Finance Act 2024 amendments make GST Section 73 time extension challenge redundant, input tax credit benefits restored

HC disposed of writ petition challenging notifications extending time limits for orders under Section 73 of CGST/AGST Act, 2017 due to Covid-19. Court held that amendments introduced by Finance (No. 2) Act, 2024 with retrospective effect from 01.07.2017 rendered the challenge redundant. Petitioners became entitled to input tax credit benefits for financial years 2017-18 to 2020-21 subject to conditions under newly inserted Sections 16(5) and 16(6). Show-cause notice proceedings were deemed redundant due to statutory amendments. Impugned order set aside and matter remanded to jurisdictional officer for appropriate order.

---

---

Issues Involved:

1. Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 as a "force majeure" condition.
2. Validity of notifications extending the limitation period for issuance of orders under Section 73.
3. Amendments to Section 16 of the CGST Act, 2017 and their retrospective effect.
4. Entitlement to Input Tax Credit (ITC) in light of recent amendments.

Issue-wise Detailed Analysis:

1. Extension of Time Limits under Section 73 Due to Covid-19:

The petitioners challenged the extension of time limits under Section 73 of the CGST/AGST Act, 2017, arguing that the Covid-19 pandemic ended in 2022, and thus, there was no justification for extending the due dates up to 31.12.2023. The extensions were invoked under Section 168A of the CGST Act, citing Covid-19 as a "force majeure" condition. The petitioners contended that the pandemic did not persist beyond 2022, questioning the bona fides of the extensions.

2. Validity of Notifications Extending Limitation Period:

The petitioners contested the validity of Notification No. 09/2023-Central Tax and Notification No. 56/2023-Central Tax, which extended the period for issuance of orders under Section 73. They argued that these extensions were not justified as the Covid-19 situation had subsided by 2022, and no other reasons were provided for the extensions. The court allowed the respondents to address these grievances and sought further instructions from the government.

3. Amendments to Section 16 of the CGST Act, 2017:

The GST Council decided that amendments were necessary to the CGST and AGST Acts, leading to changes in Section 16 through the Finance (No. 2) Act, 2024. The amendments, effective from 27.09.2024, included provisions allowing registered persons to claim ITC for financial years 2017-18 to 2020-21 in returns filed up to 30th November 2021. These changes rendered the petitioners' challenge redundant as they were now entitled to claim ITC for the relevant period.

4. Entitlement to Input Tax Credit (ITC):

The court noted that the amendments to Section 16, effective retrospectively from 01.07.2017, allowed the petitioners to claim ITC subject to the conditions in the newly inserted subsections 16(5) and 16(6). The amendments addressed the petitioners' concerns, rendering the proceedings initiated against them redundant. Consequently, the court set aside the impugned order and remanded the matter to the competent jurisdictional officer for further action if necessary.

Conclusion:

In light of the amendments, the court found that the petitioners were entitled to claim ITC, and the proceedings against them were rendered redundant. The court disposed of the writ petition, setting aside the impugned order and remanding the matter for appropriate action.

---