EXPANSION OF LIMITATION PERIOD

[Sadanand Bulbule]

Dear Sir/s

1. Since 01/07/2017 many indirect tax laws have been repealed to give effect to the CGST Act and the State GST Acts. The effect of the repeal is to obliterate the statue repealed as completely as if it had never been passed and it is to be considered as a law which never existed except for those purposes of those actions or suits which were commenced, prosecuted and concluded while it was as an existing law which are specifically saved under the respective GST Acts,

2. Legal position being so, on account of COVID-19 & consequential lockdown, the assessments which are to be concluded within five years timeline gets expired by this month end for the financial year 2015-16. The similar time limitation applies to other areas of appeals/revisions/rectifications too. Therefore whether the State Government can enlarge the time limitation period by importing the power vested under “Power to remove difficulties” of the repealed VAT Act? If yes, how about its validity?

3. Lot of academic queries are being received in this regard. Please throw light on this issue.

Mask yourself. Stay at home.

With profound regards.

[Rajagopalan Ranganathan]

Sir,

According to Section 174 (2) (e) of CGST Act, 2017 " the repeal of the Acts existing prior to 01.07.2017 shall not affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed.

Similar provisions will exist in SGST Acts of respective States. There is no time limit for passing orders in the Departmental Proceedings. If orders are passed on or after 01.07.2017, the demand confirmed in such order will be trated as arrears of revenue under GST Acts and action will be initiated by the Department to recover the same.

[Sadanand Bulbule]

Thank you so much Sir.

[KASTURI SETHI]

Section 174 of CGST Act does not come into play. Section 174 cannot save Karnataka VAT Act. It is a dispute between SGST Act and Karnataka VAT Act.

[KASTURI SETHI]

Dear Sir,

I am of the view that Statement Govt. can extend the time limitation by way of issuing "Removal of Difficulties Order under Section 172 of SGST Act/CGST Act. How such order is legally correct and proper, has been well explained in the following web link ;

"http://www.desikanoon.co.in/2018/10/ptrd-power-to-remove-difficulties-inconsistent-article-392-constitution-of-india-interpretation-interpretative-separation-powers.html"

[KASTURI SETHI]

The word, 'difficulty' mentioned under Section 172 of CGST Act/SGST Act is applicable to both i.e. tax payers and Govt. Govt. has extended various time limitations for tax payers/registered persons due to Covid-19 on its own.So State Govt. of Karnataka has also removed its difficulties by issuing Removal of Difficulties Order No.1/2020 dated 17.4.20. Situation called for such order.

[KASTURI SETHI]

In continuation of above, there is only one error in the Order of State Govt. of Karnataka and that is non-mention of Section 172 of SGST Act but this is typographical error and does not vitiate the essence of the Order. All other parameters mentioned in Section 172 have been taken care of and these are in the form of following words and phrases :

(i) Difficulty : Covid-19 created such havoc that assessment order cannot be issued. Not to speak this assessment, every work is held up in the country.

(ii) Giving effect to : Properly adhered to.

(iii) Non-inconsistency : There is no inconsistency in the Order.

(iv) Prescribed period for issuance of Order : Order issued before the expiry of prescribed period.

On this very issue, Kerala High Court has issued order in December, 2019 this will not eclipse the Order of State Govt. of Karnataka inasmuch as that High Court's order was issued prior to the onset of pandemic in our country. In India this disease has spread after February, 2020.

[Sadanand Bulbule]

Respected Sethi Sir,

At the outset, I am very happy to be clarified couple of times by the well acknowledged experts particularly on this subject, which in my opinion, is less discussed & disputed. I convey my deepest appreciation to all of them.

Now coming back to the subject, I have gone through the multiple clarifications & the way the relevant provisions are deciphered to effectively brush the knowledge of all the readers & other stakeholders in general by distinguishing the judicial rulings. The subject is clarified in a simple, lucid manner and more importantly without keeping the burning candle on the wall. Such efforts in pursuit of excellence would further enhance the dignity & decorum of this “ Discussion Forum” to new heights and reverberates the trust & hope in the subject experts. Further such clean clarifications would inspire the querist to raise the queries without hesitation. Because, many a times we lose precious knowledge by not asking.

In simple words, such deep discussion is to the effect that it is the Legislative intention that must be given full effect.

Out of box,there is a great saying that " Let us sanctify our work, no matter what it is".
Once again my Pranaams to all.

[KASTURI SETHI]

Respected Sh.Sadanand Bulbule Ji,

Sir, I agree with you in toto. I am all praise your high standard of drafting and high level of thinking.

Thanks & regards

K.L.SETHI

AI Summary

Power to remove difficulties can extend tax limitation periods due to pandemic disruptions, preserving continuation of pre-repeal proceedings. The central operative position is that the CGST Act's statutory savings provision preserves investigations, assessments, adjudications and recovery relating to repealed VAT/CST laws so such proceedings may be continued and orders passed after repeal treated as arrears under GST; concurrently, the executive power to remove difficulties under CGST/SGST can be used by State governments to extend prescribed limitation periods where factual impediments like the pandemic prevent completion of statutory actions, subject to the enabling provision's scope and conditions; typographical omissions in such orders do not necessarily invalidate them if substantive requirements are met.