Three Months Under GST Act Means Three Calendar Months, Not 90 Days: Delhi High Court

Three Months Under GST Act Means Three Calendar Months, Not 90 Days: Delhi High Court

Introduction

The Delhi High Court has held that the phrase 'three months' under Section 73(2) of the CGST Act means three calendar months and not 90 days. The Court made this observation while dismissing a petition filed by Tata Play, which challenged a show-cause notice issued by the Sales Tax Officer.

Factual Background

Tata Play, engaged in the business of providing DTH broadcasting services, received a show-cause notice (SCN) for alleged wrongful availment of Input Tax Credit (ITC). The notice was issued on November 30, 2024, for the tax period April 2020 to March 2021.

The last date for furnishing annual returns for FY 2020–21 was extended till February 28, 2022. Therefore, the three-year time limit for passing the assessment order, under Section 73(10) of the CGST Act, would end on February 28, 2025.

Procedural Background

The petitioner challenged the SCN as time-barred, contending that the three-month period prescribed in Section 73(2)—meant to precede the final order—should be calculated as 90 days, not calendar months. Thus, the petitioner claimed that the window for issuing the SCN closed on November 28, 2024, making the November 30, 2024 SCN invalid.

Contentions of the Parties

Petitioner's Contentions: The petitioner argued that the SCN was time-barred, as it was issued beyond 90 days prior to the expiry of the three-year limit. Therefore, the notice was not in compliance with Section 73(2) of the CGST Act.

Respondent's Contentions: The respondent contended that ‘three months’ should be understood as three calendar months, not 90 days. Since the order could be passed till February 28, 2025, the SCN issued on November 30, 2024, was within time.

It was submitted that the month of February 2025 (last month), January 2025 (second month), and December 2024 (third month) are to be counted backward as three calendar months.

Court’s Observations

The Division Bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta noted that the purpose of Section 73(10) is to fix the outer time limit for issuing the final adjudication order, while Section 73(2) ensures that the taxable person gets at least three months to respond and be heard.

The Court relied on the Supreme Court’s ruling in State of Himachal Pradesh & Anr. vs. Himachal Techno Engineers & Anr. (2010), wherein the term ‘month’ was defined as per the General Clauses Act, i.e., a calendar month.

Reasoning & Analysis

The Court held that the expression ‘three months’ must be interpreted as three calendar months and not as 90 days.

Thus, counting backwards from February 28, 2025, the three months are: February, January, and December.

As a result, the SCN issued on November 30, 2024 was held to be valid and within time.

Implications

This judgment provides clarity on statutory interpretation within the GST framework, particularly around limitation periods under Section 73.

It establishes that the phrase ‘three months’ refers to calendar months, offering predictability and uniformity for both taxpayers and tax authorities.

Outcome

The Court dismissed the petition, holding that the show-cause notice was issued within the stipulated time under the CGST Act.

In this case the appellant was represented by Mr. Gautam Narayan, Senior Advocate with Mr. Anirudh Bakhru, Mr. Victor Das, Mr. Vipul Singha and Ms. Anwesh Padhi, Advocates. Meanwhile the respondent was represented by Ms. Vaishali Gupta, Panel Counsel.