Indirect Tax Laws · Demands and Recovery

Show Cause Notice, Time Limits and Order under GST

Updated 5 October 2026 · Fact-checked

A show cause notice is the written notice the proper officer issues before fixing a GST demand of tax, interest and penalty. To solve questions, identify the financial year, whether the case is fraud-type or not, the annual return due date, then compute the last date for notice and for the order.

Understand Show Cause Notice, Time Limits and Order

GST works on self-assessment. If the officer thinks tax was not paid, short paid, wrongly refunded, or input tax credit was wrongly availed or utilised, the officer cannot just demand money. The officer must first serve a show cause notice (SCN) asking you to explain why the tax, interest and penalty should not be demanded. This follows the natural justice rule: you must be heard before an adverse order.

The law has two regimes you must keep apart. For financial years up to 2023-24, there are two separate demand provisions: one for ordinary (non-fraud) cases and one for cases of fraud, wilful misstatement or suppression of facts to evade tax. For financial year 2024-25 onwards, a single demand provision (section 74A) applies to all cases, whether fraud-type or not. The questions ask you to pick the right regime from the year in the facts.

Time limits are the most examined part. Every limit is counted from the due date of filing the annual return for the financial year to which the demand relates. For the older non-fraud provision, the order must be passed within 3 years of that date, and the notice must be issued at least 3 months before that. So the notice limit is effectively 2 years 9 months. For the older fraud provision, the order must be passed within 5 years, and the notice at least 6 months before that, so the notice limit is effectively 4 years 6 months.

Under the single provision for 2024-25 onwards, the notice must be issued within 42 months from the due date of the annual return for the year. The order must be passed within 12 months from the date of the notice. For tax wrongly refunded, the 42 months run from the date of the erroneous refund.

After the notice, the proper officer must consider your reply, give a personal hearing, and pass a speaking order. The order must fix the tax, interest and penalty. The amount demanded cannot exceed what the notice proposed, and the order cannot rest on grounds not stated in the notice.

There is also a statement route for later periods. It is available only after a notice has already been issued for an earlier period, and only for the same ground of demand. The statement is treated as a notice for those later periods.

Under the older provisions, the statement route also needs an earlier notice and the same ground. But the time limits for the later period are still counted from that period's own annual return due date. The order must be passed within 3 years (non-fraud) or 5 years (fraud-type) of that date, and the notice must come 3 months or 6 months earlier.

Under section 74A, the statement for the later period must be issued within 42 months from the annual return due date of that period. The order for that period must be passed within 12 months from the date of the statement. This is unlike the older provisions, where the order limit runs from the annual return due date.

Key rules to remember

Starting point for all limits: Reference date = due date of annual return for the financial year of the demand; Use the due date, not the date you actually filed. Check whether an extension of the due date was notified for that year.
Non-fraud, older provision (up to FY 2023-24): Last date for order = due date of annual return + 3 years; last date for notice = order date − 3 months (i.e. + 2 years 9 months); Notice must be issued at least 3 months before the time limit for the order.
Fraud-type, older provision (up to FY 2023-24): Last date for order = due date of annual return + 5 years; last date for notice = order date − 6 months (i.e. + 4 years 6 months); Applies to fraud, wilful misstatement or suppression of facts to evade tax.
Single provision (FY 2024-25 onwards): Last date for notice = due date of annual return + 42 months; last date for order = date of notice + 12 months; For erroneous refund, the 42 months run from the date of the refund. Same limits for fraud-type and other cases. If a statement is used, the order is due within 12 months of the statement date.
Contents of the order: Order = tax + interest + penalty, within the amount and grounds in the notice; The officer must consider the reply and hearing. Grounds beyond the notice are not allowed.
Statement for other periods: Statement for later periods on the same ground = deemed notice for those periods. Section 74A: statement within 42 months from that period's annual return due date; order within 12 months from the statement date. Older provisions: limits for that period still run from its own annual return due date (order within 3 or 5 years; notice 3 or 6 months earlier); Use it only when a notice has already been issued for an earlier period on the same ground. Always count from the later period's own annual return due date for the statement or notice limit. Only under section 74A does the order limit run from the statement date. A different ground needs a fresh notice.

