Power To Extend Time Limit Under GST Law

Judicial Review of Section 168A of CGST Act

• Section 168A of CGST Act was inserted vide the Taxation and Other laws (Relaxation and Amendment of Certain Provisions) Act, 2020 which gave power to the Government to extend the time limit in respect of any actions which cannot be completed due to force majeure events such as war, epidemic, flood, draught, fire, cyclone, earth quake or any other calamity caused by nature or otherwise.
• By virtue of the said provision, the Government has periodically been issuing notifications to extend the time limit for issuance of demand orders under Section 73 of CGST Act. The same have been summarized below for reference.

  Particulars	Financial Year	Extended time limit
  Notification No 13/2022 dated 5 July 2022	2017-18	30 September 2023
  Notification No 09/2023 dated 31 March 2023	2017-18	31 December 2023
  	2018-19	31 March 2024
  	2019-20	30 June 2024
  Notification No 53/2023 dated 31 March 2023	2018-19	30 April 2024
  	2019-20	31 August 2024

• The tax payers have filed writ petitions before various High Courts to challenge the said notifications issued by the Government on the ground that there was no force majeure event at the time of issuance of such notification.
• The orders passed by these High Courts both at the interim as well as the final stages have been summarized below for reference.
  1. Gujarat High Court¹ - The Court restrained the issuance of final orders in cases where the extension of the time limit under Section 168A was contested however did not stay the proceedings initiated by the authorities to adjudicate the show cause notices.
  2. Punjab and Haryana High Court² - Following the interim order of the Gujarat High Court [Supra], also restrained the issuance of final orders in cases where the extension of the time limit under Section 168A was contested however allowed the proceedings to adjudicate the show cause notices to continue.
  3. Gauhati High Court³ - The Court provided interim reliefs to the noticees/assessees by inter alia observing that the proceedings in pursuance of the impugned show cause notice may proceed but no final order shall be passed and if final order is passed already, no recovery is to be effected.
  4. The Kerala High Court⁴ on the other hand in its final order has upheld such extension of time limit recognizing the Government's authority under Section 168A to extend such deadlines in case of force majeure such as Covid-19 pandemic. The Court noted that disruptions caused by the pandemic justified the extension of time limits for undertaking compliance and enforcement actions under GST.
  5. The Allahabad High Court⁵ has also upheld the extension of time limits and held that issuance of time extension application was a legislative function and there existed material [Covid-19] and due deliberation before the legislative function was performed. It further held that the legislative wisdom to issue a further notification would always survive under Section 168A of CGST Act.

Aurtus Comment

• The controversy surrounding the validity of extension notifications may have achieved some semblance of finality pursuant to the decision of Kerala High Court and the Allahabad High Court, however, the possibility of an alternate outcome from other High Courts cannot be rule out.
• Also, the periods under consideration in the Kerala and Allahabad judgment was the financial year 2017-18. The fact that the Government has stretched its authority / liberty by issuing Notification No 56/2023 dated 28 December 2023 to extend time limit to issue demand order under Section 73 for FY 2018-19 till 30 April 2024 and FY 2019-20 till 31 August 2024, may also become a ruling factor.
• It cannot be doubted that Government has power to issue notification under Section 168A, however such powers should be used judiciously and in genuine cases. It would be interesting to see if High Courts upholding the validity of Notification 9/2023 – Central Tax dated 31 March 2023 , declare Notification No 56/2023 dated 28 December 2023 as invalid and being against the mandate of Section 168A of CGST Act.

Footnotes

1 M/s New India Acid Baroda Pvt Limited vs Union of India [2024(1) TMI 128]

2 M/s Garg Rice Mills vs State of Punjab [2024(2) TMI 123]

3 M/s NK Constructions vs Union of India [2024 (5) TMI 1429]

4 Faizal Traders Pvt Ltd vs Deputy Commissioner of Central Tax [ 2024 (5) TMI 1183]

5 M/s Graziano Transmissioni vs Union of India [2024(6) TMI 233]

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