“Three Calendar Months” Rule under Section 73(2) of the CGST Act – A Commentary on Tata Play Ltd. v. Sales Tax Officer (2025 DHC 6172-DB)

1. Introduction

Tata Play Ltd. v. Sales Tax Officer (2025 DHC 6172-DB) is a division-bench decision of the Delhi High Court that tackles two recurring issues in indirect-tax adjudication under the Central Goods and Services Tax Act, 2017 (CGST Act):

Computation of limitation for issuing a show-cause notice (SCN) under Section 73(2) in light of the three-year outer limit for passing the adjudication order under Section 73(10); and
The taxpayer’s entitlement to personal hearings vis-à-vis the proviso to Section 75(5).

The petitioner, Tata Play Ltd., a major DTH broadcaster, challenged an SCN dated 30 November 2024 and the consequential order dated 28 February 2025 by which the department demanded tax, interest and penalty aggregating to about ₹10.4 crore for FY 2020-21 on the allegation of excess input-tax credit (ITC).

The writ petition asserted (i) that the SCN was time-barred by two days, and (ii) that principles of natural justice were breached as only one effective hearing opportunity was given. The High Court dismissed the petition, holding the SCN to be within limitation because “three months” means “three calendar months”, and concluding that adequate hearing opportunities were afforded. It also reiterated that writ jurisdiction should not be invoked when a statutory appellate remedy exists.

2. Summary of the Judgment

After analysing statutory text, precedent, and the facts' chronology, the Court ruled:

An SCN issued on 30 November 2024 is within the mandatory period prescribed by Section 73(2) when the adjudication order was required to be passed by 28 February 2025. “Three months” must be computed as three calendar months (December, January, February) and not as a rigid block of 90 days. Accordingly, the Andhra Pradesh High Court’s contrary view in Cotton Corporation of India was expressly disagreed with.
The taxpayer was afforded adequate opportunity: it was granted an extension to file replies, and two hearing dates (17 & 27 January 2025); missing the second date due to “inadvertent oversight” could not invalidate the proceedings. Section 75(5) sets a ceiling — not a floor — of three adjournments.
Because the order is appealable under Section 107, the high-court writ petition did not warrant intervention; nevertheless, to mitigate hardship the Court allowed the taxpayer to file the first appeal until 31 August 2025.

3. Analysis

3.1 Precedents Cited and Their Role

State of Himachal Pradesh v. Himachal Techno Engineers, (2010) 12 SCC 210
• Supreme Court clarified difference between “months” and “days” when computing limitation under the Arbitration & Conciliation Act.
• Held: “Three months” means the corresponding date of the third calendar month, not 90 days.
• Delhi High Court transplanted this reasoning to Section 73(2) CGST Act.
Dodds v. Walker, (1981) 2 All ER 609 (HL)
• House of Lords decision adopted by Supreme Court in Himachal Techno; continues to guide Indian courts on reckoning “month”.
M/s Cotton Corporation of India v. AC (ST) (Audit), 2025 SCC OnLine AP 652
• High Court of Andhra Pradesh had held that an SCN issued two days late (30 Nov) was time-barred, treating “three months” as exactly 90 days.
• Delhi High Court expressly disagreed, thereby creating a jurisdictional divergence.
Sree Ananta Exim v. Union of India, Del HC (2014) and Commercial Steel Ltd., (SC 2021) — cited mainly for natural-justice and alternate-remedy principles.
Several Delhi HC decisions (Its My Name P. Ltd.; Sun Pharma Laboratories) to underline the breadth of appellate powers under Section 107.

