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2025 (4) TMI 1522 - HC - GSTExtension of time limit for issuance of Show Cause Notice (SCN) - Violation of principles of natural justice - alleged non-service of the show cause notice and denial of personal hearing - Challenge to N/N. 56/2023-Central Tax dated 28th December 2023 and N/N. 56/2023-State Tax dated 16th January 2024 issued u/s 168A of the Central Goods and Services Tax Act 2017 (CGST Act) read with Section 168A of the Maharashtra Goods and Services Tax Act 2017 - HELD THAT - The issues raised in this Writ Petition are pending adjudication in several other Writ Petitions including Writ Petition No. 5146 of 2024 2025 (3) TMI 173 - BOMBAY HIGH COURT and Writ Petition No.5471 of 2024 2025 (3) TMI 250 - BOMBAY HIGH COURT . Hon ble Gauhati High Court has in fact already struck down these Notifications. Though on this issue the Telangana High Court has held in favour of the Petitioner before it the Telangana High Court came to the conclusion that because of the order of the Hon ble Supreme Court in Re-Cognizance for extension of limitation 2022 (1) TMI 385 - SC ORDER the assessment was not time barred. This order of the Telangana High Court has been challenged before the Hon ble Supreme Court and which is pending adjudication. Once these are the facts the Petitioner has not only made out a case for admission but also for grant of interim relief. As far as interim relief is concerned that in similar matters (including one before the Nagpur Bench of this Court) this Court has directed the Respondents not to take coercive action against the Petitioner. Here also since one of the issues is whether the Notifications dated 28th December 2023 and 16th January 2024 are valid or otherwise and whether the impugned order could have been passed especially if the said Notifications are set aside there is a strong prima facie case is made out for granting interim relief to the Petitioner. Conclusion - The show cause notice was never properly served on the Petitioner and the impugned order has been passed without giving a personal hearing to the Petitioner. Hence there is a clear breach of principle of natural justice which itself makes the impugned order vulnerable to challenge. Petition disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of the impugned order in light of alleged breach of natural justice Relevant legal framework and precedents: The principles of natural justice require that a show cause notice be properly served and the affected party be given an opportunity of personal hearing before passing any adverse order. This is a fundamental procedural safeguard embedded in administrative law. Court's interpretation and reasoning: The Petitioners contended that the show cause notice was never properly served and no personal hearing was granted before the impugned order was passed, rendering the order vulnerable to challenge. The Court acknowledged this ground as raising an arguable question, but did not conclusively decide on it at this stage, noting the matter was pending adjudication in other writ petitions. Key evidence and findings: The Petitioners relied on the absence of proper service and hearing. The Respondent did not specifically rebut these contentions in detail but focused on other issues. Application of law to facts: The Court recognized that failure to observe natural justice could invalidate the impugned order and, consequently, all consequential notices issued pursuant thereto. Treatment of competing arguments: The Respondent did not dispute the principle but emphasized the validity of the Notifications and the exceptional circumstances under Section 168A. Conclusion: The Court found this to be a substantial issue warranting further consideration and interim relief. Issue 2: Whether the impugned order was time-barred Relevant legal framework and precedents: The limitation period for passing assessment or related orders under the CGST Act is prescribed by statute. Section 168A was introduced to extend limitation periods in exceptional circumstances such as pandemics. Court's interpretation and reasoning: The Petitioners argued that the impugned order for FY 2019-20 ought to have been passed by 30th June 2024 but was passed on 16th August 2024 relying on the impugned Notifications. They contended that if these Notifications were invalid, the order would be barred by limitation. Key evidence and findings: The Notifications in question purportedly extended limitation periods under Section 168A. Application of law to facts: The Court noted that the validity of the Notifications is central to this issue. If the Notifications are struck down, the order is time barred. Treatment of competing arguments: The Respondent argued that Section 168A was enacted to address force majeure events like the Covid-19 pandemic, justifying the extension of limitation. However, the Respondent could not confirm whether the Notifications were issued on the GST Council's recommendation, a statutory requirement. Conclusion: The Court found this to be a serious and arguable question, pending adjudication in other courts, including the Supreme Court. Issue 3: Validity of the Notifications dated 28th December 2023 and 16th January 2024 under Section 168A Relevant legal framework and precedents: Section 168A of the CGST Act and MGST Act empowers the government to extend limitation periods by notification, but such notifications must be issued on the recommendation of the GST Council. