Order Date - 02 January 2025

Parties: M/s.Brunda Infra Pvt. Limited and Others Vs The Additional Commissioner of Central Tax

Facts -

• The Petitioner,  M/s.Brunda Infra Pvt. Limited and Others, challenges the legality, validity, and propriety of   Notifications Nos. 13/2022 (dated 05.07.2022), 9/2023 (dated 31.03.2023), and 56/2023 (dated 28.12.2023). issued under Section 168A of the GST Act, 2017. The notifications primarily relate to the extension of limitation periods for tax assessments and related proceedings during and after the COVID-19 pandemic.
• The Petitioner contented that these notifications arbitrarily extended the limitation period for tax proceedings under Section 73(10) of the GST Act. No force majeure circumstances existed when the notifications were issued, as the COVID-19 pandemic had subsided. The notifications lack prior recommendations from the GST Council, a mandatory requirement under Section 168A. Further repeated extensions violated Article 14 of the Constitution by treating taxpayers unfairly compared to the Revenue.

Issue -

• Whether the notifications extending limitation periods under Section 168A of the GST Act are valid in law?

Order -

• The Divisional Bench of Hon'ble High Court observed that in the argument on the first blush appears to be attractive, but, lost much of its shine when minutely examined in the light of language employed in Section 168A of the GST Act. Section 168A in no uncertain terms makes it clear that the time limit can be extended ‘in respect of actions’ which could not be completed or complied with, due to force majeure. 
• The purpose behind using the phrase ‘on the recommendation of Council’ is to equip the Government with the expert opinion of an expert constitutional body i.e., GST Council. This enables the Government to take an informed decision based on such opinion of Council. Since all the States have participation in the Council, the recommendation of Council will certainly be in consonance with doctrine of cooperative federalism. The decision of Government on such recommendation in the shape of notification will certainly has serious impact on taxpayers. Section 73(10) prescribes period of three years from due date for issuing order and Section 75(10) is pregnant with a deeming clause that if order is not passed within three years as per Section 73(10) the proceeding shall be deemed to be concluded. 
• Hence, notification extending time limit issued under Section 168A can impact the tax payer for the purpose of conclusion of proceedings as per conjoint reading of Section 73(10) and 75(10) of the GST Act.  Therefore, the word ‘may’ does not make the provision i.e., Section 168A as directory. 
• Writ Petitions are accordingly disposed of by reserving liberty to the petitioners to avail the remedy of statutory appeal.