Section 168A of the GST Act: Legal Boundaries of Extending Tax Timelines in Force Majeure Situations

Posted On - 7 March, 2025 • By - King Stubb & Kasiva

Introduction

The Indian government’s landmark tax reform of 2017 is the Goods and Services Tax (GST) Act, which sought to consolidate the indirect tax system into a singular comprehensive system. The tax architecture in India allows GST to be levied, collected and administered across the nation. The Act is designed to address the multi-dimensional shifts within businesses and the economy. One important tax provision is Section 168A, which allows the Government to implement force majeure events by granting extensions to legal deadlines.

This ranging issue was given special importance when the deadlines were delayed during the compliance of the government’s pandemic policies through the use of Section 168A. Nonetheless, the scope of its interpretation and use has become a matter of legal concern as it raises issues of whether such a provision can be used to broaden the limitation periods for tax adjudications.

Understanding The GST Act: A Legislative Overview

GST Act 2017, otherwise known as GST, was enacted to form a single indirect tax system by replacing several central and state taxes like excise duty, VAT, and service tax. It is structured as a dual system in which both the Central and State governments have taxation powers. In India, the laws that govern GST are as follows:

Central Goods and Services Tax (CGST) Act 2017 – This Act covers GST on intra-state supplies.

State Goods and Services Tax (SGST) Act 2017 – This Act is legislated by the respective states.

Integrated Goods and Services Tax (IGST) Act 2017 – This Act covers inter-state supplies.

Union Territory Goods and Services Tax (UTGST) Act 2017 – This Act is concerned with GST in the union territories.

It is also the responsibility of the council to make recommendations on tax rates, the exemptions to be made, and mineral laws procedures in relation to GST. Section 168A inserted in 2020 is also essential for tax relief during times of great need.

Section 168A of the GST Act: Legislative Intent and Interpretation

1. Statutory Provision of Section 168A

Section 168A of the CGST Act, 2017, was introduced through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, effective from March 31, 2020. It provides:

“168A. Power of Government to extend time limit in special circumstances—

(1) Notwithstanding anything contained in this Act, the Government may, on the recommendations of the Council, by notification, extend the time limit specified in, or prescribed or notified under, this Act in respect of actions which cannot be completed or complied with due to force majeure.

(2) The power to issue notification under sub-section (1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act.

Explanation—For the purposes of this section, the expression ‘force majeure’ means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act.”

Important Aspects of Section 168A

Authority of the State: The Central Government, with the recommendation of the GST Council, is empowered to grant extension of time limits prescribed under the Act.

Bringing Over Clause: This section, as all the other provisions of this Act, has overriding effects.

Retrospective Effect: The government is permitted to issue extensions with retrospective provisions to ensure tax compliance is seamless.

Force Majeure: The clause has limited application in exceptional cases like an outbreak of epidemic disease, war, and earthquakes, ensuring that businesses are not unduly burdened because of uncontrollable situations.

The Use of 168A During the COVID-19 Pandemic

Section 168A was implemented a couple of times during the Corona Virus pandemic in order to mitigate compliances as set forth bus.

Notification No. 35/2020 – Central Tax (April 3, 2020): For different compliance requisites, due dates were shifted from March 20, 2020, to June 29, 2020.

Notification No. 55/2020 – Central Tax (June 27, 2020): Compliance deadlines already set between 20 March 2020 to 30 August 2020 were further extended.

Notification No. 91/2020 – Central Tax (December 14, 2020): Validity of other compliances like e-way bills along with timelines were extended.

These measures helped the taxpayers to remain compliant and avoid facing any penalties or violation during unmatched economic distress.

There are certain high courts and the supreme court that have contested the applicability of section 168A prior to force majeure events. The key question is whether it can be used to extend the limitation periods for tax adjudication as per section 73 of the GST Act pertaining tax demand notice for defaulting and underpayment of tax.

Recent Supreme Court Case on Section 168A

A core issue that is being heard by the Supreme Court is the challenge to government notifications which extend the limitation periods for tax adjudications as provided under Section 73(10) of the GST Act.

Section 73(10) asserts that tax demand orders are to be raised within three years of the completion date of the return. The government issued notifications extending these timelines, citing Section 168A. Petitioners assert that force majeure situations are no longer applicable, and therefore these extensions are legally problematic.

Key notifications under challenge:

Notification No. 13/2022 – Central Tax (July 5, 2022): Superseded the deadline for FY 2017-18 to September 30, 2023.

Notification No. 9/2023 – Central Tax (March 31, 2023): Further extended deadline for FY 2017-18 to December 31, 2023.

Notification No. 56/2023 – Central Tax (December 28, 2023): Extended the deadlines for FY 2018-19 and FY 2019-20 respectively to April 30, and August 31 2024.

Petitioners’ Argument: Section 168A was invoked for situations of dire need such as COVID. The 2023 and 2024 extensions of limitation periods are unjustified, as force majeure does not exist. Such extensions are unconstitutional as they contravene taxpayers’ right to equity and balance in taxation.

Government’s Argument: The power under Section 168A is broad and allows retrospective extensions.
Tax authorities faced delays in issuing show cause notices due to administrative disruptions.
The Supreme Court’s ruling on this case will have far-reaching implications, determining the extent of government power to extend tax timelines beyond immediate emergencies.

Conclusion

Section 168A of the GST Act does address compliance with payment of taxes under extreme conditions. Unlike its usage in the COVID-19 pandemic, which bordered on uncontentious, its application under more regular situations is much litigated upon. The decision of the Supreme Court will be relevant in resolving the appropriate boundaries of governmental power so that there is responsiveness to the needs of public administration and the rights of the taxpayers.

It is important for businesses and tax practitioners to appreciate the scope of Section 168A within the context of the compliance requirements under GST in times of economic distress.

King Stubb & Kasiva,
Advocates & Attorneys

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