[Opinion] Power Under Section 168A – Rightly Used or Majorly Misused?

Brijesh Kothary & Saundarya Sinha – [2024] 159 taxmann.com 201 (Article)

Recently, the Central Board of Indirect Taxes and Customs issued Notification No. 56/2023 – CT dated 28.12.2023 (“Notification”) wherein the Government extended the time limit specified under Section 73(10) of the Central Goods and Services Tax Act, 2017 (“CGST Act”) for issuance of order under Section 73(9) of the CGST Act for recovery of tax not paid or short paid or ITC wrongly availed or utilized for the period FY 2018-19 to 30th April 2024 and for the period FY 2019-20 to 31st August 2024. This extension implies that the taxpayers must brace themselves for flurry of show cause notices from GST officials for FY 2018-19 regarding any possible shortfall in tax payment. It is pertinent to note that the said Notification was issued while exercising the powers conferred under Section 168A of the CGST Actand in partial modification of Notification Nos. 35/2020-CT dated 03.04.2020, 14/2021-CT dated 01.05.2021, 13/2022-CT dated 05.07.2022, and 09/2023-CT dated 31.03.2023. In this Article, we wish to discuss the validity of the said Notification.

The Notification intends to extend the time limit specified under Section 73(10) of the CGST Act for recovery of tax dues or of input tax credit wrongly utilized, relating to the F.Ys 2018-19 and 2019-20. To meet the deadline, the industry has been bombarded with notices with very limited time to respond without even pre-notice consultation or without giving any effective opportunity of being heard. It is also noticed that some of notices are even backdated. In situations, where the Department could not ascertain demand of tax under Section 73, it has issued vague and superfluous notices in terms of Section 74 invoking fraud, wilful misstatements, or suppression of facts only for the sake of raising a demand. This has caused unnecessary hardship for the taxpayers who have to justify that the allegation regarding short payment of tax or irregular availment of ITC during the relevant financial years is baseless.

It is interesting to note that Section 168A(1) of the CGST Act confers power to the Government to extend the time limit under the Act in respect of the actions which cannot be completed or complied with due to force majeure. The expression ‘force majeure’ is defined in the Explanation to Section 168A of the CGST Act as 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 the GST Act. Notably, the Notification has been issued without any such force majeure events, thereby resulting in arbitrary extension of the limitation date to initiate litigation mainly to protect and save the inaction of the departmental authorities who have been sleeping over for more than 6 years, despite having all relevant information within their grasp.

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