Facts of the Case:In this case, the petitioner challenged the validity of a show cause notice dated 15.05.2024 and the consequential final adjudication order dated 09.07.2024, both issued under Section 73. The petitioner contended that the adjudication was completed in undue haste, as the final order was passed within one month and twenty-four days of issuance of the show cause notice, thereby violating the statutory mandate under Section 73(2) read with Section 73(10) of the CGST Act. During the course of hearing, reliance was placed on judgments of the Delhi High Court in C.H. Robinson Worldwide Freight India Pvt. Ltd. and the Andhra Pradesh High Court in Cotton Corporation of India, which had interpreted the provisions of Section 73 to hold that a minimum period of three months must be available between issuance of notice and passing of the final order. The respondents argued that the three-month requirement applied only in relation to the outer limitation period under Section 73(10) and not to notices issued well within time.
Issue:
Whether Section 73(2) of the CGST Act mandates a compulsory minimum gap of three months between issuance of a show cause notice and passing of the adjudication order, even where the notice is issued well before the outer limitation prescribed under Section 73(10).
Held that:
The Court observed that multiple statutory steps are required to be undertaken between issuance of the notice and passing of the final order, and curtailing this period would render the protections available to taxpayers illusory. Since, in the present case, the adjudication order was passed without maintaining the mandatory three-month gap, the impugned show cause notice and final order were held to be unsustainable in law. The Court held that the three-month time gap prescribed under Section 73(2) read with Section 73(10) of the CGST Act is mandatory and not merely directory. The Court rejected the contention that such requirement applies only with reference to the outer limitation period.
It was held that the legislative intent behind prescribing this period is to ensure that the taxpayer is afforded a meaningful and effective opportunity of hearing, including compliance with the procedural safeguards contained in Sections 73(3), 73(5), and Section 75, such as service of detailed statements, option to make voluntary payment, and the right to seek adjournments and personal hearing.
Consequently, both were quashed, and the matter was remanded to the adjudicating authority for fresh consideration in accordance with law.
Case Name: A. M. MARKETPLACE PVT. LTD. vs. THE UNION OF INDIA & ORS. dated 17.01.2026
To read the complete judgement 2026 Taxo.online 190
