2025 (3) TMI 1026 - HC - GST

Extension of time limit for issuing Show Cause Notice (SCN) - Challenge to N/N. 9/2023-Central Tax dated 31st March 2023 N/N. 56/2023 Central Tax dated 28th December 2023 issued by Respondent No. 6 (Union of India) and N/N. 9/2023 State Tax dated 24th May 2023 N/N. 56/2023 dated 16th January 2024 issued by Respondent No. 1 (State of Maharashtra) exercising powers u/s 168A of the Central Goods and Services Tax Act 2017 (CGST Act) - point raised in this Petition is that these Notifications issued under Section 168A have to be on the recommendation of the GST Council - HELD THAT - A strong prima facie case is made out for granting of ad-interim relief. This is for two reasons. Firstly the challenge to the aforesaid Notifications is already in issue in several other Writ Petitions before this Court and in which ad-interim relief is already granted. On the same parity ad-interim relief would have to be granted in the present Writ Petition also. Secondly prima facie it is found that the Show Cause Notice itself ought to have been issued before 31st May 2024. This is because the Show Cause Notice has to be issued atleast three months prior to the time limit specified under Section 73 (10) of the Act. In the present case the Show Cause Notice has not been issued prior to three months as stipulated in Section 73 (2) of the Act. The above matter placed on board on 22nd April 2025 under the caption for ad-interim reliefs .

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

1. Whether the Notifications issued under Section 168A of the Central Goods & Services Tax Act, 2017 (CGST Act) by Respondent Nos. 1 and 2 are valid without the recommendation of the GST Council.

2. Whether the extension of time for adjudication of the Show Cause Notice for the Financial Year 2019-20, as facilitated by the Notifications, is valid.

3. Whether the Show Cause Notice issued under Section 73(1) of the CGST Act was issued within the prescribed time limit as per Section 73(10) of the Act.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Notifications under Section 168A without GST Council Recommendation

- Relevant legal framework and precedents: Section 168A of the CGST Act allows for the extension of time limits specified under the Act during force majeure situations. However, the issuance of such notifications typically requires the recommendation of the GST Council.

- Court's interpretation and reasoning: The court considered the requirement that notifications under Section 168A be issued on the GST Council's recommendation. The Petitioner argued that the absence of such a recommendation renders the notifications void ab initio.

- Key evidence and findings: The Petitioner contended that the notifications were not based on any recommendation from the GST Council, thus challenging their validity.

- Application of law to facts: The court acknowledged the Petitioner's argument that without the GST Council's recommendation, the notifications could be considered void.

- Treatment of competing arguments: The Respondents were yet to file their affidavits in reply, and the court allowed time for this.

- Conclusions: The court found a prima facie case in favor of the Petitioner, suggesting potential invalidity of the notifications.

Issue 2: Extension of Time for Adjudication of Show Cause Notice

- Relevant legal framework and precedents: Section 73(10) of the CGST Act specifies the time limits for adjudication of Show Cause Notices. The notifications purportedly extended these limits.

- Court's interpretation and reasoning: The court considered the Petitioner's argument that if the notifications are invalid, the extension of time for adjudication is also invalid.

- Key evidence and findings: The Petitioner argued that the extension of time was improperly granted due to the invalidity of the notifications.

- Application of law to facts: The court noted the potential impact of the invalid notifications on the extension of time for adjudication.

- Treatment of competing arguments: The Respondents were given time to respond to these arguments.

- Conclusions: The court found a prima facie case for granting ad-interim relief, indicating potential issues with the time extension.

Issue 3: Timeliness of the Show Cause Notice

- Relevant legal framework and precedents: Section 73(2) of the CGST Act requires that a Show Cause Notice be issued at least three months prior to the time limit specified in Section 73(10).

- Court's interpretation and reasoning: The court examined the timing of the Show Cause Notice issuance, which was on the last permissible date, raising questions about its validity.

- Key evidence and findings: The Petitioner argued that the Show Cause Notice was issued on the last permissible date, thus potentially invalidating the subsequent order.

- Application of law to facts: The court recognized the Petitioner's argument about the timing of the notice issuance.

- Treatment of competing arguments: The Respondents were yet to provide their counterarguments.

- Conclusions: The court granted ad-interim relief based on the prima facie case regarding the timing issue.

SIGNIFICANT HOLDINGS

- Preserve verbatim quotes of crucial legal reasoning: The court noted, "prima facie, we find that the Show Cause Notice itself ought to have been issued before 31st May, 2024."

- Core principles established: The necessity of GST Council recommendations for notifications under Section 168A and the strict adherence to time limits specified in the CGST Act were emphasized.

- Final determinations on each issue: The court granted ad-interim relief, staying the operation of the Impugned Order-in-Original dated 30th August 2024, pending further hearings and the filing of affidavits by the Respondents.