A wave of discontent has swept through the business community as GST notices, delayed by up to three years, suddenly inundate their mailboxes. Triggered by the extended deadline for issuing notices, a slew of petitions have surged into various high courts, challenging the legality of these belated notifications. With over 800 taxpayers embroiled in the legal fracas, the gravity of the situation cannot be understated.
Under the GST law, notices must be dispatched within three years of return filing. However, the onset of the pandemic prompted an initial extension, subsequently snowballing into multiple postponements by the Central Board of Indirect Taxes and Customs. The latest extension pushed the deadline for 2018-19 notices to April 30 and for 2019-20 to August 31, sparking a deluge of notifications.
High Courts in Guwahati, J&K and Ladakh, Rajasthan, and MP have intervened, issuing stays on tax demands pending resolution. Saurabh Agarwal, tax partner at EY, remarks, ‘Industry observers are closely monitoring whether the courts lean towards flexibility or stricter enforcement of force majeure conditions.’
Despite the backlash, revenue authorities defend their actions, citing approval from the GST Council for all extensions. Abhishek A Rastogi, founder of Rastogi Chambers, asserts, ‘The GST Council has clearly outlined the circumstances warranting timeline extensions.’
Legal experts caution that notices issued beyond statutory frameworks risk legal scrutiny. Mahesh Jaising, leader-indirect tax at Deloitte India, emphasises, ‘The outcome of these cases will be pivotal in assessing the legitimacy of demand orders issued during this period, especially concerning the interpretation of ‘force majeure.’
As businesses brace for a legal showdown, the outcome of these petitions could significantly impact the landscape of GST compliance and enforcement.
