Numerous businesses, which were served Goods and Services Tax (GST) notices in December 2023 and January 2024 due to an extension of the deadline, have taken their grievances to various high courts, questioning the legality of these notices. Sources familiar with the situation reveal that some high courts have issued notices to the Centre, urging it not to take coercive action against the taxpayers. Across the country, multiple petitions involving approximately 800 taxpayers have been lodged.
As per GST regulations, notices must be dispatched within three years of filing the return. While the deadline was initially extended due to the Covid-19 pandemic, subsequent extensions were granted by the Central Board of Indirect Taxes and Customs. Recently, the deadline for issuing notices for the fiscal years 2018-19 and 2019-20 was extended to April 30 and August 31 respectively, leading to a surge in notices to taxpayers.
High Courts in Guwahati, Jammu and Kashmir, Ladakh, Rajasthan, and Madhya Pradesh, where such cases are being heard, have halted tax demands. An expert noted that the industry is keenly observing whether the courts prioritize flexibility or stricter enforcement of force majeure conditions. Revenue authorities have defended their actions, stating that all extensions were approved by the GST Council. However, some experts argue that any notifications issued beyond the statutory framework will likely face legal scrutiny.
It is emphasized that monitoring the progress of these cases is crucial to assess the legitimacy of demand orders issued between January and August. This is especially important in understanding the interpretation of ‘force majeure’ in these instances, according to another tax expert.