2024 (8) TMI 1133 - HC - GST

Challenge to action on the part of the Central Board of Indirect Taxes and Customs in issuance of a notification bearing No. 56/2023 dated 28.12.2023 - HELD THAT - It prima facie appears that the notification bearing No.56/2023 is not in consonance with the provisions of 168(A) of the Central GST Act, 2017. If the said notification cannot stand the scrutiny of law, all consequential actions so taken on the basis of such notification would also fail. This Court duly takes note of the submission of Mr. S.C Keyal, the learned Standing Counsel that the Petitioner would be entitled to the reliefs as proposed in the Financial Bill 2024. In addition to that, this Court also finds that an examination would be required as regards the applicability of the force majeure in respect to the notification bearing No. 56/2023 taking into account the contents of the Minutes of the 49th Meeting of the GST Council. However for the purpose of deciding the same, this Court is of the opinion that an opportunity has to be granted to the Respondent Authorities to place on record their stand as well as bringing on record the materials on which they claim the applicability of the force majeure. This Court is of the opinion, that the Petitioner herein is entitled to an interim protection pending the notice. Till the next date, no coercive action shall be taken on the basis of impugned assessment order dated 18.04.2024. The Respondents are directed to file their affidavits on or before 19.08.2024 - List this matter on 21.08.2024.

Summary

Issues:
Challenge to the validity of a notification issued by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017 without a recommendation from the GST Council. The applicability of force majeure in extending the time limit for passing orders under Section 73(9) of the CGST Act, 2017. The impact of the notification on the Assam Goods and Service Tax Act, 2017.

Analysis:

1. The petitioner challenged a notification issued by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017, arguing that it was ultra vires due to the absence of a recommendation from the GST Council. The petitioner contended that the notification extending time limits for passing orders lacked the necessary recommendation, rendering it invalid under the law. The petitioner also highlighted that the power to extend time limits under Section 168A is contingent upon the existence of force majeure circumstances, which were not present in this case.

2. The petitioner further argued that the reasons cited for the extension, such as a lack of manpower hindering audit and assessment processes, did not qualify as force majeure. The petitioner emphasized that the COVID period had ended, and the extension granted was unjustified. Additionally, the petitioner pointed out discrepancies between the extension granted under the CGST Act and the corresponding provisions in the Assam Goods and Service Tax Act, 2017, asserting that the notification had adverse implications on the latter.

3. In response, the respondent standing counsel for the Central GST defended the notification, citing a recommendation from the GST Implementation Committee as the basis for its issuance. The respondent acknowledged the impending amendments through the Finance Bill 2024, suggesting that the petitioner would receive relief concerning assessment proceedings once the amendments were enforced. However, the respondent clarified that the amendments were pending implementation.

4. The standing counsel for Assam GST contended that the state authorities followed notifications issued by the Central GST, implying that the impugned notification would apply to Assam GST as well. Conversely, the petitioner's counsel argued that the extension granted by the impugned notification did not align with the provisions of the Assam GST Act, 2017, and thus could not be adopted by the state authorities.

5. The court prima facie found the impugned notification to be inconsistent with Section 168(A) of the Central GST Act, 2017, indicating potential legal flaws. The court recognized the petitioner's entitlement to relief as proposed in the Finance Bill 2024 and noted the necessity of examining the applicability of force majeure in extending time limits, requiring the respondent authorities to substantiate their position. Consequently, the court granted interim protection to the petitioner, restraining coercive actions based on the impugned assessment order until further proceedings.

6. The court directed the respondents to submit their affidavits by a specified date, signaling a comprehensive review of the issues raised. The matter was listed for further hearing to address the complexities surrounding the notification's validity and the implications on the petitioner's rights under the GST Acts.