Notifications extending time limit for passing order under section 73(9) valid Writ Petition Dismissed.

Legality of GST Limitation Extensions Upheld; Writ Petition Dismissed.

Issue:

Whether Notification No. 56/2023-CT dated December 28, 2023 (and its corresponding State GST notification, G.O.(Ms) No. 1 dated January 2, 2024), extending the time limit for passing orders under Section 73(9) of the CGST/TNGST Act for Assessment Year 2018-19, are valid and constitutional, or if they are arbitrary, without jurisdiction, capricious, excessive, and contrary to Section 168A and Articles 14 and 19(1)(g) of the Constitution of India.

Facts:

The assessee challenged Notification No. 56/2023-CT, dated December 28, 2023, and G.O.(Ms) No. 1 of the Commercial Taxes and Registration (B1) Department, dated January 2, 2024, along with the assessment order issued by the respondent authority for Assessment Year 2018-19. The assessee contended that these notifications were arbitrary, without jurisdiction, capricious, excessive, and contrary to Section 168A of the TNGST Act, thereby violating Articles 14 (equality before law) and 19(1)(g) (right to practice any profession or carry on any occupation, trade or business) of the Constitution1 of India. The assessee argued that Section 168A was inserted as an extraordinary measure to extend time limits specifically due to force majeure circumstances like the severe impact of the COVID-19 pandemic. They further submitted that the exercise of this extraordinary power was initially through Notification No. 13/2022-CT, which extended the time limit for Section 73 orders until September 30, 2023. The assessee claimed that the impugned notifications and assessment order did not align with the purpose and spirit of Section 168A, as they failed to consider the post-pandemic recovery period and the adequate time already provided for compliance under earlier notifications.

Decision:

In favor of the revenue: The court held that the impugned notifications as well as the impugned assessment order were valid and issued in accordance with the provisions of the GST Act, TNGST Act, and the constitutional framework. The court found that the exercise of powers under Section 168A of the CGST Act and TNGST Act was done appropriately, with due consideration of exceptional circumstances (presumably the lingering effects of the pandemic). Furthermore, the court concluded that the respondents had acted within their jurisdiction and had not violated the principles of natural justice or the assessee’s fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India. Accordingly, the writ petition was dismissed.

Key Takeaways:

• Validity of Section 168A Extensions Upheld: This judgment explicitly upholds the validity of the notifications extending limitation periods under Section 168A for the period 2018-19. It confirms that the government’s power to extend time limits due to force majeure (like the pandemic) is considered legitimate and appropriately exercised.
• Constitutional Scrutiny Satisfied: The court found no violation of fundamental rights (Articles 14 and 19(1)(g)) or an arbitrary exercise of power. This suggests the court was satisfied that the extensions were not unreasonable or discriminatory, given the extraordinary circumstances.
• Importance of “Exceptional Circumstances”: The decision rests on the premise that the extensions were justified by “exceptional circumstances,” implying that the lingering impact of the COVID-19 pandemic continued to affect compliance and administrative processes even after the initial peak.
• Divergence in High Court Views: It’s important to note that the validity of these extensions under Section 168A has been a contentious issue, with different High Courts taking varied views. While some High Courts (like this one) have upheld them, others have expressed reservations or quashed certain notifications. The Supreme Court’s impending decision in HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax (as noted in previous cases) will provide a definitive resolution across India.
• Jurisdiction and Natural Justice: The court specifically found that the authorities acted within their jurisdiction and did not violate natural justice principles, implying that the procedural aspects related to the assessment order itself were likely deemed to be in order.
• Impact on Future Litigations: For cases originating in the jurisdiction of this High Court, this judgment provides clarity that the demand orders issued within the extended limitation periods for FY 2018-19 (and potentially other periods covered by similar notifications) are valid, subject to the Supreme Court’s final word.