Three Months Means Calendar Months, Not 90 Days: High Court in matter of Tata Play

The Delhi High Court, in a recent ruling, has agreed with the GST Demand order issued against Tata Play Ltd. for the Financial Year 2020-21, rejecting the company’s challenge on the grounds of limitation for passing the order under Section 73 of the CGST Act, 2017.

The petitioner company, Tata Play Ltd, is a well-known company that provides Direct-To-Home (DTH) broadcasting services. The GST Department raised a tax demand of Rs 5,63,52,147 along with interest of Rs 4,22,64,110 and penalty of Rs 56,35,214, for the tax period April 2020 to March 2021. As per the GST Department, the Show Cause Notice Demanding Rs 10.41 crore was issued on the ground that the petitioner company had wrongly availed excess Input Tax Credit (ITC). However, on the other hand, the company has challenged the validity of the said demand raised by the GST department before the High Court of Delhi.

The main issue raised in this case was:
a. Whether the impugned SCN was issued to the Petitioner within the period of limitation, as prescribed under Section 73 of the Central Goods and Service Tax Act, 2017 (hereinafter, ‘the CGST Act’)?

b. Whether adequate opportunity has been afforded to the Petitioner for filing a reply with respect to the impugned SCN and for participating in the personal hearings thereafter?

The company argued that the SCN should have been issued at least three months before the expiry of the three-year limitation under Section 73(10). The petitioner argued that the order for reversion of ITC by the GST department was beyond the statutory limitation, since the three-year period for passing the order had already expired on February 28, 2025, and the show-cause notice was issued on November 30, 2024, when it should have been issued before November 28, 2024.

The High Court observed the decision passed in Dodds v. Walker (1981) 2 AII ER 609 (HL), where the Supreme Court held that “three months” under Section 34(3) does not mean a period of 90 days but refers to the actual period of a calendar month. Based on the months, the three-month period may also mean 91 days or 89 days.

The court also observed the ruling passed by the Supreme Court in Himachal Techno Engineers (Supra), where it was stated that the permitted time period specified under 73(2) of the Act is mandatory and any violation of that time period cannot be condoned and would render the show cause notice.

Therefore, the court held that in the present case, the show cause notice dated November 30, 2024, was issued within the given time period of three months before the order dated February 28, 2025, was passed. Therefore, both the order and SCN are issued within the statutory limitations and cannot be set aside. The court also observed that the company was given enough opportunity for filing a reply and for a personal hearing.

The court dismissed the appeal filed by Tata Play Ltd. Since the demand order issued by the GST department is appealable under the CGST Act, the court allowed Tata Play to first avail the appellate remedy, by filing an appeal before the appropriate GST Appellate Authority under Section 107 of the CGST Act by August 31, 2025, along with the mandatory pre-deposit under Section 107 of the CGST Act.