Notification challenged as there was no force majeure in existence to exercise power under Section 168A

The Gauhati High Court has ruled that a notification extending tax recovery deadlines under Section 168A of the CGST Act was invalid. The court found no 'force majeure' event, such as an epidemic, to justify the extension, especially after the Supreme Court had already addressed limitations related to the pandemic. Consequently, while the petitioner must respond to the notice, no final order can be issued until a specified date.

The Hon'ble Gauhati High Court in the case of M/s. Indus Towers Ltd. v. Union of India [WP(C)/ 529/2024 dated February 12, 2024], held that as per interim orders passed by the various High Court in respect to Notification No. 09/2023-CT dated March 31, 2023 ("the Notification"), the Assessee shall file the reply to the Notice, however, till the returnable date, no final order in respect of the Impugned Notice shall be passed. Hence, this Court passed the same order in the present case as well. 

Facts

M/s. Indus Towers ("the Petitioner") was issued the Demand-cum-Show Cause Notice dated December 21, 2023 ("the Impugned Notice") was issued asking to show cause as to why a sum of Rs. 62,06,927/- shall not be demanded and recovered from the Petitioner under the Sub-Section (1) of Section 73 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and corresponding Section of State Goods and Services Tax Act, 2017 ("the SGST Act") as ineligible Input Tax Credit ("ITC") received from the suppliers, who did not file their FORM GSTR-3B returns and other amounts under the Section 16(4) of the CGST Act plus interest and penalty. 
The Notification was issued in the exercise of powers conferred by Section 168A of the CGST Act and other identical provisions of the IGST Act and the Union Territory Goods and Services Tax Act, 2017 ("the UTGST Act"). By exercising the said powers, the time limit specified under the Sub-Section (10) of Section 73 of the CGST Act for issuance of an order under the Sub-Section (9) of Section 73 of the CGST Act for recovery of tax not paid or short paid or of ITC wrongly availed or utilized, relating inter alia to the period, that is, Financial Year 2018-2019 has been extended upto March 31, 2024. 

The Petitioner contended that after the year 2022, there was no COVID-19 pandemic in existence. Further, attention was drawn to the Order dated January 10, 2022, passed by the Hon'ble Supreme Court of India in Suo Motu Writ Petition (Civil) no. 3 of 2020 to contend that the Hon'ble Supreme Court of India after taking all the factors into account, had extended the period of limitation only upto February 28, 2022. Thus, the Council did not need to take resort to the factor of the COVID-19 pandemic to extend the time limit under Sub-Section (10) of Section 73 of the CGST Act.

Hence, aggrieved by the circumstances, the present writ petition was filed before the Hon'ble High Court.

Issue

Can Notification be challenged if issued under Section 168A of the CGST Act?

Held

The Hon'ble Gauhati High Court in WP(C)/ 529/2024 held as under:

• Observed that, in the Explanation to Section 168A of the CGST Act, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake, or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the CGST Act. Therefore, the time limit under Sub-Section (10) of Section 73 of the SGST Act was extended once before the Notification dated March 31, 2023.
• Held that, the Hon'ble Allahabad High Court, the Hon'ble Gujarat High Court, the Hon'ble Punjab & Haryana High Court, and the Hon'ble Madras High Court, have provided interim reliefs to the noticees by observing that the proceedings in pursuance of the notices may proceed but no final order shall be passed. The said interim orders are stated to be in operation till date. Therefore, the Petitioner shall file the reply to the Impugned Notice on or before March 15, 2024. Further, till the returnable date, the proceedings initiated pursuant to the Impugned Notice may proceed, but no final order in respect of the Impugned Notice shall be passed.