GST- Extension of Limitation FY 2018-19 & 2019-20

In a recent development, the government has by Notification No. 56/2023 dated 28/12/2023 extended the time limit for issuing orders under Section 73(9) of the CGST Act for collection of taxes and duties a is used for the project Credit for FY 2018-19 & 2019-20. Here are some crucial aspects to note:

Exclusions on Erroneous Refunds:

• The GST- Extension of Limitation extension does not apply to the recovery of erroneous refunds.

• Refer to NN 13/2022 -CT dated 05/07/2022 for details on excluding the Covid period for computing the limitation on erroneous refund recovery.

• Recovery beyond the specified limitation period shall be time-barred.

Application to Non-Fraud Cases (Section 73):

• The extension applies to situations falling under Section 73 (non-fraud cases).

• Limitation under Section 74 (fraud cases) remains as specified in the statute.

• For FY 2017-18, the limitation under Section 74 expires between 05th to 07th February 2025, based on the taxpayer's location.

Power under Section 168A and Force Majeure:

• Section 168A empowers the government to extend the limitation on the ground of force majeure.

• Previous data during the Covid wave were released independently for FYs 2017-18, 2018-19 & 2019-20.

• Consideration is needed on whether the power under Section 168A can be exercised after the Covid period.

Interpretation of Section 168A:

• Section 168A grants power to extend limitations for actions that cannot be completed or complied with due to force majeure.

• The question arises whether this provision allows the initiation of a fresh action (e.g., issuance of notice) beyond the specified limitation.

• The extension notifications only mention the limitation for the issuance of the order and are silent on the limitation for the issuance of the SCN (Show Cause Notice).

Potential Discrimination and Arbitrariness:

• If overreach is considered within the power of Section 168A, the lack of similar benefits at the end of taxpayer actions may be viewed as discriminatory and arbitrary under Article 14.

• Both initiation and response actions may be seen as affected by Covid, warranting a balanced approach.

It's important to note that the resolution of issues related to Section 168A and its application will likely be determined by the Hon’ble Courts in the future. In the meantime, it is advisable to incorporate suitable defenses in submissions and take appropriate actions in relevant cases. Stay updated on further developments in this matter.