Extended period of Limitation under CGST Act cannot be Invoked in absence of Clear Allegation of Wilful Misstatements or Suppression: Calcutta HC [Read Order]

The Calcutta High Court in a significant case rules that extended period of limitation under Central Goods and Service Tax ( CGST ) Act , 2017 cannot be invoked in absence of clear allegation of willful misstatements or suppression.

Haldia Nirman Project Private Limited & Anr, the petitioner challenged the order dated 31st January, 2024 passed under Section 74 of the Central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017.

The primary challenge in the writ petition is with regard to initiation of a proceeding by the Central Goods and Services Tax authorities by invoking the extended period as provided for under Section 74(1) read with sub- section (10) by issuing a show cause notice dated 2^nd August, 2023 in respect of alleged violation for the financial year 2017-18 to 2021-22.

Mr. Kanodia, advocate representing the petitioners submitted that the said show cause notice has been issued beyond the ordinary period of limitation. According to him, certain bald statements have been made at paragraph 4 of the said show cause notice so as to invoke the extended period as provided for in the said Act.

Although, the petitioners had duly responded to the said show cause notice by filing a reply dated 17th November, 2023 and had questioned the jurisdiction and authority of the proper officer to initiate proceeding under Section 74 of the said Act beyond the extended period, the proper officer, however, by an order dated 31st January, 2024, by glossing over the same had determined liability of the petitioners by confirming the amount of Rs.3,09,64,252/- as due and payable by the petitioners on account of GST.

It was argued that since, no case for invocation of the extended period has been made out. The proper officer had no jurisdiction to issue show cause notice as the show cause notice was issued beyond the period of limitation ordinarily provided for under Section 73(1) read with Section 73(10) of the GST statute.

 Mr. Bhanja, advocate representing the respondent nos. 1, 2 and 3 on the other hand submitted that the order dated 31st January, 2024 is an appealable order within the meaning of Section 107 of the said Act.

In the case of M/s. Central Arya Road Transport & Anr. vs.Union of India  it was clarified that the extended period cannot be invoked in the absence of factual finding and there should be clear allegations of wilful misstatement or suppression of fact or fraud or collusion committed by the assessee, however according to him, since the show cause notice clearly spells out the reasons for invocation of extended period, this Court ought not to entertain the writ petition.

In the present case it was found that the GST proper officer while issuing the show cause notice had invoked the extended period by issuing the show cause notice under Section 74 of the GST law.  The show cause notice had been issued on 2nd August, 2023 in respect of the financial year 2017-2018, though, as per the provisions of Section 73 of the said Act, the ordinary period of limitation is only three years from the due date of filing the return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized for any reason other than reasons of fraud, misstatement or suppression of fact to evade tax.

A single bench of Justice Raja Basu Chowdhury observed  that in the show cause notice it was evident that in no uncertain terms the basis for invocation of the extended period, which includes suppression of fraudulent availment of input tax credit by way of willful misstatement. The court dismissed the petition.

To Read the full text of the Order CLICK HERE

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