GST- Extension of Limitation for Issuing Order for FY 2018-19 & 2019-20: Certain Aspects
The Government vide Notification No. 56/2023-Central Tax dt. 28/12/2023 has further extended the time limit for issuance of the order u/s 73(9) of the CGST Act, 2017 for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized for FY 2018-19 & 2019-20 as under:
| FY | Extended limitation |
| 2018-19 | 30/04/2024 |
| 2019-20 | 31/08/2024 |
Now the following aspects are required to be noted:
1. The aforesaid extension is not applicable for the recovery of erroneous refunds. The normal period of limitation for such recovery is three years from the date of such refund. One may refer to Notification No. 13/2022–Central Tax dt. 05/07/2022 which provides for excluding the Covid period (01/03/2020 to 28/02/2022) for computing limitation for recovery of erroneous refund. Hence only the said exclusion shall apply in such cases (including refunds received in FY 2017-18 or 2018-19). Recovery beyond limitation shall be time-barred.
2. The aforesaid extension applies to situations alleged to be covered u/s 73 (non-fraud cases). The limitation u/s 74 (fraud cases) remains as specified in the statute (i.e., order to be passed within 5 years from the due date of annual return/erroneous refund). For FY 2017-18, the limitation u/s 74 for issuance of orders will expire between 05th to 07th February 2025 (based on the State where the taxpayer is located).
3. Section 168A of the CGST Act, 2017, by which the aforesaid extensions have been made, grants power to the Government to extend the limitations due to force majeure. Earlier notifications (viz. 35/2020-CT dt. 03/04/2020 & 14/2021-CT dt. 01/05/2021) were issued during the Covid wave (1st & 2nd respectively). The later notifications (13/2022-CT dt. 05/07/2022 & 09/2023-CT dt. 31/03/2023) as well as the current notification purportedly refer to Covid period notifications but have been issued independently for FY 2017-18, 2018-19 & 2019-20. Hence the issue to consider is whether the power available u/s 168A can be exercised after the Covid period.
4. Section 168A grants the power to extend the limitation in respect of actions which cannot be completed or complied with due to force majeure. The words “completed or complied with” denote situations wherein action has started but could not be completed or action was obligatory under the law to be complied with. Hence whether the said provision can be said to grant power to even initiate a fresh action (by way of issuance of notice (SCN)) beyond the limitation specified in law (which has ended for FY 2017-18 & 2018-19). The first notification (35/2020-CT) issued in the exercise of the said powers expands the ambit by including actions of issuance of SCN. Whether the interpretation of Sec. 168A permits such overreach. It may be noted that the given notification only extends the limitation for the issuance of the order and is silent on the limitation for the issuance of the SCN.
5. If the overreach is said to be within the power available u/s 168A, then not granting similar benefits at the end of the taxpayer action (e.g. filing of refund claim, appeal, etc.) can be said to be discriminatory and manifestly arbitrary (Article 14) when both have suffered due to Covid.
The answers to the issues listed at Sr. No. 3, 4 & 5 will have to come from the Hon’ble Courts in times to come in appropriate cases. Till then, suitable defence in submissions and suitable action in appropriate cases is suggested.
Conclusion: While the extension of the order issuance deadline is a relief, the nuances and legal intricacies surrounding the application of Section 168A warrant careful consideration. Taxpayers and professionals should stay informed and prepared for potential legal developments in the future.
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