How to solve Show Cause Notice, Time Limits and Order questions

Use this order of thinking for any question on notice, limitation or the order. Write each step in your answer in provision-facts-conclusion form.

1Note the financial year of the demand. Up to 2023-24, the older two-provision regime applies. From 2024-25, the single provision applies.
2For the older regime, decide whether facts show fraud, wilful misstatement or suppression of facts. If not, treat it as a non-fraud case.
3Find the due date of the annual return for that financial year. Check whether the question mentions an extended due date.
4Apply the correct limit. Non-fraud: notice by due date + 2 years 9 months and order by + 3 years. Fraud-type: notice by + 4 years 6 months and order by + 5 years. Single provision: notice by + 42 months, order within 12 months of notice.
5Compare the actual date of the notice with the last date. State clearly whether the notice is within time or barred.
6Check the content of the notice and order: tax, interest and penalty, hearing given, reply considered, and amount and grounds not beyond the notice.
7For later periods, check whether an earlier notice exists on the same ground. If so, a statement can serve as the notice for those periods. Count the limits from that period's own annual return due date. Under the older provisions, the order is due within 3 or 5 years of that date, with the notice 3 or 6 months earlier. Under section 74A, the statement must be issued within 42 months of that date, and the order is due within 12 months of the statement.
8Check payment options. Paying tax and interest before notice, or within the allowed period after notice, can end the proceedings or reduce penalty.
9Conclude in one line: valid or time-barred, and the proper amount to be determined.

Quickest way: Three-line date check

When to use it: Use it for MCQs and short case questions that give you a financial year and dates.

Write the annual return due date for the year, usually 31 December of the next financial year unless extended.
Add the number for the case: 2 years 9 months (non-fraud notice), 4 years 6 months (fraud notice), or 42 months (single provision notice).
Compare with the actual notice date. If the notice is later, it is time-barred. For the single provision, add 12 months to the notice date to get the order deadline.

Common mistakes in Show Cause Notice, Time Limits and Order

Counting the time limit from the end of the financial year or the date of filing the return.
Students recall 'three years' and 'five years' but forget the starting point.
Fix: Always count from the due date of the annual return for that financial year.
Treating 3 years and 5 years as the limit for the notice.
The order limit is the one stated most prominently, so it gets mixed up with the notice limit.
Fix: Subtract 3 months (non-fraud) or 6 months (fraud-type) from the order limit to get the notice limit.
Applying the older provisions to a demand for 2024-25 or later years.
Students learned the older provisions first and forget the single provision.
Fix: Look at the financial year first. From 2024-25, use 42 months for notice and 12 months from notice for the order.
Calling a case fraud-type just because tax was short paid.
Students assume any large default is fraud.
Fix: Fraud-type needs fraud, wilful misstatement or suppression of facts to evade tax. Mere error or a difference of view is non-fraud.
Saying the officer can demand more in the order than the notice proposed.
Students think the order is a fresh decision.
Fix: State that the order cannot exceed the amount or go beyond the grounds in the notice. A new issue needs a fresh notice.
Using the statement route without an earlier notice, or for a different ground, or counting its limits from the first period's dates.
Students remember that a statement saves a fresh notice but forget its conditions.
Fix: A statement needs an earlier notice on the same ground. It is a deemed notice for the later period. Count that period's 42 months from its own annual return due date, and the 12 months for the order from the statement date.

Worked examples

Example 1

A registered person's GST demand relates to financial year 2022-23. The officer finds that ITC was claimed on an invoice by mistake. There is no fraud or suppression. The due date of the annual return for 2022-23 was 31 December 2023. The officer issues the show cause notice on 5 October 2026. Is the notice within time? By when must the order be passed?

Show the solution

Provision: the year is before 2024-25, and there is no fraud or suppression. So the older non-fraud provision applies.
The order must be passed within 3 years from the due date of the annual return: 31 December 2023 + 3 years = 31 December 2026.
The notice must be issued at least 3 months before that, so by 30 September 2026 (the same as 2 years 9 months from 31 December 2023).
Facts: the notice was issued on 5 October 2026, which is after 30 September 2026.
Conclusion: the notice is time-barred. Any order based on it would not be sustainable. Had the notice been in time, the order would still have to be passed by 31 December 2026.

