Interim stay on assessment order for 2019-2020, challenging Section 168A extension of limitation period.

Issue:

Whether an assessment order passed under Section 73 of the CGST/WBGST Act, 2017, for the period April 2019 to March 2020, on August 28, 2024, is time-barred, given that the due date for furnishing returns was extended only until March 31, 2021, and the subsequent extension of the order-passing date until August 31, 2024, by invoking Section 168A, was without a valid force majeure event.

Facts:

The assessee challenged an assessment order dated August 28, 2024, pertaining to the tax period April 2019 to March 2020. The challenge was based on the contention that the order was passed beyond the statutory limitation period prescribed under Section 73(10) of the CGST/WBGST Act. The assessee argued that the time to furnish returns for the said period was extended only until March 31, 2021, and there was no further extension that would enable the authorities to pass an order within an extended period. The respondents, however, invoked Section 168A of the Act to extend the date for passing orders under Section 73(9) up to August 31, 2024. The assessee contended that this invocation of Section 168A was improper as no force majeure event was prevailing to justify such an extension, thus rendering the order passed under Section 73(9) unsustainable.

Decision:

The matter was adjourned, and the impugned order was ordered to remain stayed until the next date of hearing. This indicates that the court found sufficient prima facie merit in the assessee’s contention regarding the limitation period and the applicability of Section 168A to warrant a temporary halt to the operation of the demand order.

Key Takeaways:

The interplay between the statutory limitation period under Section 73(10) and the power to extend time under Section 168A of the CGST/WBGST Act is a critical legal issue.
The invocation of Section 168A requires a valid justification, typically a force majeure event, and its application without such a prevailing circumstance can be challenged.
Orders passed beyond the standard limitation period, relying on contested extensions, are vulnerable to legal challenge.
Courts may grant an interim stay on such orders to preserve the status quo while the legal arguments regarding limitation and the validity of extensions are fully heard and decided.

HIGH COURT OF CALCUTTA

Amar Nath Jaiswal

Assistant Commissioner of State Tax

Raja Basu Chowdhury, J.

WPA No. 1860 of 2025

APRIL 23, 2025

Ramesh Patodia and Ms. Megha Agarwalfor the Petitioner. Anirban Ray, GP, Md. T.M. Siddiqui, AGP, Ms. Tanoy Chakraborty and Saptak Sanyalfor the Respondent.

ORDER

1. Affidavit of service filed in Court today is taken on record.

2. Challenging the order dated 28^th August, 2024 passed under Section 73 of the West Bengal/Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “said Act”), in respect of the tax period April, 2019 to March, 2020, inter alia, on the ground that the order was passed beyond the statutory period as provided for in Section 73(10) of the said Act, the instant writ petition has been filed.

3. Ms. Agarwal, learned advocate appearing in support of the instant writ petition by drawing attention of this Court to a notification dated 30^th December, 2020 would submit that by the aforesaid notification, Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, on the basis of the recommendations made by the GST Council in exercise of power under Section 44(1) of the said Act had extended the time limit for furnishing the annual returns specified under Section 44 of the said Act read with Rule 80 of the West Bengal/Central Goods and Services Tax Rules, 2017, electronically through the common portal for the financial year 2019-20 till 28^th February, 2021. According to her, by a further notification dated 28^th February, 2021, the above period was extended till 31^st March, 2021 and no further. According to her, the extension of the aforesaid period has the effect of enabling the authorities to pass an order under Section 73(9) of the said Act within the aforesaid extended period. In the instant case, however, the respondents by invoking the powers under Section 168A of the said Act through two several notifications dated 31^st March, 2023 and 28^th December, 2023 had extended the date of passing of the order under Section 73(9) of the said Act in respect of the financial year 2019-20 up to 31^st day of August, 2024. According to her, there was no force majeure condition prevailing by invoking the aforesaid provision and extending the period and on such ground not only the order passed under Section 73(9) of the said Act is unsustainable, the above notifications dated 31^st March, 2023 and 28^th December, 2023 are also bad and cannot be sustained.

4. Independent of the above, she would submit that the matter pertains to reversal of input tax credit by reasons of the registration of the three suppliers of the petitioner being retrospectively cancelled. On a show cause being issued, the petitioner had duly responded to the same and had categorically stated that the purchases made with the suppliers whose registration had been cancelled retrospectively had been done in regular course of business and in good faith. To substantiate the same not only invoices of the above suppliers, but ledgers and eway bills for the relevant period in respect of the aforesaid three suppliers were also disclosed. By placing reliance on the order passed under Section 73(9) of the said Act, she would submit that although the proper officer had accepted the explanation given by the petitioner in respect of two suppliers, however, in respect of one particular supplier, namely, Shree Shyam Iron Steel Trading Company without assigning any reason the reversal of input tax credit was upheld. This according to her is a failure to exercise jurisdiction. In the facts as noted hereinabove, she would submit that the order passed by the proper officer is not sustainable and should be set aside and pending hearing of this writ petition, the same should be stayed.

5. Mr. Sanyal, learned advocate representing the State respondents prays for an accommodation to take appropriate instruction with regard to the proper officer disallowing the contention of the petitioner in respect of only one of the suppliers namely, Shree Shyam Iron and Steel Trading Company without assigning any reasons therefor.

6. Having regard thereto, let this matter stand adjourned and be taken up for further consideration on 28^th April, 2025.

7. Until further order, the impugned order shall remain stayed till the next date.