The Supreme Court has issued notice on a petition challenging a Gauhati High Court judgment concerning the calculation of the minimum three-month interval between issuance of a GST show cause notice under Section 73(2) and the statutory deadline for passing the adjudication order.
A Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe passed the order in the special leave petition filed by the assessee against the State of Assam and others.
According to the supplied background material, the dispute relates to financial year 2020–21. Following scrutiny of the company’s returns and other records, the tax authorities issued a show cause notice on November 29, 2024, proposing liability of approximately ₹33.03 lakh, apart from interest and penalty.
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The allegations included wrongful or excess availment of input tax credit involving cancelled dealers, return defaulters and non-taxpayers. However, the challenge before the High Court centred on the timing of the notice rather than the merits of these allegations.
The company contended that the deadline for passing the adjudication order under Section 73(10) was February 28, 2025. Since Section 73(2) requires the notice to be issued at least three months before that deadline, it argued that November 28, 2024, was the last permissible date. On this interpretation, the notice issued on November 29 was one day late.
The department argued that the date of issuance should be excluded from computation and that December 2024, January 2025 and February 2025 provided the required three calendar months before the adjudication deadline. Pasted markdown(3)
The Gauhati High Court Division Bench of Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury upheld the conclusion that the notice was within time.
As described in the background material, the High Court interpreted Section 73(2) as prescribing a minimum interval for completing the adjudicatory process, rather than an independent limitation period ending on a mechanically calculated corresponding date.
The Bench reasoned that issuance of the notice begins the adjudicatory process, during which the taxpayer may reply, make representations and participate in a hearing before liability is determined. Section 73(10), in turn, fixes the outer limit for concluding that process.
On this approach, the High Court held that the full intervening calendar months of December, January and February satisfied the statutory requirement. It rejected the contention that the notice necessarily became invalid merely because it was issued one day after November 28, 2024. Pasted markdown(3)
Although the High Court rejected the limitation challenge, it separately granted the company an opportunity to contest the notice. The background material records that an adjudication order had been passed on February 28, 2025, and ₹10 lakh had subsequently been recovered.
The High Court interfered with that adjudication order and permitted the company to submit its reply within four weeks of the judgment. If a reply was filed, the proceedings were to be completed within three months thereafter. If no reply was filed within the stipulated period, the earlier adjudication order would revive.
The High Court also clarified that its ruling on limitation did not decide the merits of the alleged wrongful ITC availment or the sustainability of the demand. Pasted markdown(3)
The Supreme Court’s order brings the challenge before it for consideration alongside the pending petition identified by the company’s counsel. The October 8 order does not decide how the three-month period must be calculated and contains no direction staying the High Court judgment or the tax proceedings.
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