Case Law Details
Maina Devi Choraria Vs Union of India And 6 Ors. (Gauhati High Court)
Summary: In the case of Maina Devi Choraria Vs Union of India, the Gauhati High Court examined the legality of extending the time limits for filing GST annual returns and initiating proceedings under Section 73 of the CGST Act, 2017. The petitioner, a registered dealer of automobile goods, challenged the notifications issued by the Government that extended these deadlines due to the COVID-19 pandemic. The Court noted that the annual returns for the financial year 2017-18 were originally due by December 31, 2018, but were extended multiple times, culminating in a final deadline of September 30, 2023. The petitioner argued that the pandemic conditions had subsided by 2022, rendering the extensions unjustified.
The Court highlighted the government’s reliance on Section 168A of the CGST Act, which allows time extensions under “force majeure” conditions. It was contended that the respondent failed to adequately justify the necessity for ongoing extensions, leading to potential prejudices against the petitioner. The case raised important questions regarding the interpretation of “force majeure” and the government’s duty to provide reasonable explanations for its actions. Ultimately, the Court sought further clarifications from the government regarding the circumstances that warranted such extended deadlines, emphasizing the need for transparency and justification in administrative decisions.
In subsequent proceedings, the GST Council acknowledged the need for amendments to the CGST and AGST Acts, leading to new legislation. This included revisions to Section 16 concerning the eligibility for input tax credits, which would now allow registered persons to claim credits for certain financial years under specific conditions. The amendments are intended to clarify the conditions under which taxpayers can claim input tax credits and reflect the evolving legal landscape shaped by both administrative actions and judicial scrutiny. The outcome of this case underscores the importance of adherence to procedural timelines and the necessity for the government to act in good faith when invoking statutory provisions for extensions.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Mr. D. Saraf, learned counsel for the petitioner. Also heard Ms. K. Phukan, learned Central Government Counsel for the respondent no.1, Mr. S.C. Keyal, learned Standing Counsel, Central Goods and Service Tax and Mr. B. Choudhury, learned Standing Counsel, Finance & Taxation Department.
2. The petitioner is engaged in the business of dealing in automobile goods amongst various categories. The petitioner is a registered assesee under the provisions of Central Goods and Services Tax Act, 2017/ Assam Goods & Services Tax Act, 2017 (hereinafter referred to as CGST/AGST Act, 2017) bearing GST Registration No.18ABFPC9992F1ZC.
3. Under Section 44 of the CGST/AGST Act, 2017, the assesees are required to file annual returns which may include self certified reconciliation statement reconciling the value of supplies declared in the returns filed for the financial year with the audited annual financial statement for every financial year electronically under the provisions of Rule 80 of the CGST Rules, 2017. Annual returns are to be furnished for every financial year as specified under Section 44 electronically in form GSTR-9 on or before 31st day of December following the end of such financial year through the common portal. For the financial year 2017-18 the due date for filing the annual return under the Rule 80 of the CGST Rules, 2017 was 31.12.2018.
4. By Order No.10/2019-Central Tax issued by the Ministry of Finance, Government of India, the due date of furnishing the annual return for financial year 2017-18 was extended upto 31.01.2020. This was further extended thereafter by notifications No.06/2020-Central Tax dated 03.02.2020 issued by the Government of India, Ministry of Finance the due date for filing annual return for the financial year 2017-18 was further extended. In so far as the State of Assam is concerned, it was extended upto 07.02.2020.
5. Section 168A of the CGST Act, 2017 was brought into statute which permitted the Government to extend the time limits under special circumstances and it provides that notwithstanding anything contained in the CGST Act, 2017, the Government may on the recommendations of the GST Council by notification extend the time limit specified in or prescribed under the Act in respect of actions which cannot be completed due to “force majeure” conditions.
