2024 (10) TMI 1685 - HC - GST

Extension of time limit prescribed u/s 73 of the CGST/AGST Act 2017 for adjudiction - availment of ITC in violation of Section 16(4) of the CGST/AGST Act - vires of N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 - HELD THAT - A careful perusal of the provisions revealed that notwithstanding anything contained under Section 16(4) of the CGST Act 2017 in respect of any invoice or debit note for supply of goods or services or both pertaining to financial years 2017-18 2018-19 2019-20 and 2020-21 the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto 30th day of November 2021. In view of the amendments brought in the petitioner is entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16(5) and Section 16(6) of the CGST Act 2017 inserted by Finance (No.2) Act 2024 . In view of the amendments brought into the statute by the Finance (No.2) Act 2024 and which amendments have been given retrospective effect from 01.07.2017 the proceedings initiated against the petitioner by way of above mentioned show-cause notice dated 14.08.2023 have been rendered redundant. Since the decision has already been taken that the same notification is required to be issued by the State Government taking such submissions into account this Court deems it proper to close the instant writ petition by setting aside the impugned order in original No.22/Assistant Commr./TEZ/GST/2024-25 dated 29.04.2024 passed by the respondent no.6. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order(s) if need be. Petition disposed off by way of remand.

Summary

ISSUES:

Whether the extension of time limits under Section 73 of the CGST/AGST Act, 2017 for issuance of orders relating to tax not paid, short paid, or input tax credit wrongly availed can be validly extended by invoking Section 168A on the ground of Covid-19 Pandemic as a "force majeure" condition.Whether the notifications extending limitation periods under Section 73 of the CGST Act, 2017 beyond the Covid-19 pandemic period are bonafide and legally sustainable.Whether the amendments introduced by the Finance (No.2) Act, 2024 to Section 16 of the CGST Act, 2017 affect the entitlement of input tax credit for financial years 2017-18 to 2020-21 and thereby impact proceedings initiated under Section 73.The legal effect of retrospective amendments to Section 16(4), (5), and (6) of the CGST Act, 2017 on pending proceedings and orders passed under Section 73 of the CGST Act.

RULINGS / HOLDINGS:

The Court held that the Covid-19 Pandemic situation was validly treated as a "force majeure" condition under Section 168A of the CGST Act, 2017, permitting extension of limitation periods under Section 73 for the financial year 2017-18 and others.The Court found the challenge to the notifications extending limitation periods beyond the pandemic period to be overtaken by subsequent legislative amendments and did not directly rule on their bonafides.The amendments introduced by the Finance (No.2) Act, 2024, particularly Sections 16(5) and 16(6), which came into effect retrospectively from 01.07.2017, expressly entitle registered persons to take input tax credit for invoices pertaining to financial years 2017-18 to 2020-21 filed up to 30th November 2021, thereby overriding the earlier restrictions under Section 16(4).Consequently, the proceedings initiated under Section 73 based on denial of input tax credit for these periods have been rendered redundant, and the impugned order confirming demand was set aside with the matter remanded for fresh consideration in light of the amendments.

RATIONALE:

The Court applied the statutory framework of the CGST/AGST Act, 2017, focusing on Sections 16, 44, 73, and 168A, and the relevant CGST Rules, 2017.Section 168A empowers the Government to extend time limits under "force majeure" conditions, which was invoked due to Covid-19 Pandemic disruptions, as recognized by GST Council recommendations and notifications issued by the Central Board of Indirect Taxes and Customs.Section 73 prescribes a three-year limitation period for issuance of orders relating to tax not paid or input tax credit wrongly availed, counted from the due date of annual returns; this limitation was extended through notifications pursuant to Section 168A due to pandemic-related difficulties.The Finance (No.2) Act, 2024 introduced retrospective amendments to Section 16, inserting subsections (5) and (6), which explicitly allow input tax credit claims for specified financial years beyond the earlier cut-off dates, thereby superseding prior restrictions and impacting ongoing or pending proceedings under Section 73.The Court recognized the legislative intent and the retrospective effect of the amendments, leading to the conclusion that earlier proceedings denying input tax credit claims for the relevant periods are no longer sustainable.No dissent or doctrinal shift was noted; the Court relied on the legislative amendments and GST Council decisions as determinative of the legal position.