to court directions.

Court's interpretation and reasoning: The Court held that the three-month timeline was intended to expedite the proceedings and cannot be construed as altering or overriding the statutory limitation period under Section 75(3).

Key evidence and findings: More than one year had passed since the learned Single Judge's order, yet the proceedings were ongoing.

Application of law to facts: The Court clarified that the three-month direction was not a limitation bar but a procedural directive to ensure timely disposal.

Treatment of competing arguments: The petitioner's contention that the proceedings were barred due to exceeding three months was rejected.

Conclusions: The three-month direction does not limit the statutory period of two years under Section 75(3).

Issue 3: Necessity of issuing a fresh intimation under Section 74(5) after remand

Relevant legal framework and precedents: The original show cause notice under Section 74 was not quashed by the Court. The remand order directed only that the Deputy Commissioner grant an opportunity of hearing and pass a reasoned order.

Court's interpretation and reasoning: The Court observed that since the show cause notice was not quashed, there was no legal necessity to issue a fresh intimation under Section 74(5).

Key evidence and findings: The remand order did not direct issuance of a fresh notice but only a fresh hearing and reasoned order.

Application of law to facts: The issuance of the fresh intimation on 04.04.2025 was therefore unnecessary.

Treatment of competing arguments: The respondents argued that fresh intimation was required to proceed; the Court rejected this as inconsistent with the remand order.

Conclusions: No fresh intimation under Section 74(5) was legally required after the remand.

Issue 4: Continuance of proceedings beyond the three-month period indicated by the learned Single Judge

Relevant legal framework and precedents: Section 75(3) allows two years for issuance of orders pursuant to court directions. The learned Single Judge's three-month direction was procedural.

Court's interpretation and reasoning: The Court held that proceedings can continue beyond three months, provided they are completed within two years as per Section 75(3).

Key evidence and findings: The proceedings were ongoing beyond three months but within two years.

Application of law to facts: The continuation of proceedings beyond the three-month period was lawful.

Treatment of competing arguments: The petitioner argued for limitation after three months; the Court rejected this.

Conclusions: Proceedings pursuant to remand can continue beyond three months, subject to the two-year statutory limit.

Issue 5: Grant of opportunity of hearing as directed by the learned Single Judge

Relevant legal framework and precedents: The remand order required the Deputy Commissioner to grant an opportunity of hearing and pass a reasoned order.

Court's interpretation and reasoning: The Court directed strict compliance with the remand order, emphasizing the necessity of hearing and reasoned order.

Key evidence and findings: The petitioner had filed a reply to the show cause notice, but respondents allegedly did not fix a hearing date promptly.

Application of law to facts: The Court mandated the Deputy Commissioner to provide hearing and pass a reasoned order in accordance with the remand order.

Treatment of competing arguments: The petitioner moved for refund due to delay; the Court allowed the refund but insisted on compliance with hearing directions.

Conclusions: The respondents are directed to grant opportunity of hearing and pass a reasoned order as per remand.

3. SIGNIFICANT HOLDINGS

"The indication made by learned Single Judge was only with a view to expedite the proceedings and the same cannot be read as creating a different period of limitation than what is provided under Section 75(3) of the Act."

"Where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction."

"The show cause notice was not quashed by the Court and, therefore, apparently, there was no necessity to issue the fresh intimation under Section 74(5) of the Act."

"The challenge laid by the petitioner to the notice issued under Section 74(5) of the Act and questioning the continuance of proceedings pursuant to the order passed by learned Single Judge dated 06.02.2024 has no substance."

Core principles established include that statutory limitation under Section 75(3) governs proceedings following remand orders, superseding shorter limitations under Section 74(10); procedural directions to expedite do not curtail statutory limitation periods; and remand orders requiring fresh hearings do not necessarily mandate fresh issuance of notices unless specifically directed.

Final determinations:

- The intimation under Section 74(5) issued on 04.04.2025 is not barred by limitation.

- The three-month period directed by the learned Single Judge is procedural and does not restrict the two-year limitation under Section 75(3).

- No fresh intimation under Section 74(5) was required post-remand.

- Proceedings may continue beyond three months but must comply with the two-year limit.

- The respondents must provide the petitioner with an opportunity of hearing and pass a reasoned order as per the remand order.