6. It is also necessary at this stage to refer to Section 73 which provides for determination of tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatements or suppressions of facts. To initiate proceedings under Section 73 of the CGST/AGST Act, 2017 the appropriate authority is required to issue notice under sub-section 1 of Section 73 at least 3 (three) months prior to the time limits specified under sub Section 10 for issuance of Order. Under subsection 10 of the Section 73 of the CGST/AGST Act, 2017, it is provided that the order required to be passed under Section 73 of the CGST/AGST Act, 2017 shall be within 3 (three) years from the due date of furnishing the annual return for the financial year to which tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within 3 years from the date of its erroneous refund.
7. In view of the Covid-19 Pandemic situation, by notification No.35/2020-Central Tax dated 03.04.2020 and notification No.14/2021-Central Tax dated 01.05.2021 issued by the Central Board of Indirect Taxes and Customs under the powers conferred under Section 168A of the CGST Act, 2017, the time line prescribed was extended. The GST Council in its 47th meeting held on 28th &29th June, 2022 also recommended for extension of limitation prescribed under Section 73 of the CGST Act, 2017 for the finical year 2017-18 on the ground of difficulties faced by the Centre as well as the State Government in completing scrutiny and issuing orders under Section 73 owing to Covid-19 Pandemic.
8. In terms of the GST Council recommendations the Central of Board of Indirect Taxes and Customs vide the notification dated 13/2022-Central Tax dated 05.07.2022 extended the limitation provided under Section 73 (10) for the financial year 2017-18 upto 30.09.2023. This extension was recommended by GST Council and pursuant to which the notifications were brought in by the CBIC to enable the department to take appropriate action under Section 73 of the CGST/AGST Act, 2017.
9. The petitioner is aggrieved that the time limit prescribed under Section 73 of the CGST/AGST Act, 2017 which enables the department to proceed under Section 73 of the CGST/AGST Act, 2017 is required to be issued within 3 years from the due date for furnishing annual returns for the financial year concerned. In view of the decisions taken by the GST Council as well as the subsequent notifications issued by the Department of Finance, Government of India, the due date for the financial years 2017-18, 2018-19, 2019-20 have been extended by invoking Section 168A of the CGST Act so that the Department may initiate proceedings required to be undertaken under Section 73 of the CGST/AGST Act, 2017, which could not be undertaken because of Covid-19 Pandemic situation. Covid-19 Pandemic situation was taken as a ground for invoking the “force majeure” condition under Section 168A of the CGST Act, 2017.
10. Pursuant to the extension of the limitations, the respondent no.5 issued show-cause notice bearing reference No.ZD181223004588F dated 06.12.2023 to the petitioner alleging inter alia that during the financial year 2018-19, the petitioner had availed ITC to the tune of Rs.11,75,727/- in violation of Section 16(4) of the CGST/AGST Act. The petitioner submitted his show-cause reply vide DRC-06 bearing Reference No.ARN:ZD180224002661U dated 03.02.2024. However, without considering the reply of the petitioner, the respondent no.5 by impugned order Reference No.ZD180224009080Z dated 09.02.2024 confirmed the demand of Rs.11,75,727/- along with interest of Rs.11,34,818/- and penalty of Rs.1,76,760/-. The petitioner is aggrieved by the impugned order dated 09.02.2024 as well as the show-cause and has therefore assailed the same.
11. It is the case of the petitioner projected before this Court that the Covid-19 Pandemic situation ended in the year 2022 and therefore, there was no rational in extending the due dates under Section 73 of the CGST/AGST Act, 2017 for the financial year 2017-18 upto 31.12.2023. The petitioner is aggrieved that the grounds for extension of the time period prescribed under Section 73 of the CGST/AGST Act, 2017 was issued by invoking Section 168A of the CGST Act, 2017 and on the ground that because of Covid-19 Pandemic situation necessary action to be taken on behalf of the Department could not be undertaken and therefore, the Covid-19 Pandemic being a factor beyond the control of the Department, it was treated to be a “force majeure” condition.
