GST adjudication time limits extension upheld under Section 168A due to COVID-19 pandemic circumstances

The Allahabad HC dismissed writ petitions challenging notifications extending time limits for adjudication authorities to pass orders for F.Y. 2017-18 under Section 168A of CGST Act, 2017. The court held that powers under Section 168A are legislative, not administrative. The COVID-19 pandemic constituted valid grounds for extension as recognized by the SC and GST Council deliberations. The court ruled that legislative wisdom cannot be judicially questioned, and limitation is not a vested right. Force majeure circumstances remain unpredictable and best addressed by legislature. Adjudication proceedings may recommence excluding stay duration, with petitioners having 45 days to file appeals where recovery was stayed.

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Issues Involved:
1. Validity of Notification No. 09/2023-Central Tax (CGST) dated 31.3.2023 and Notification No. 515 dated 24.4.2023 issued u/s 168A of the Central Goods and Service Tax Act, 2017 and the U.P. Goods and Service Tax Act, 2017.
2. Whether the extension of time granted by these notifications for adjudication orders for F.Y. 2017-18 is valid.
3. Whether the exercise of power u/s 168A was justified due to "force majeure" circumstances.

Summary:

1. Validity of Notifications:
The petitions challenged the validity of Notification No. 09/2023-Central Tax (CGST) dated 31.3.2023 and Notification No. 515 dated 24.4.2023 issued by the Central and State Governments u/s 168A of the Central Goods and Service Tax Act, 2017 (Central Act) and the U.P. Goods and Service Tax Act, 2017 (State Act). The notifications extended the time for adjudication orders for F.Y. 2017-18. The Court noted that the power under Section 168A is a legislative function, not administrative, and is conditional legislation exercised based on the recommendation of the GST Council.

2. Extension of Time:
The Court examined whether the power was exercised in respect of actions that could not be "completed or complied" due to "force majeure." The Court found that the recommendations of the GST Council and the occurrence of the "force majeure" circumstance (COVID-19 pandemic) were undisputed. The Court concluded that the scrutiny and audit of Annual Returns for F.Y. 2017-18 were delayed due to the pandemic, justifying the extension of time for adjudication orders.

3. Justification of Exercise of Power:
The Court held that the legislative function exercised by the Central and State Governments was based on relevant material and due deliberation. The Court rejected the argument that the extension was prejudicial to taxpayers' rights, noting that limitation is a statutory prescription and not a vested right. The Court further held that the power u/s 168A was exercised within the confines of the legislative conditions and was justified due to the disruption caused by the COVID-19 pandemic.

Conclusion:
The Court dismissed the writ petitions challenging the notifications and upheld the validity of the time extensions granted for adjudication orders for F.Y. 2017-18. The Court directed that hearings of pending adjudication proceedings may recommence and be concluded after excluding the duration of the stay of the extended limitation. Petitioners with stayed recovery orders were given 45 days to file appropriate appeals.

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