Introduction
The limitation period in GST is a critical safeguard for taxpayers. But when a show cause notice (SCN) lumps together multiple financial years, it raises a key legal question: does it defeat the time limit prescribed under Section 73 or 74 of the CGST Act? This blog breaks it down using case laws and CBIC clarifications.
What is the Limitation Period in GST?
Under GST, the time limits for issuing a show cause notice are defined in Section 73 (for non-fraud cases) and Section 74 (for fraud/suppression cases):
| Type of Case | Section | Time Limit to Issue SCN |
|---|---|---|
| No fraud/suppression | 73 | 2 years and 9 months from the due date of annual return |
| With fraud/suppression | 74 | 4 years and 6 months from the due date of annual return |
Example: For FY 2018-19, the due date for the annual return was 31 December 2019. So, for non-fraud cases, SCN must be issued by 30 September 2022.
Can a Single SCN Cover Multiple Financial Years?
Many taxpayers receive a single SCN covering multiple years (e.g., FY 2017-18 to 2020-21). Here’s the catch: each year has its own limitation clock. If one year is time-barred, the SCN for that part may be invalid.
Key Case Law:
Amit Cotton Industries vs Principal Commissioner (2022)
Gujarat High Court held that issuing a common SCN for multiple years does not revive limitation for time-barred periods.
“Tax authorities cannot bypass the time limit by bundling years together.”
What CBIC and Tribunals Say
- CBIC FAQs and Instructions: Do not override statutory limitation periods. SCNs must mention year-wise cause of action.
- CESTAT (Excise era cases): Long settled that bundled SCNs cannot validate time-barred demands.
Legal Takeaways for Taxpayers
- Always check year-wise limitation when receiving an SCN.
- Ask for bifurcation of tax demands per financial year.
- Raise preliminary objection during adjudication if any part is beyond limitation.
Expert Tip
If SCN lacks proper year-wise breakup and includes time-barred demands, consider filing a writ petition in High Court, especially if demand for earlier years is substantial.
What You Can Do with Efiletax
- Legal SCN review and representation before GST authorities
- Timeline calculation as per Section 73/74
- Drafting replies that challenge limitation breaches
FAQ on Limitation Period in GST
Q1: Can the department issue a single SCN for multiple years?
Yes, but each year must still be within the applicable time limit under Section 73 or 74.
Q2: Is the limitation period extended by SCN covering multiple years?
No. Courts have held this does not extend or revive time-barred demands.
Q3: What if I already paid the demand for time-barred years?
You may consider legal remedies like refund claim or writ petition, but success depends on facts.
Summary
Under GST, a single SCN covering multiple years doesn’t override the statutory limitation period under Sections 73 or 74. Courts like Gujarat High Court have ruled that time-barred demands bundled into such SCNs are not legally sustainable. Taxpayers must check year-wise validity.