Can Time Limit To Adjudicate Show Cause Notice Be Extended By Notification Under S.168A? SC To Consider

Supreme Court

The Supreme Court on Tuesday will hear if the government can extend the timeline for ordering a show cause notice and clearing an order by issuing notifications under Section 168A of the GST Act.

This provision provides for extending timelines when compliance becomes impossible because of extraordinary circumstances (force majeure).

The case is particularly concerned with whether the deadline for settling show cause notices under GST for the financial year 2019-2020 could be extended legally by way of government notifications made under Section 168A.

A bench of Justices J.B. Pardiwala and R. Mahadevan heard the case.

A bunch of taxpayers initially questioned these notices in the Telangana High Court, claiming that the time limit for passing orders had lapsed and that there were no exceptional reasons (like COVID-19) to grant the extensions. They cited that relaxations due to the pandemic had already expired in February 2022.

The petitioners referred to previous High Court rulings, such as the Allahabad High Court’s decision in Graziano Transmissions v. Goods and Services Tax, which stated that the Supreme Court’s general extensions of limitation do not apply to GST proceedings. Another Gauhati High Court case (M/s. Barkataki Print and Media Services v. Union of India) reiterated that any extension under Section 168A should be subject to the recommendation of the GST Council, which was not done in this case.

The Telangana High Court held that one of the notifications (No. 56/2023) was issued without a formal recommendation from the GST Council and was instead made on the basis of a decision by the GST Implementation Committee.

The Court held that ratifying the notification after its issue could not render it legally valid.

But the High Court also pointed out that the Supreme Court had previously extended the periods of limitation as a result of COVID-19, and Section 168A was intended to permit extensions when compliance was impossible because of force majeure.

It underscored that the pandemic was a rare circumstance requiring flexibility in timing.

Finally, the High Court rejected the petitions, declaring that as the Supreme Court had already excluded the duration from March 15, 2020, to February 28, 2022, from the limitation period, the issue regarding the validity of the notifications became unnecessary.

On this decision, the petitioners then filed a special leave petition before the Supreme Court on the grounds that various High Courts had given contradictory verdicts on this matter.

These arguments were put forward by senior counsel Dr. Muralidhar, and the Supreme Court has now issued notice to the respondents, setting the next hearing date to March 7, 2025.