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 introduced Section 168A to deal with extraordinary situations like pandemics. Court's interpretation and reasoning: The Petitioners challenged the Notifications as ultra vires for not being issued on the GST Council's recommendation, a mandatory procedural requirement. The Court noted that the Hon'ble Gauhati High Court had struck down these Notifications, while the Telangana High Court upheld them relying on a Supreme Court order extending limitation periods in pandemic-related cases. Key evidence and findings: Conflicting judicial pronouncements exist on this issue, with the Supreme Court currently adjudicating related appeals. Application of law to facts: The Court acknowledged the conflicting precedents and the pendency of the Supreme Court's decision as crucial to the fate of these Notifications. Treatment of competing arguments: The Respondent emphasized the force majeure rationale and the legislative intent behind Section 168A, while the Petitioners stressed the procedural lapse regarding the GST Council's recommendation. Conclusion: The Court found the issue to be of significant legal importance and prima facie in favor of the Petitioners for interim relief. Issue 4: Sustainability of recovery notices, attachment notices, and consequential actions Relevant legal framework and precedents: Recovery and attachment actions flowing from an impugned order must stand on the validity of that order. If the order is invalid, all consequential actions are also liable to be set aside. Court's interpretation and reasoning: The Petitioners argued that if the impugned order is invalid due to breach of natural justice or limitation bar, all recovery and attachment notices issued pursuant thereto must also be quashed. Key evidence and findings: The impugned notices dated 17th March 2025 and others were challenged. Application of law to facts: The Court found that the validity of these notices depends entirely on the impugned order's validity. Treatment of competing arguments: The Respondent did not specifically defend the notices independently but relied on the validity of the impugned order and Notifications. Conclusion: The Court granted interim relief restraining coercive action based on these notices pending final adjudication. Issue 5: Applicability of Section 168A and its scope Relevant legal framework and precedents: Section 168A was introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, specifically to address limitation extensions during exceptional circumstances such as wars and pandemics, including Covid-19. Court's interpretation and reasoning: The Respondent argued that the Covid-19 pandemic qualifies as a force majeure event under Section 168A, justifying the issuance of the Notifications and extension of limitation. Key evidence and findings: The Court noted the legislative intent behind Section 168A and the ongoing judicial scrutiny of its application. Application of law to facts: While the rationale for Section 168A is accepted, the procedural compliance for issuing Notifications remains in question. Treatment of competing arguments: The Court balanced the Respondent's argument on legislative intent with the Petitioners' challenge on procedural grounds. Conclusion: The Court found the issue to be significant but reserved final decision pending further adjudication. 3. SIGNIFICANT HOLDINGS "The show cause notice was never properly served on the Petitioner and the impugned order has been passed without giving a personal hearing to the Petitioner. Hence, there is a clear breach of principle of natural justice which itself makes the impugned order vulnerable to challenge." "The impugned order passed on 16th August 2024 was for the financial year 2019-20. It is the case of the Petitioner that for this financial year, the impugned order ought to have been passed by 30th June 2024. However, the impugned order has been passed on 16th August 2024 on the strength of the Notifications dated 28th December 2023 and 16th January 2024. These Notifications are ultra vires Section 168A of the CGST Act and MGST Act because they have not been issued on the recommendation of the GST Council, which is one of the mandatory requirements of Section 168A." "Section 168A was enacted specifically to deal with cases like wars and pandemics etc., and which would include the Covid-19 Pandemic. Once this is the position, and the fact that the Covid-19 Pandemic would be a force majeure event [as contemplated under Section 168A], no exception can be taken to the issuance of the said Notifications." "The Hon'ble Gauhati High Court has in fact already struck down these Notifications. Though on this issue, the Telangana High Court has held in favour of the Petitioner before it, the Telangana High Court came to the conclusion that because of the order of the Hon'ble Supreme Court in
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