High Court affirms extension of time limits for adjudication

 This is to update you regarding an important decision by Hon’ble Kerala High Court in the case of Faizal Traders Pvt. Ltd. v. DC-GST, WP(C) No. 24810 of 2023. The High Court has upheld that the time extension notified by the Government for adjudication under Section 73 and 74.

 

Facts of the case

 

·            The Petitioner received a Show Cause Notice (‘SCN) on March 16, 2023, proposing GST demand on various issues. Thereafter, the demand was confirmed vide. Order dated June 21, 2023.

 

·            The Petitioner challenged the Order on the ground that the same is barred by limitation. The Petitioner argued that extension can only be made under Section 168A in case of ‘force majeure’ and since, the Notification extending the time has not mentioned any of such reason, it must be treated as ultra vires.

 

High Court Decision

 

·            The HC observed that during COVID period, the Government authorities were working with reduced staff and could not take enforcement actions.

 

·            The Court further observed that the decision to extend the timelines with the recommendation of GST Council which took the recommendations of Law Committee.

 

·            Importantly, the Court held that ‘How much time could have been extended considering the pandemic is the discretion of the Executive, which has been taken based on the recommendation of the GST Council.’

 

·            Thus, the HC upheld the time extension notifications.

 

 | Comments

 

·            The decision will have a far-reaching impact especially the observation of the Court that the extent of extension is the discretion of the Government.

 

·            Further, this case involves a matter when time limit was extended till September 30, 2023. The Government had further extended it to December 31, 2023.

 

·            With all due respect to Court’s decision, we believe that if the extent of extensions is left on the discretion of the Government, it may lead to excessive delegation which may lead to unregulated delegated legislations.

 

·            Since Kerala HC have held so, it will be interesting to see the decisions of other High Court which are pending on new time line extensions by the Government.