Court affirms extended limitation period under Section 74 of GST Act, directs Canon India to respond within 30 days
In a significant ruling, the Madras High Court has dismissed writ petitions filed by M/s. Canon India Private Limited challenging the Goods and Services Tax (GST) Show Cause Notices issued by the State Tax Officer, Chengalpattu Intelligence. The court upheld the invocation of the extended period of limitation under Section 74 of the GST Act, directing the petitioner to file a reply within 30 days to ensure adjudication on merits.
The judgment, delivered by Justice C. Saravanan, addresses the challenge against the GST Show Cause Notices pertaining to tax periods 2017-2018, 2018-2019, and 2019-2020. Canon India argued that the notices were issued beyond the limitation period, thus invalidating their legal standing. The petitioner sought quashing of the notices or their reissuance under Section 73 of the GST Act, which deals with non-fraudulent tax issues.
The court, however, rejected these contentions, affirming that each tax year is an independent block, and proceedings under Section 74 can be initiated if the conditions justifying the extended limitation are met. The court highlighted the petitioner’s failure to reply to GST DRC-01A notices, which led to the invocation of Section 74 due to “Suppression” as defined in Explanation-2 to the section.
Justice Saravanan emphasized that disputed questions of fact arising from the GST notices cannot be resolved under Article 226 of the Constitution through writ petitions. The court noted that Canon India’s non-cooperation during inspections and its failure to provide necessary documents were tantamount to suppression of facts, warranting action under Section 74.
The judgment draws upon previous decisions, including the Supreme Court’s ruling in Collector of Central Excise v. H.M.M. Limited, and the Madras High Court’s decision in BASF Catalysts India Private Limited v. Deputy Commissioner (ST)-I. The court refuted the applicability of these precedents to Canon India's case, stating that the facts were different.
Canon India is now directed to file a reply to the Show Cause Notices within 30 days. Failure to comply will allow the State Tax Officer to proceed with tax recovery as if the petitions were dismissed at the outset. The court has assured that upon receiving Canon India's reply, the tax authorities must expedite the adjudication process, ideally within three months.
This ruling underscores the judiciary's stance on upholding procedural requirements in tax disputes and reinforces the importance of timely compliance and cooperation in tax-related matters.
Bottom line:-
Challenge to GST Show Cause Notices issued under Section 74 of respective GST Enactments dismissed. Invocation of extended period of limitation under Section 74 upheld. Petitioner directed to file reply within 30 days to ensure adjudication on merits.
Statutory provision(s): Goods and Services Tax Act, Section 74; Constitution of India, 1950, Article 226
M/s. Canon India Private Limited v. State Tax Officer, (Madras) : Law Finder Doc id # 2939883
