Hon’ble Supreme Court Order on Extension of Limitation period applies on Indirect Tax Laws?

Hon’ble Supreme Court Order on Extension of Limitation period applies on Indirect Tax Laws?

Hon’ble Supreme Court Order on Extension of Limitation period:

  1. In view of the Covid-19 pandemic the Hon’ble Supreme Court took suo motu cognizance of the situation arising from difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation and in furtherance of its Order dated 23 March 2020; issued another Order dated 8 March 2021[1] wherein the Hon’ble Court in view of Covid-19 pandemic provided following directions:
  • In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.
  • In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply
  1. However, once again due to ongoing rise in Covid-19 cases, the Hon’ble Supreme Court in furtherance thereof, have issued Order dated 27 April 2021 wherein the Court restored its earlier Order dated 23 March, 2020 thereby extending the period of limitation until further orders[2] under both general and special laws.
  1. One of the questions which arise is whether the above directions of Hon’ble Court would also apply to indirect tax matters. As the above Order extends the period of limitation under both general and special laws, it could be very well concluded that it shall also apply to indirect tax matters.

Limitation period under Goods and Service Tax (‘GST’):

  1. The Central Board of Indirect Taxes (‘CBIC’) has issued Notification[3] in exercise of the powers conferred under Section 168A of the Central Goods and Service Tax Act, 2017 (‘CGST Act’) granting following relief for completion / compliance by any authority or any person (viz., Passing order, issuance of notices, filing of appeal, reply or application or furnishing of any report, etc.
  • Extension of time limit for completion / compliance of any action notified under the GST law which falls during the period 15 April 2021 to 30 May 2021 to 31 May 2021.

However, such relief is not available for actions falling under certain provisions mentioned in the exclusion list for Time of Supply, Registration, filing of GST Returns, issuance of Tax Invoice, Levy of Interest and Late fee, E-way bill, penalties, Arrest, Detention / Seizure etc.

  • The time limit for completion of any action in relation to verification of registration applications by the tax authorities falling between 1 May, 2021 to 31 May, 2021 has been extended upto 15 June, 2021.
  • Time limit for passing an Order, where notice for rejection of refund claim has been passed, which falls between 15 April, 2021 to 30 May, 2021 has been extended to fifteen days from receipt of reply from the registered person or 31 May, 2021, whichever is later.

Question under consideration:

  1. The moot question arises is whether the taxpayer can take recourse to Hon’ble Supreme Court Order to file an appeal who have failed to do so by 31 May 2021 or in whose case the time limit to complete the action i.e., filing the appeal does not fall within the period 15 April 2021 to 31 May 2021?

Our Analysis:

  1. It is pertinent to note that the above Orders have been issued by Hon’ble Supreme Court in exercise of powers under Article 142 read with Article 141 of the Constitution of India and are therefore binding on all Courts/ Tribunal and authorities.
  1. Further, the notification issued under GST is in exercise of powers under Section 168A[4] of the CGST Act, 2017 which grants power to Government to extend timelines in Special Cases i.e., due to force majeure and the expression “force majeure” as provided in Explanation to said section means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the Act.
  1. Therefore, it needs to be evaluated whether the notification issued under statutory provisions contained in GST is in contradiction to the directions issued by Hon’ble Court under Article 142 of the Constitution. In this regard, reference could be drawn to the judgement of Supreme Court in Delhi Judicial Service Assn vs State of Gujarat[5] wherein it was held as under:

“No enactment made by the legislature can limit or restrict the constitutional power of the Supreme Court under Article 142, though the Court must take into consideration the statutory provisions regulating the matter in dispute.”

The above view was reaffirmed by the Court in Union Carbide Corporation Etc. Vs Union of India[6]  wherein the Court held that:

“The proposition that a provision in any ordinary law irrespective of the importance of the public policy on which it is founded, operates to limit the powers of the Supreme Court under Article 142(1) is unsound and erroneous. … Perhaps, the proper way of expressing the idea is that in exercising powers under Article 142 and in assessing the needs of ‘complete justice’ of a cause or matter, the Supreme Court will take note of the express prohibitions in any substantive statutory provision based on some fundamental principles of public policy and regulate the exercise of its power and discretion accordingly.”

Although statutory provisions are not a limitation for exercise of constitutional powers by the Supreme Court under Article 142, the Court while exercising such power to do complete justice must consider them. In the present case, the directions have been issued to minimize the hardship faced by litigants-public which would have arisen in case of lapse of proceeding on account of being time-barred, thus, even though the notification provides a specific time limit, the vires of notification can be subject to challenge before the Courts on account of the specific Order of Hon’ble Supreme Court issued under Article 142 of the Constitution.

  1. Further, we would also like to highlight that an Instruction was issued by the Ld. Principal Secretary/ Commissioner of Commercial Tax, Chennai[7] with respect to cancellation of registration under Section 29 of CGST Act, 2017 wherein relaxation (to apply for Revocation of Cancellation) is provided to taxpayers in light of Supreme Court Order. The Instruction further states that the said suo moto Order binds the Proper Officer (being quasi–judicial authority) as well as the Deputy Commissioner, GST Appeals & Joint Commissioner, GST Appeals (being judicial authorities).

Conclusion:

  1. Therefore, in our opinion the taxpayer can take a recourse to Hon’ble Supreme Court Order in case the taxpayer is unable to comply with the timelines or where the period of complying/ completing the action does not fall under the period as specified in said notification.

Disclaimer: All the above views, and thoughts expressed in the content belong solely to the author.


[1] In Suo Motu Writ Petition (Civil) No. 3 of 2020

[2] The Hon’ble Court has listed the matter on 19 July, 2021 for next hearing

[3] Notification no. 14/2021 – Central Tax dated 01 May 2021

[4] Inserted vide the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

[5]  1991 AIR 2176, 1991 SCR (3) 936

[6] 1992 AIR 248, 1991 SCR Supl. (1) 251

[7] Instruction no. P/35/2021-ADC(RRC and M)-CCT-CTD dated 7 April, 2021

ConsultCAOnline

Website:

One comment

Siddharth

Author has given his thought after carefully analyzing Article 142. Must read for CAs and IDT consultants.

Leave a Reply

Your email address will not be published.