Court’s Key Observations

The Court clarified that Section 73(2) is intended to provide a meaningful opportunity of hearing to the taxpayer. The three-month period is necessary to enable filing of replies, conduct of personal hearings, grant of adjournments, and exercise of the option for voluntary payment under Section 73(5). Any reduction in this statutory time defeats the principles of natural justice.

The Court rejected the department’s argument that the three-month gap applies only when notices are issued close to the limitation period. It held that the requirement applies in all cases, regardless of when the SCN is issued.

Decision of the Court

Since the SCN was issued on 18 November 2024 and the final order was passed on 31 January 2025, the statutory three-month gap was not maintained. Accordingly, the SCN and the final order were quashed, and the matter was remanded for fresh adjudication in accordance with law.

Key Takeaway for Taxpayers

GST adjudication orders passed without observing the mandatory three-month gap under Section 73 are liable to be set aside, even if issued within the limitation period.

To download official order, click here.

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