12. The petitioner has assailed the notification No.09/2023-Central Tax dated 31.03.2023 and notification No.56/2023-Central Tax dated 28.12.2023 extending the period of issuance of the orders under Section 73 of the CGST Act, 2017 as it is contended that it was not bonafide and could not have been done by invoking the provisions of Section 168A as the Covid-19 Pandemic situation did not continue beyond the year 2022 and therefore, cannot be treated to be a “force majeure” condition. Further contention of the petitioner is that there are no reasons cited/discussed or circumstances projected by the respondents save and except the “force majeure” condition as to why necessary action would not be taken by the Department in spite of earlier extensions and as to why the period of extension was required to be further extended by the impugned Notification No.09/2023-Central Tax dated 31.03.2023.
13. The petitioner, therefore, has prayed for setting aside the notification dated 09/2023-Central Tax dated 31.12.2023 and notification No.56/2023-Central Tax dated 28.12.2023 as well as the order bearing Reference No.ZD180224009080Z dated 09.02.2024 passed by the respondent No.5/ Department against the writ petitioner.
14. This Court permitted the respondents to complete their instructions and address the Court on the grievances raised. The Court also passed interim orders which were extended from time to time.
15. The respondents upon due instructions submitted before the Court that the matter was under consideration at the highest level in the Government and some decision in this respect was likely to be arrived upon and therefore, sought for further time.
16. Subsequently, on 09.09.2024 the learned Standing Counsel, CGST informed the Court that the GST Council has already taken a decision in its meeting held on 09.09.2024 that certain amendments are required to be made in to the CGST as well as AGST Act. The learned Standing Counsel had also informed that pursuant to the decision of the GST Council, the Ministry had brought certain amendments inter alia to Section 16 of the CGST Act with effect from 01.07.2017 by the Finance (No.2) Act, 2024. The Amendment Act was placed before the Court. Subsequently, notification No.17/2024-Central Tax dated 27.09.2024 was also issued whereby the appointed date for giving effect to the amendments brought under the Finance (No.2) Act, 2024 was notified. In terms of the said notification, the appointed date for giving effect to the provisions of Sections 118, 142, 148 & 150 of the Finance (No.2) Act of 2024 will be the date of publication of Notification No.17/2024-Central Tax which is 27.09.2024. In other words, amendments which were brought to Section 16 of the CGST Act, 2017 by Section 118 of the Finance (No.2) Act of 2024 will take effect from 27.09.2024.
17. Section 16 of the CGST Act, 2017 provides for the eligibility and the conditions for taking input tax credit for the registered person. Section 16(4) of the CGST Act, 2017 provides as under:
“4. A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the [thirtieth day of November] following the end of financial year to which such invoice or [xxx] debit note pertains or furnishing of the relevant annual return, whichever is earlier:
[PROVIDED that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under Section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-Section (1) of Section 37 till the due date for furnishing the details under sub-section (1) of the said section for the month of March, 2019.]
18. By the subsequent amendment brought in by the Finance (No.2) Act of 2024, sub-section 5 & 6 of Section 16 were inserted which reads as under:
(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the 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 the thirtieth day of November, 2021.
(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or Court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under Section 39,-
(i) filed upto thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or
(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancelation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration.
19. As discussed above, these amended provisions came into effect from the date of publication of notification No.17/2024-Central Tax with effect from 27.09.2024.
20. 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.
21. Reading of these amended provisions reveal that the challenge made in the writ petition before this Court is no longer required to be addressed in view of the amendments brought in by the Finance (No.2) Act, 2024. In view of the amendments brought in it is evident that the petitioner is entitled to avail the benefit of input tax credit for the relevant period. It is also submitted by the learned Standing Counsel, AGST that similar notification is required to be issued by the State respondents. The learned Standing Counsel for the respondents fairly submit that in view of the amendments brought in by the Finance (No.2) Act, 2024 and in view of the Notification No.17/2024 dated 27.09.2024, the amendments brought in to Section 16 have already taken effect and with retrospective effect from 01.07.2017.
22. As such, 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 show-cause notice No. ZD181223004588F dated 06.12.2023 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 bearing Reference No.ZD180224009080Z dated 09.02.2024 passed by the respondent no.5. The matter now stands remanded back to the competent jurisdictional officer to pass appropriate order(s) if need be.
23. In terms of the above, the writ petition stands disposed of.
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