1. Introduction

Limitation periods for issuing SCNs and passing adjudication orders under GST play a central role in ensuring fairness, predictability and finality in tax administration. These time limits protect taxpayers from indefinite uncertainty while allowing authorities a reasonable period to investigate and raise demands. The key distinction in GST is between Section 73, which applies to tax shortfalls without fraud, and Section 74, which applies when fraud, willful misstatement or suppression is alleged. This distinction directly affects the statutory timelines available to the department and the rights of taxpayers.

2. Section 73 — Non-Fraud Cases

2.1 Nature of Proceedings

Section 73 deals with cases where tax is unpaid, short-paid or erroneously refunded in the absence of fraudulent intent. The legislative design expects quicker resolution in such matters since they typically arise from interpretational differences, clerical errors or inadvertent non-compliance rather than deliberate evasion.

2.2 Time Limit for Issuing SCN

For cases falling under Section 73, statutory timelines require that the department issue the SCN within the prescribed limitation window, traditionally computed from the due date for furnishing the annual return for the relevant financial year. Practically, an SCN must be issued at least three months prior to the expiry of the period allowed for passing the final adjudication order, ensuring adequate time for response and adjudication.

2.3 Time Limit for Passing Orders

The adjudication order under Section 73 must generally be passed within three years from the due date of filing the annual return for the relevant year. The due date, not the actual filing date, is the reference point for calculating limitation. This strict timeline prevents authorities from indefinitely delaying action and protects taxpayers’ interests.

3. Section 74 — Fraud, Suppression and Willful Misstatement

3.1 Elevated Threshold and Extended Time

Section 74 addresses more serious instances involving fraudulent intent or suppression. Given the investigative complexity and the necessity to gather substantial evidence, the statute provides a longer limitation period. This acknowledges the practical realities of tracing orchestrated frauds and assembling admissible evidence before issuing notices.

3.2 Time Limit for Issuing SCN

Under Section 74, the SCN issuance window is extended—typically requiring issuance well within the period that allows at least six months before the final order is due. The broader statutory window for SCN issuance in fraud cases often spans up to four and a half years from the annual return due date, depending on the factual matrix and whether the issue relates to an erroneous refund.

3.3 Time Limit for Passing Orders

The department is empowered to pass final orders within five years from the due date for furnishing the annual return for the relevant financial year. This longer window recognises the additional time required for detailed probes and complex fact-finding in fraud matters.

4. Interpretational Complexities

4.1 Annual Return Date as the Anchor

The calculation of limitation periods revolves around the due date of the annual return. Courts have consistently held that this statutory due date—not the actual date of filing—serves as the anchor for computing limitation. This ensures uniformity and discourages strategies that delay filing to prolong exposure to departmental action.

4.2 Effect of Pre-SCN Communications

Administrative pre-SCN consultations such as DRC-01A are useful for dispute resolution but do not, by themselves, extend or suspend the statutory limitation period. Authorities must still ensure that formal SCNs and orders are issued within the statutory timelines irrespective of such consultations.

4.3 Special Position for Erroneous Refunds

Where the dispute arises from an erroneous refund, courts often treat the date of refund as the point from which limitation runs. This is a recognised exception that short-circuits the annual return anchor in favour of a refund-centric timeline, reflecting the revenue’s interest in recovering undue payments.

5. Pandemic-Era Extensions and Their Aftermath

Temporary extensions of limitation periods were introduced during the COVID-19 pandemic through notifications and judicial directions. These extensions paused or recalibrated timelines for certain fiscal years. Post-pandemic litigation has examined whether extensions apply to both SCN issuance and final order passing; courts have generally supported government extensions where clearly notified, but ambiguity persists in several cases, necessitating careful legal analysis of each notification.

6. Consequences of Time-Barred Notices and Orders

6.1 Invalidity of Time-Barred Proceedings

SCNs or adjudication orders issued beyond prescribed limitation periods are liable to be quashed. Judicial pronouncements have affirmed that limitation is a strict statutory bar in tax proceedings, and departments cannot circumvent it by citing administrative convenience or investigational delays.

6.2 Burden of Proof on the Department

The revenue must demonstrate that actions were initiated within statutory timelines. Where a taxpayer challenges limitation compliance, authorities are required to produce cogent evidence of timely initiation and service of SCNs and adherence to the statutory clock.

7. Practical Steps for Taxpayers

Businesses should maintain a limitation calendar tied to annual return due dates and document all interactions with tax authorities. Prompt responses to pre-SCN notices and maintaining detailed transactional records will help in establishing defenses. Where limitation appears breached, affected taxpayers should seek immediate legal relief through appellate or writ remedies to prevent protracted litigation.

8. Conclusion

Sections 73 and 74 balance revenue protection with taxpayer rights by prescribing distinct limitation windows for ordinary short-payment cases and fraud-related matters. Adhering to these timelines preserves legal certainty, prevents administrative overreach, and ensures that tax disputes are resolved within a reasonable period. Taxpayers and advisors must be vigilant about these limitations and exercise timely procedural responses to safeguard their interests.