Three Months Under Section 73(2) GST Means Calendar Months
In a key ruling, the Delhi High Court has clarified that “three months” under Section 73(2) of the CGST Act, 2017 refers to calendar months, not 90 days. This interpretation directly impacts the validity of show-cause notices (SCNs), recovery timelines, and limitation periods under GST.
Let’s break it down.
What is Section 73(2) of GST Act?
- Section 73(1): Proper officer must issue SCN at least 3 months prior to the expiry of 3 years from due date of annual return.
- Section 73(2): Provides that the person may reply within the period prescribed, which is 3 months from SCN.
The issue was — does “three months” mean 90 days or three full calendar months?
Delhi HC Clarifies “Three Months” Means Calendar Months
In the case of TVS Supply Chain Solutions Ltd v. Commissioner of GST (2024), the petitioner challenged a recovery order where the SCN was not issued 3 calendar months prior to the limitation deadline.
Key observation:
“The term ‘three months’ as used in Section 73(1) and 73(2) must be understood to mean three complete calendar months, not merely 90 days.”
This aligns with past decisions interpreting similar phrases in statutes like the Limitation Act.
Why This Matters for Taxpayers
This interpretation has practical implications:
| Scenario | 90 Days Approach | Calendar Month Approach |
|---|---|---|
| SCN issued on 1st Jan | Reply due by 31st March | Reply due by 30th April |
| SCN issued on 15th Feb | Reply due by 15th May | Reply due by 31st May |
| Last date to issue SCN (3 months prior to time bar) | Count backward 90 days | Count backward 3 calendar months |
Legal References & Expert Insight
- Case Law: TVS Supply Chain Solutions Ltd v. Commissioner of GST (Delhi HC, 2024)
- Comparable Judgments:
- K.M. Sharma v. ITO (2002) 254 ITR 772 (SC)
Expert View (CA Ravi Dugar):
“Officers must now carefully calculate the SCN timeline using calendar months. This also gives taxpayers a stronger ground to challenge improperly timed notices.”
What You Should Do
- Businesses & CAs must realign their response and litigation strategies based on this precedent.
Efiletax Can Help
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FAQs
Q1. Is this ruling applicable to all states?
Yes. While the ruling is from Delhi HC, it is persuasive and likely to be followed unless overruled.
Q2. What if SCN was issued 90 days before limitation but not full 3 calendar months?
It can be challenged as premature based on this ruling.
Q3. Can the department still take action ignoring this ruling?
Until the Supreme Court gives clarity, there’s room for different interpretations — but Delhi HC’s ruling is a strong precedent.
Summary
Delhi HC clarifies that “three months” under Section 73(2) of GST Act means calendar months, not 90 days. This affects SCN validity and limitation timelines. Learn what it means for your GST case.