India’s economic reforms following the 1990s accelerated its progress as a globally integrated nation, with notable gains in regulatory efficacy, macroeconomic stability, and geopolitical constancy. Besides China on the Asian continent, India has emerged as one of the fastest-growing economies in recent decades. Fortifying the topsy-turvy but relatively continuous growth tale, India has seen tremendous indirect tax reform over the last three decades and proven economic resilience by beginning on another breakthrough in July 2017. According to experts, the Goods and Services Tax (henceforth GST) is the Indian government’s significant taxation turnaround since liberalising the Indian economy in 1991. India has come a long way to accept GST as a wonderful and long-awaited indirect tax reform intended to implement one nation one tax and one market.
The Goods and Services Tax (GST) is implemented in India with the tagline of “one tax, one nation’. GST implementation in India aims to simplify laws and procedures. Regardless, With the introduction of GST, the government’s administrative system had to issue numerous notifications regarding the GST Law’s stipulations. The issuance of 718 notifications until December 31, 2022 (excluding notifications from state governments and union territories) complicates tax assessment, levy, and collection for officials and taxpayers. If the law is as simple as it is claimed, it should have fewer recommended amendments. GST notifications are frequently issued, making it difficult for tax payers to prepare monthly returns and respond to assessment orders. The notification will be updated overnight without prior notice, and failure to complete the process within the specified timeframe will result in fines.
Government of India vide its Notification no 35/2020- Central Tax, exercised its power under section 168-A of the CGST Act, and as the entire country was suffering from COVID-19 Pandemic, the Government on the recommendation of the Council, extended the time limitation to 30th June, 2020, for completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts or filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts. Further the Government using its power under section 168-A, extended the time limit 31.05.2021 in view of the COVID-19 Pandemic.
However, Government of India, vide its notification No. 13/2022 dated 05.07.2022, extends the time limit specified under sub-section (10) of section 73 for issuance of order under subsection (9) of section 73 of the said Act, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, up to the 30th day of September, 2023. This notification states that it is a partial modification to the above 2 mentioned notifications. Again the time limit was extended vide notification no. 09/2023-Central tax dated 31.03.2023.
Having a brief overlook at section 168-A of the CGST Act, it clearly talks about extension of time limit in special circumstances, and more specifically due to Force Majeure. The section also expressly defines Force Majeure which includes 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 this Act. However the Notification No. 13/2022 dated 05.07.2022 and Notification No.09/2023 dated 31.03.2023, were published in a time where there was no case of COVID-19 Pandemic. Mere mentioning of “Partial Modification” doesn’t allow the Government to misuse its power U/s 168-A, where its an exhaustive provision in itself, in the absence of any condition of Force Majeure, the passing of this notification in the first place is itself an abuse of power.
The vires of these two notifications have been challenges at various High Courts and High Courts have interfered at the Show Cause Notice stage where they have been pleased to pass interim orders whereby they have issued notice and directed the department to not pass any final orders without the leave of the court. Cases relied upon are M/s. Graziano Trasmissioni vs GST &ors in Writ Tax No. 1256 of 2023 before Hon’ble Allahabad High Court- interim order dt. 17.11.2023. New India Acid Baroda Pvt. Ltd. vs UOI in Special Civil Application No. 21165 of 2023 before Hon’ble Guajarat High Court- interim order dt. 21.12.2023. M/s. Garg Rice Mills vs State of Punjab & ors in CWP No. 1138 & 1140 of 2024 before Hon’ble Punjab & Haryana High Court- interim order dt. 18.01.2024. Hon’ble Orissa High Court in the case of M/s Orissa Stevedores Ltd. vs Deputy Commissioner and ors. in W.P. (C) No. 3703 of 2024 while issuing notice has directed vide order dt. 22.02.2024 that the Opp. Parties that proceeding relating to SCN may go on but no final order shall be passed.
Recently, in the case of OSL Exclusive Pvt Ltd Vs. UOI and Others,[WPA 7423 OF 2024], The Hon’ble Calcutta High court have stayed the adjudication order and have restrained the recovery proceedings. Similar orders have also been passed by the Hon’ble Orissa High Court in Swastik Stevedores Pvt Ltd Vs. UOI and Others [WP(C) No. 6333 of 2024].
In the further course of time, the constitutionality of these notifications will be answered and there will be certainly a major change in the tax jurisprudence. But this raises a very fundamental question and that is whether the Act is making life easier for the Business man or has it deviated from its main objective, which was to simplify the process and make it easier for the business man to conduct their business. Certainly, issuance of numerous notifications under the act have made compliance a tough task but it also highlights the abuse of the power and its direct impact on article 19(1)(g) of the Constitution of India.
Being a 7 year old Act, it certainly needs more time to evolve, and in the process, a lot of question needs to be answered and most importantly, certain provision’s constitutionality needs to be analysed. The majority of CGST tax notices address GSTN system issues. Approximately 25% of notices are connected to return filing, namely postponement of the date. Filing of returns. This shows that the majority of notifications issued are due to technical faults with the GSTN system. Notifications directly affect several provisions of the CGST Act. This requires more examination of the substance of alerts.
Author Bio
