GST amendments allow input tax credit claims for 2017-21 until November 2021 under Section 16

The HC disposed of a petition challenging notifications extending time limits under Section 73 of CGST/AGST Act, 2017 due to Covid-19. The court found that amendments introduced by Finance (No. 2) Act, 2024 with retrospective effect from 01.07.2017 rendered the challenge redundant. The amendments allow registered persons to claim input tax credit for financial years 2017-18 to 2020-21 until November 30, 2021, subject to conditions in newly inserted Sections 16(5) and 16(6). The court set aside the impugned order and remanded the matter to the competent jurisdictional officer for appropriate orders, making the show-cause notices redundant.

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Issues Involved:

1. Extension of the due date for filing annual returns under Section 73 of the CGST/AGST Act, 2017.
2. Invocation of "force majeure" under Section 168A of the CGST Act, 2017 due to the Covid-19 pandemic.
3. Legitimacy of the notifications extending the limitation period for issuing orders under Section 73.
4. Amendments to Section 16 of the CGST Act, 2017 and their impact on input tax credit claims.

Issue-wise Detailed Analysis:

1. Extension of Due Date for Filing Annual Returns:

The petitioners were required to file annual returns under Section 44 of the CGST/AGST Act, 2017, which was initially due by 31.12.2018 for the financial year 2017-18. The due date was extended multiple times, with the final extension for Assam being up to 07.02.2020. The petitioners challenged the further extension of deadlines for initiating proceedings under Section 73, arguing that the Covid-19 pandemic, which was cited as the reason for the extension, had ended by 2022, rendering the extensions unnecessary.

2. Invocation of "Force Majeure" under Section 168A:

Section 168A of the CGST Act, 2017 allows for the extension of time limits due to "force majeure" conditions. The government invoked this provision due to the Covid-19 pandemic to extend the limitation period for actions under the Act. The petitioners contested this invocation, arguing that the pandemic no longer constituted a "force majeure" condition by the time the extensions were granted, and thus, the extensions lacked a valid basis.

3. Legitimacy of Notifications Extending Limitation Period:

The petitioners challenged the validity of Notification No. 09/2023-Central Tax dated 31.03.2023, which extended the period for issuing orders under Section 73. They argued that the extension was not bona fide and lacked justification, as the pandemic situation had stabilized. The court noted that the GST Council had recommended these extensions due to difficulties faced by the authorities in completing scrutiny and issuing orders during the pandemic.

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

The Finance (No. 2) Act, 2024 introduced amendments to Section 16, allowing registered persons to claim input tax credit for financial years 2017-18 to 2020-21, even beyond the previously stipulated deadlines. The amendments, effective from 27.09.2024, addressed the petitioners' grievances by allowing them to claim input tax credit retrospectively. The court observed that these amendments rendered the petitioners' challenge moot, as they were now entitled to claim the input tax credit for the relevant period.

Conclusion:

The court concluded that the amendments to Section 16 of the CGST Act, 2017, effectively addressed the petitioners' concerns regarding input tax credit claims. Consequently, the proceedings initiated against the petitioners, based on the earlier show-cause notices, were deemed redundant. The court set aside the impugned order dated 30.12.2023 and remanded the matter to the competent jurisdictional officer for further action, if necessary. The writ petition was disposed of in light of these developments.

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