Challenge to Covid-19 time extensions under Section 73 CGST/AGST Act becomes moot after Finance Act 2024 amendments

Gauhati HC disposed of a writ petition challenging notifications extending time limits under Section 73 of CGST/AGST Act, 2017 due to Covid-19. The court found the challenge rendered moot by amendments introduced through Finance (No. 2) Act, 2024, which granted retrospective effect from 01.07.2017 allowing input tax credit claims for financial years 2017-18 to 2020-21 up to 30th November 2021. The court set aside the impugned order and remanded the matter to the competent jurisdictional officer for appropriate orders, noting that show-cause notice proceedings became redundant due to statutory amendments.

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Issues Involved:
1. Extension of time limits under Section 73 of the CGST/AGST Act, 2017 due to the Covid-19 Pandemic.
2. Invocation of "force majeure" under Section 168A of the CGST Act, 2017.
3. Legitimacy of notifications extending the period for issuance of orders under Section 73.
4. Amendments to Section 16 of the CGST Act, 2017 by the Finance (No. 2) Act, 2024.
5. Entitlement to input tax credit for financial years 2017-18 to 2020-21.

Detailed Analysis:

1. Extension of Time Limits Under Section 73:
The petitioner challenged the extension of time limits prescribed under Section 73 of the CGST/AGST Act, 2017. Initially, the due date for filing annual returns for the financial year 2017-18 was extended multiple times due to the Covid-19 Pandemic, with the final extension reaching up to 30.09.2023. The petitioner argued that the pandemic situation ended in 2022, questioning the rationale behind further extensions.

2. Invocation of "Force Majeure" Under Section 168A:
The government invoked Section 168A to extend deadlines, citing the pandemic as a "force majeure" condition. The petitioner contested this invocation, arguing that the pandemic's impact did not justify extensions beyond 2022. The court considered whether the extension was justified under the "force majeure" provisions.

3. Legitimacy of Notifications Extending the Period for Issuance of Orders:
The petitioner challenged specific notifications (No.09/2023-Central Tax and No.56/2023-Central Tax) that extended the period for issuing orders under Section 73. The petitioner claimed these extensions lacked bona fide reasoning and were unjustified post-2022. The court examined whether these notifications were validly issued under the circumstances.

4. Amendments to Section 16 of the CGST Act, 2017:
Amendments to Section 16, introduced by the Finance (No. 2) Act, 2024, were central to the case. These amendments allowed registered persons to claim input tax credit for invoices or debit notes from financial years 2017-18 to 2020-21 until 30th November 2021. The court noted that these amendments effectively addressed the petitioner's grievances regarding input tax credit entitlement.

5. Entitlement to Input Tax Credit:
The court acknowledged that the amendments to Section 16 provided the petitioner with the right to claim input tax credit for the relevant financial years. The amendments, effective retrospectively from 01.07.2017, rendered the proceedings against the petitioner redundant. Consequently, the court set aside the impugned order and remanded the matter to the competent jurisdictional officer for appropriate action.

Conclusion:
The court concluded that the amendments to Section 16 of the CGST Act, 2017, resolved the issues raised in the writ petition. The petitioner was entitled to claim input tax credit as per the amended provisions, rendering the earlier show-cause notice and order redundant. The court disposed of the writ petition, setting aside the impugned order and remanding the matter for further proceedings if necessary.

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