Answer: The notice is not within time. The last date for notice was 30 September 2026 and the order limit is 31 December 2026.

Example 2

For financial year 2024-25, the due date of the annual return is 31 December 2025. The proper officer finds that output tax was short paid in a few months. A show cause notice is issued on 10 January 2029. State the last date for notice and the time within which the order must be passed. The officer also finds the same short payment for 2025-26, whose annual return due date is 31 December 2026. How can that period be covered?

Show the solution

Provision: the year is 2024-25, so the single demand provision (section 74A) applies. The fraud or non-fraud distinction does not change the time limits.
Notice limit: 42 months from 31 December 2025 = 36 months to 31 December 2028, plus 6 months to 30 June 2029. The notice dated 10 January 2029 is within time.
Order limit for 2024-25: the order must be passed within 12 months from the date of the notice, that is, within 12 months from 10 January 2029.
Later period: a notice has already been issued for 2024-25 on this ground, and the ground for 2025-26 is the same. So the officer may serve a statement for 2025-26. It is treated as a notice for that period.
Limits for 2025-26: the statement must be issued within 42 months from that period's own annual return due date, 31 December 2026. That is 36 months to 31 December 2029, plus 6 months, so by 30 June 2030. The order for 2025-26 must be passed within 12 months from the date of the statement, not from the date of the 2024-25 notice.
Conclusion: the 2024-25 notice is valid. Its order is due within 12 months of 10 January 2029. The 2025-26 period can be covered by a statement on the same ground, issued by 30 June 2030, with its order due within 12 months of the statement date. A different ground would need a fresh notice.

Answer: Last date for notice for 2024-25 is 30 June 2029, so the notice of 10 January 2029 is valid, and its order must be passed within 12 months from 10 January 2029. The 2025-26 period can be covered by a statement on the same ground, treated as a notice for that period. The statement must be issued within 42 months from 31 December 2026, that is by 30 June 2030, and the order for that period must be passed within 12 months from the statement date.

Exam tips

Always write the financial year and the annual return due date first. Examiners give marks for the reference date.
Show the date working in two lines: due date plus the period equals the last date. Then compare with the actual notice date.
In case scenarios, read for words like suppression, wilful misstatement or fraud. They decide the older regime you apply.
Do not mix the older provisions and the single provision. State clearly which applies to the year in the question.
For a statement covering later periods, state the conditions: earlier notice, same ground, deemed notice, and limits counted for that period.
In a written answer, end with a clear conclusion: notice valid or barred, and what the order must contain.

Practice questions from Demands and Recovery

Show Cause Notice, Time Limits and Order: frequently asked questions

What is the time limit for issuing a show cause notice under GST?

It depends on the year and the case. For years up to 2023-24, the notice limit is 2 years 9 months from the annual return due date for non-fraud cases and 4 years 6 months for fraud-type cases. For 2024-25 onwards, it is 42 months from the annual return due date.

How do I compute the time limit for the order in a non-fraud case?

Take the due date of the annual return for the financial year and add 3 years. The notice must be issued at least 3 months before that date. So the notice limit is the due date plus 2 years 9 months.

What is the difference between the non-fraud and fraud limitation periods?

For years up to 2023-24, the non-fraud order limit is 3 years and the fraud-type order limit is 5 years from the annual return due date. The notice must come 3 months and 6 months earlier respectively. From 2024-25, one rule of 42 months for notice and 12 months for the order applies to both.

Can the officer demand more in the order than in the show cause notice?

No. The order cannot exceed the amount in the notice and cannot be based on grounds other than those in the notice. If the officer finds a new issue, a fresh notice must be issued.

When can a statement be used instead of a fresh notice for later periods?

Only when a notice has already been issued for an earlier period and the later period involves the same ground. The statement is then treated as a notice for that period. Under section 74A, the order for the later period must be passed within 12 months from the statement date.