3.2 Legal Reasoning Adopted by the Court

(a) Limitation Issue

Identify statutory scheme: Section 73(10) fixes the outer limit (three years from the due-date of annual return); Section 73(2) mandates that the SCN must precede that outer limit by at least three months.
Compute due-date for FY 2020-21: by virtue of Notification 40/2021-CT read with Rule 80, the annual return due-date became 28 February 2022; hence the order had to be passed by 28 February 2025.
Apply “calendar-month” approach: Borrowing the Himachal Techno ratio, months, not days, is the operative unit. Thus, subtracting three calendar months from 28 Feb 2025 lands on 30 Nov 2024. The SCN was therefore timely.
Reject contrary view: The Court criticised Cotton Corporation for conflating “months” with “days,” emphasizing legislative intention and clarity supplied by the General Clauses Act, 1897 (“month” means a British-calendar month).

(b) Natural-Justice / Personal-Hearing Issue

Chronology shows two hearing opportunities. The petitioner asked for one adjournment that was granted; it thereafter failed to utilise the rescheduled date.
Section 75(5) grants the officer discretion to adjourn if “sufficient cause” shown, but it caps such adjournments at three. The statute does not guarantee minimum adjournments.
Portal glitch argument unsubstantiated; moreover, taxpayer could have emailed/written a request but did not.

High Court relied on Supreme Court’s Commercial Steel Ltd. test: writ lies only in exceptional cases (breach of fundamental rights, lack of jurisdiction, etc.). None applied here.
Reiterated that Section 107 appeal is a “continuation of the original proceedings” with wide powers (confirm, modify, annul).

3.3 Likely Impact of the Decision

Uniformity in Limitation Calculations: By crystalising that “three months” in Section 73(2) equals three calendar months, the judgment gives administrators and taxpayers a predictable yardstick and reduces litigation over 90-day versus month-wise calculations. However, because the Andhra Pradesh view still differs, Supreme Court clarification may ultimately be required.
Adjournment Expectations: Taxpayers can no longer presume entitlement to three adjournments; they must proactively request and justify any adjournment beyond the first. Departments may rely on this ruling to fast-track proceedings.
Portal-Glitch Arguments Weakened: Absence of contemporaneous evidence of a system glitch will not rescue a taxpayer who misses a hearing; expect stricter judicial scrutiny.
Writ-Petition Filings May Decline: Reinforcement of the appellate remedy principle may steer litigants toward Section 107 instead of Article 226, at least in the Delhi jurisdiction.

4. Complex Concepts Simplified

Calendar Month vs. 30/90 Days: A calendar month is the interval between a given date in one month and the day preceding the numerically corresponding date in the next month. Thus, “three months from 28 Feb” counted backwards ends at 30 Nov, not 28 Nov.
Section 73(2) & (10) CGST Act:
- 73(10) sets the deadline (three years from the annual-return due-date) for issuing the final order.
- 73(2) requires the SCN to be served at least three months before that deadline to give the taxpayer time to respond.
Section 75(5) CGST Act:
Gives a maximum of three adjournments — not a right to receive three hearings; each additional date must be backed by “sufficient cause.”
Statutory Appeal (Section 107): A first-level appellate forum where the entire dispute can be re-examined; the officer can confirm, modify, or annul the lower order but cannot remand.

5. Conclusion

The Delhi High Court’s decision in Tata Play lays down a clear and practically significant precedent: the phrase “three months” in Section 73(2) CGST Act equates to three calendar months, bringing India’s GST jurisprudence in line with long-standing principles from Dodds v. Walker and Himachal Techno Engineers. The ruling simultaneously clarifies that Section 75(5)’s three-adjournment limit is a ceiling, not a floor, and that failure to attend a scheduled hearing without promptly seeking another date will not invalidate proceedings.

By relegating the petitioner to the statutory appeal, the Court underscores the self-contained nature of the GST dispute-resolution framework and discourages premature invocation of writ jurisdiction. Unless the Supreme Court harmonises divergent high-court views, taxpayers operating in multiple states must be mindful of differing limitation interpretations; however, within Delhi the “calendar-month” yardstick now prevails.

Key Takeaway: Calculate Section 73(2) deadlines in calendar months, seek adjournments proactively and sparingly, and exhaust the Section 107 remedy before approaching constitutional courts.