This Tax Alert summarizes a recent judgement of the Kerala High Court (HC)1 upholding the validity of GST notifications2 extending the timelines for passing order under section 73 of Central Goods and Services Tax Act, 2017 (CGST Act) for financial year 2017-18.
As per the petitioner, the extension of time limit can only be notified under section 168A of CGST Act where the actions cannot be completed due to force majeure. The impugned notifications do not indicate any force majeure affecting the passing of order within the time stipulated by CGST Act.
HC observed that:
- The GST Council, in its 47th meeting, took note of the effect of the COVID-19 pandemic and agreed with the recommendation of the Law Committee.
- How much time could have been extended considering the pandemic is the discretion of the Executive, which has been taken based on the recommendation of the GST Council.
- The Government is well within the power to extend the limitation for completing the proceedings and taking action u/s 73 by issuing notification under Section 168A if there is force majeure.
- COVID-19 was a force majeure, and taking into account the various factors, the time limit has been extended.
Accordingly, HC held that the impugned notifications extending the time limit for passing order u/s 73 for FY 2017-18 are not ultra vires the provisions of Section 168A of the CGST Act.
Comments:
- It is worthwhile to note that the Petitioner has challenged this ruling before the Division Bench of Kerala HC. Court has admitted the Petition without granting any interim stay.
- Similar proceedings are pending before various other HCs challenging the second extension on the ground that after 2022, there was no COVID pandemic and accordingly, the provisions of Section 168A would not be applicable. In all these cases, stay have been granted by the HCs.
[1] WP(C) No. 24810 of 2023
[2] Notification no. 13/2022-CT dated 5 July 2022 and 9/2023-CT dated 31 March 2023
