GST limitation and parallel-proceeding bar restrict duplicate input tax credit action while allowing distinct short-payment and mismatch issues.
GST proceedings for 2017-18 under Section 74(1) were treated as time-barred because an extension of the annual-return filing date did not extend the statutory period for initiating adjudicatory proceedings, and no valid limitation extension was identified. Parallel Central GST proceedings on excess input tax credit for 2018-19 and 2019-20 were barred where State GST notices covered the same subject matter. Distinct allegations of GST short payment for those years and return mismatches for 2020-21 remained outside that bar and could continue. Barred portions were set aside, with fresh consideration confined to matters lawfully open to the authority.
Issues: (i) Whether proceedings initiated under Section 74(1) of the Central Goods and Services Tax Act, 2017 for financial year 2017-18 were time-barred in the absence of a valid extension of limitation under Section 168A of the Central Goods and Services Tax Act, 2017; (ii) Whether the bar under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 prohibited the Central GST authority from proceeding on excess availment of input tax credit for financial years 2018-19 and 2019-20 where State GST proceedings on the same subject matter had already been initiated; (iii) Whether the Central GST authority could proceed on the distinct allegations relating to short payment of GST for financial years 2018-19, 2019-20 and the mismatch issue for financial year 2020-21.
Issue (i): Whether proceedings initiated under Section 74(1) of the Central Goods and Services Tax Act, 2017 for financial year 2017-18 were time-barred in the absence of a valid extension of limitation under Section 168A of the Central Goods and Services Tax Act, 2017.
Analysis: The limitation for initiating proceedings under Section 74(10) was computed from the due date for filing the annual return for 2017-18. The notification extending the return-filing date was treated as beneficial to taxpayers and not as extending the department's time to initiate proceedings beyond the statutory period. No other valid notification extending the time to initiate or complete proceedings under Section 74 was shown. The prior notice referred to by the revenue was held not to amount to initiation of adjudicatory proceedings under Section 74.
Conclusion: The initiation of proceedings for 2017-18 under Section 74(1) was held to be without jurisdiction and time-barred.
Issue (ii): Whether the bar under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 prohibited the Central GST authority from proceeding on excess availment of input tax credit for financial years 2018-19 and 2019-20 where State GST proceedings on the same subject matter had already been initiated.
Analysis: Parallel proceedings are barred only when they concern the same subject matter. The State GST notices for 2018-19 and 2019-20 already covered mismatch and excess availment of input tax credit. The Central GST show cause notice sought to pursue the same alleged excess availment on the same years, attracting the statutory bar. To that extent, the Central authority lacked jurisdiction.
Conclusion: Proceedings on excess availment of input tax credit for 2018-19 and 2019-20 were barred by Section 6(2)(b) and could not be sustained.
Issue (iii): Whether the Central GST authority could proceed on the distinct allegations relating to short payment of GST for financial years 2018-19, 2019-20 and the mismatch issue for financial year 2020-21.
Analysis: The short payment allegation for 2018-19 and 2019-20 was not covered by the State GST proceedings. Likewise, the 2020-21 mismatch relating to GSTR-1B and GSTR-3B was also not the same subject matter as the State GST notice. Therefore, the statutory bar under Section 6(2)(b) was not attracted for these distinct issues.
Conclusion: Proceedings on the distinct short-payment and 2020-21 mismatch issues were permitted to continue.
Final Conclusion: The impugned show cause notice and order-in-original were set aside to the extent they covered barred matters, the adjudication order was quashed in entirety, and the matter was remitted for fresh consideration confined to the issues lawfully open to the authority.