Validity of extension of time limit for issuance of Show Cause Notice and passing Order under Section 73

This is to apprise you that CBIC recently issued Notification No. 9/2023-Central Tax dated March 31, 2023 (‘Notification’) in exercise of powers under Section 168A of the CGST Act. Vide the Notification, CBIC extended time limit for issuance of Show Cause Notices and passing Orders under Section 73 of the CGST Act as under:

Pertinent to note that Section 168A empowers the Government to issue Notification to extend time limit specified/prescribed/notified under the CGST Act which cannot be complied due to force majeure. Section 168A also empowers the Government to give retrospective effect to such Notification.

On earlier occasions as well, the CBIC exercised powers under Section 168A due to COVID-19 pandemic. Vide Notification No. 35/2020-Central Tax dated April 3, 2020 and Notification No. 14/2021-Central Tax dated May 1, 2021, time limit was extended from time to time in view of COVID-19. All these Notifications mentioned COVID-19 as the reason for extension. Further, vide Notification No. 13/2022-Central Tax dated July 5, 2022, the CBIC extended time limit for issuance of Order under Section 73 for FY 2017-18 to September 30, 2023 drawing powers from Section 168A.

Pertinently, the Notification extending time limit does not highlight any reasons of force majeure. Further, impact of COVID-19 was over long back and even the Supreme Court did not grant any further extensions to taxpayers.  

NITYA Comments: The Notification clearly lacks statutory backing. CBIC issued the Notification invoking force majeure event. However, on date of issuance of Notification, no such force majeure event existed. Given this, the Notification is ultra vires the parent statute and can be challenged before the Constitutional Courts.

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