Patna High Court Dismisses Plea Challenging Notifications Extending Timeline For Issuance Of Orders U/S 73(10) Of CGST Act

The Patna High Court has rejected a petition challenging Notifications extending timeline for issuance of Orders under Section 73(10) of the GST Act.

The Division Bench, comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy was dealing with the case where the assessees/petitioners filed writ petition against Notification Nos. 13/2022-Central Tax, 9/2023-Central Tax & 56/2023-Central Tax which extended the dates for issuing orders under Section 73(10) of the GST Act.

In this case, the assessee/petitioners challenged the assessment orders of 2017-18, 2018-19 and 2019-20, mainly on the ground of limitation. The due date for furnishing of annual returns for a financial year, as per both the GST enactments, was 31st December of that financial year, as per Section 44.

The assessment orders were passed on the basis of the extension; beyond the period of three years from the 31st of December of the subject year; which is the limitation provided under Section 73(10).

The assessee further argued that the Notifications respectively came on 05.07.2022, 31.03.2023 and 20.12.2023, under Section 168A of the CGST Act were not sustainable and tenable since the force majeure condition of the pandemic situation has not been satisfied; for the simple reason that the entire world, by that time, had resumed operations. As on the date of the respective notifications the pandemic situation was not in existence and there could not have been an extension of the limitation period on that ground.

The bench opined that if the due date as provided in Section 44 of the GST Act was applicable, then the limitation under Section 73(10) of the GST Act, for making an order would expire respectively on (i) 31.12.2021 (2017-18), (ii) 31.12.2022 (2018-19) and (iii) 31.12.2023 (2019-20).

The bench observed that the Government by the impugned notifications did not extend the limitation for the entire period granted by the Supreme Court. At the risk of repetition, the extended date of filing of return under Section 44(10) of the GST Act for the years 2017-18, 2018-19 and 2019-20 were respectively on 07.02.2020, 31.12.2020 and 31.03.2021.

The three-year period under Section 73(10) of GST Act hence commences from such dates and would have normally expired respectively on 07.02.2023, 31.12.2023 and 31.03.2024. For the year 2017-18 the period between 15.03.2020 to 28.02.2022; 2 years minus 14 days come within the period of limitation. Hence the period of 1 year, 11 months and 16 days have to be excluded for the year 2017-18, which would take the limitation period to 21.01.2025, stated the bench.

The bench opined that the “non-obstante provision in Section 168A of the GST Act empowers the Government, on the recommendation of the Council to extend the time limit specified in or prescribed and notified under the GST Act, in respect of actions which could not be completed and complied with due to force majure and by sub-section (2) empowers such notifications to have retrospective effect. The explanation defines force majure; which no doubt includes the COVID-19 pandemic situation. The power so conferred cannot also be confined to be exercised, when a force majure situation is existing.”

The bench noted that in the financial year 2018-19, the period between 01.01.2021 and 28.02.2022 should be excluded from the three-year period commencing from the extended date of filing amended returns for that year; i.e: between 31.03.2020 to 31.12.2023. The 01 year 02 months so excluded would extend the limitation from 31.12.2023 to 28.02.2025, for the assessment year 2018-19. Likewise, for the financial year 2019- 20 the extended due date of filing of return falls on 31.03.2021 and the limitation under Section 73(10) of the GST Act extends upto 31.03.2024.

“The period excluded for reason of the Covid- 19 pandemic, coming within the period of limitation, hence would be 11 months which would enable extension of limitation under Section 73(10) of the GST Act from 31.03.2024 to 28.02.2025.” added the bench.

In view of the above, the bench rejected the petition.

Case Title: M/s Barhonia Engicon Private Limited v. The State of Bihar

Case Number: Civil Writ Jurisdiction Case No.4180 of 2024

Counsel for Petitioner/ Assessee: D.V. Pathy, Dr. Avinash Poddar, Bijoy Kumar Gupta and Aman Raza

Counsel for Respondent/ Department: P.K. Shahi, for the State and Dr. K.N. Singh, for the Union of India

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