In a ruling that could affect several businesses, the Madras High Court has struck down government notifications that extended the time limit for GST assessments for older financial years.
The court said that these extensions — meant for FY 2017–18 to 2019–20 — were not legally valid, as they did not follow proper procedures under the law.
What was the case about?
Under GST law, tax officials must complete assessments and issue demand notices within fixed timeframes. During the COVID-19 period, the government had issued notifications to extend these deadlines, using Section 168A of the CGST Act, 2017.
But in this case, the court ruled that the government overstepped its legal authority.
Why the Court rejected the extensions?
Justice Mohammed Shaffiq cancelled Notification No. 09/2023 and No. 56/2023, citing two key reasons:
No proper reason for extension: The court said there was no valid force majeure event (like a natural disaster or COVID disruption) when the extensions were issued. So, the justification wasn’t strong enough under Section 168A.
Missing GST Council approval: According to the law, such changes need the prior recommendation of the GST Council, a constitutional body.
But here, the government had only relied on the GST Implementation Committee, which doesn’t have legal authority to approve such extensions.
What happens to affected taxpayers?
The case was filed by a company that had received a ₹1,019 crore GST demand, which was based on the extended timelines.
Since the court found the notifications invalid, it cancelled the tax demand and sent the matter back for fresh assessment.
Affected taxpayers will now get eight weeks to respond to new show cause notices, if issued.
An tax advocate said, “This judgment reiterates that delegated legislation cannot transgress statutory limits. The distinction drawn by the High Court between exclusion and extension is a crucial precedent for interpreting taxing statutes narrowly to protect taxpayer rights.”
He says, is handling similar matters in Delhi, Bombay and J&K High Courts.
Why this matters?
This ruling reinforces that tax rules and deadlines must be followed strictly, and the government cannot change them without proper legal steps. It also shows that taxpayers have the right to challenge unjust assessments based on flawed processes.
