[S.73(10) UPGST] Time Extension Notification Dated 24.04.2023 Valid Only From 31.03.2023, Not Before: Allahabad High Court

Section 73 empowers the proper officer to pass orders imposing penalty or interest where any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, after following due procedure laid down in the Section.

Section 73(9) provides for issuance of order. Section 73(10) prescribes a 3 year limitation period for issuing such order from the date on which annual return was furnished by the assesee.

Petitioner approached the High Court seeking quashing of orders by which the petitioners bank accounts were frozen. Petitioner submitted that the impugned orders were violative of sub-Section 10, Section 73 of the U.P.G.S.T. Act, 2017 as they had been passed after the permissible time period.

Respondents justified the passing of orders under Section 73(9) and (10) of the Act by placing reliance on notification dated 24.04.2023. They argued that the aforementioned notification extended the time limit mentioned in sub-Section 10 of Section 73 for the year 2017-18 up to 31.12.2023 making the orders passed valid.

The Court held that while the respondents placed reliance on the notification dated 24.04.2023, they had not considered that the notification had only been given retrospective effect from 31.03.2023.

The Court held that under normal circumstances, the last date for filing the annual return for the year 2017-18 would be 31.12.2018. However, by the notification issued by Central Board of Direct Taxes and Customs dated 03.02.2018, which was adopted by the State of U.P., such date was extended to 05.02.2020. The Court held that thus the three-year period for passing an order under Section 73 (10) of the Act would last till 05.02.2023.

“… the notification dated 24.04.2023 would be applicable retrospectively but only from 31.03.2023 meaning thereby, if the time limit of three years prescribed in sub Section 10 of Section 73 read with sub Section 1 of Section 44 expired prior to 31.03.2023 then the notificaiton dated 24.04.2023 extending the time limit for passing of an order under sub Section 9 of Section 73 would not be applicable, apparently so,” held the Division Bench comprising Justice Rajan Roy and Justice Manish Kumar.

The impugned orders were held to be without jurisdiction and accordingly, the writ petition was allowed.

Case Title: M/s A.V. Pharma Thru. Its Prop. Smt. Madhu Vohra v. State of U.P. Thru. Prin. Secy. State Tax Lko. and 2 Ors. [WRIT TAX No. - 264 of 2024]