Taxpayers Should Be Granted At Least 15 Days’ Time Limit to Respond to SCNs: HC

The Calcutta High Court restored the application for the refund claim, holding that tax authorities should at least grant a minimum time limit of 15 days to reply to a show cause notice (SCN) under Rule 92(3) of the Central Goods and Services Tax (CGST) Rules, 2017.

The petitioner, CBF Component Private Limited, had furnished an application for a refund for the period May to June 2023, under Section 54 of the Central Goods and Services Tax Act (CGST), 2017. In response to the application, the tax authorities issued a show cause notice (SCN) dated April 30, 2024, giving the petitioner a time limit of 7 days to respond and also scheduled a personal hearing on May 07, 2024.

Prior to the personal hearing, on May 05, 2024, the petitioner had furnished an application seeking adjournment until May 22, 2024, to file a reply to the issued notice. However, the tax authorities rejected the request for adjournment without clearly communicating about the rejection and passed a final order dated May 17, 2024, denying the refund claim.

The tax authorities argued that the petitioner’s request for adjournment was not supported by valid evidence, and therefore, the rejection of the request was valid. Further argued that the petitioner was totally aware of the adjournment request rejection and also about the scheduled personal hearing date on May 07, 2024; however, it still chose not to appear for the personal hearing. Consequently, the final order dated May 17, 2024, was passed, rejecting the petitioner’s refund claim.

The court analysed the provisions of Rule 92(3) of the CGST Rules, which states every taxpayer must be provided at least 15 days of time to respond to a show-cause notice, along with an opportunity for a personal hearing. However, in the present case, only a seven-day time limit was granted to the petitioner, which is unfair as per the law. Additionally, the final order was issued without hearing the petitioner. Therefore, the court held that the impugned order rejecting the petitioner’s claim for a refund was not justified.

Considering the aforementioned findings, the court quashed the impugned order dated May 17, 2024, and directed the tax authorities to grant the petitioner a sufficient 15-day time to furnish a reply. Thereafter, a fresh hearing must be scheduled with at least 72 hours’ notice and completed within one month.