2024 (9) TMI 1398 - HC - GST

Extension of time limit for passing and order u/s 73 - Absence of recommendation of GST Council - Absence of corresponding state government notification parallel to Central Govt. Notification - Non-fulfilment of condition precedent for issuance of the Notifications in exercise of powers under Section 168A of the Central Act - whether the Notification No.56/2023-CT dated 28.12.2023, is ultra vires the provisions of Section 168A of the Central Act? - HELD THAT - It is apparent that for the Government to exercise the powers under Section 168A to extend the time limit specified or prescribed or notified, it can be made on the recommendation of the GST Council by way of a notification in respect to acts which could not be completed or complied with due to force majeure. The challenge to the Notification No.56/2023-CT is on account of absence of recommendation by the GST Council and existence of force majeure as defined in the Explanation to Section 168A of the Central Act. In the case of V.M. Kurian Vs. State of Kerala 2001 (3) TMI 1091 - SUPREME COURT , the Supreme Court was dealing with Rule 5 of Kerala Building Rules and the question which arose was whether without the recommendation of Greater Cochin Development Authority and the Chief Town Planner, the State Government could have granted exemption from the operation of the Kerala Building Rules for construction of an eight storey building. The Supreme Court in the said judgment observed that the word recommendation is a statement expressing commendation or a message of this nature . However, taking into account that the word recommendation was not defined in the Kerala Building Rules, it was observed that the meaning of the word recommendation has to be understood in the context of the provisions of the Kerala Building Rules and the object behind the Rules. In the instant case, it would be seen that both the Central Act as well as the State Act do not define the term recommendation . Under such circumstances, it would be necessary to understand the impact of the word recommendation in the context of the provisions of the Constitution as well as the Central Act and State Act - It is also pertinent to take note of that the said power conferred on the Parliament and the State Legislature is not subject to Article 279A except to the extent that in respect to the Goods and Service Tax to be levied on petroleum, crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, the power can be exercised under Article 246A from the date recommended by the GST Council. It is apparent that the object behind the insertion of the Article 246A and Article 279A and overriding Article 254 is to promote fiscal federalism and cooperative federalism. Under such circumstances, the recommendations to be made by the GST Council if required as per the provisions of the Central Act or the State Act has to be construed to be a sine qua non for exercise of power by the Union or the State Government. In other words, wherever the provisions of the Central Act or the State Act stipulates that an act is required to be done on the recommendation of the GST Council, the act can be done only when there is a recommendation. This Court is of the opinion that the Notification No.56/20123-CT is ultra vires the Central Act and the same is not legally sustainable in law. Accordingly, the same is set aside and quashed - the impugned Orders-in-Original which have been passed under Section 73(9) both under the Central Act as well as State Act are beyond the time period prescribed under Section 73(10) of both the Central Act or the State Act for which the same are liable to be interfered with as being passed without jurisdiction. Petition allowed.

Issues Involved:
1. Validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT under Section 168A of the Central Goods and Service Tax Act, 2017.
2. Validity of orders passed under Section 73(9) of the Central and State Acts.
3. Requirement of GST Council's recommendation for exercising power under Section 168A.
4. Existence of force majeure for extending the period under Section 168A.

Issue-wise Detailed Analysis:

1. Validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT under Section 168A of the Central Goods and Service Tax Act, 2017:
The Petitioners challenged the validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT on the grounds that the conditions precedent for issuance of the notifications under Section 168A were not fulfilled. Specifically, Notification No. 9/2023-CT was challenged due to the absence of force majeure, and Notification No. 56/2023-CT was challenged for lack of GST Council recommendation and force majeure. The court found that the absence of GST Council recommendation rendered Notification No. 56/2023-CT ultra vires the Central Act, and it was set aside and quashed.

2. Validity of orders passed under Section 73(9) of the Central and State Acts:
The impugned Orders-in-Original were passed beyond the period prescribed under Section 73(10) of both the Central and State Acts. The court noted that the orders were appealable under Section 107 of the Central Act but could only be challenged under Article 226 of the Constitution if the notifications were ultra vires. Since the notifications extending the period were found invalid, the orders passed under Section 73(9) were without jurisdiction and thus set aside.

3. Requirement of GST Council's recommendation for exercising power under Section 168A:
The court emphasized that the recommendation of the GST Council is a sine qua non for exercising power under Section 168A. The term "recommendation" was interpreted in the context of the provisions of the Constitution and the Central Act. The court referred to the Supreme Court's judgment in V.M. Kurian Vs. State of Kerala, which held that recommendations are essential for granting exemptions. Similarly, the GST Council's recommendation is necessary for extending timelines under Section 168A.

4. Existence of force majeure for extending the period under Section 168A:
The court noted that the definition of force majeure in Section 168A includes natural calamities, war, and epidemics. The GST Council had previously recommended an extension due to COVID-19 but had decided against further extensions. The absence of force majeure consideration by the GST Council before issuing Notification No. 56/2023-CT further invalidated the notification.

Conclusion:
The court declared Notification No. 56/2023-CT ultra vires the Central Act and set aside the impugned Orders-in-Original passed under Section 73(9). The court clarified that the decision does not prejudice the rights of the Central and State Governments to issue retrospective notifications as per Section 168A(2) of the Central and State Acts. The respective impugned Orders-in-Original were quashed and detailed in the Appendix to the judgment.

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