Assessee Can Challenge Extended Limitation Period Invoked in SCN During Tax Proceedings Following Discrepancy Noted in CAG Audit | HC

Case Details: Vedanta Ltd. vs. Union of India - [2025] 172 taxmann.com 445 (Orissa)

Judiciary and Counsel Details

• Arindam Sinha, ACTG. CJ.
• V. Sridharan, Sr. Adv., Prashanta Kumar Nayak, Adv. for the Petitioner.
• Satyanarayan Pattanayak, T.K. Satapathy, Advs. for the Respondent.

Facts of the Case

The petitioner-assessee identified a discrepancy between its accounts and GST annual return, which was also noted in a CAG audit. The jurisdictional officer sought an explanation, which the assessee furnished to the officer’s satisfaction. Despite this, the audit case remained pending, and the tax authority issued a show-cause notice invoking the extended limitation period under Section 74 of the Central Goods and Services Tax Act, 2017 / Orissa Goods and Services Tax Act, 2017. The impugned show-cause notice recorded a dispute wherein the petitioner considered it a mere discrepancy, while the revenue alleged wrongful availment of Input Tax Credit (ITC). The petitioner challenged the invocation of the extended limitation period in the show-cause notice, seeking relief through a writ petition.

High Court Held

The Hon’ble High Court held that the petitioner-assessee retains the right to contest the invocation of the extended limitation period while responding to the show-cause notice. The court directed the tax authority to pass an order on the matter and clarified that upon receipt of the order, the assessee would have the liberty to seek legal advice on the next course of action. With these observations, the writ petition was disposed of in favour of the assessee, reinforcing that the limitation issue could be raised during the tax proceedings.