The Madras High Court has held that Notifications Nos. 9 and 56/2023-Central Tax, issued for the purpose of increasing the time limits for issuance of SCN and adjudication under Section 73 of the CGST Act, 2017 are illegal and are vitiated for the following reasons.
- Notifications curtail the limitation available as per Supreme Court decision under Article 142 of Constitution (excluding period from 15 March 2020 to 28 February 2022) and are thus contrary to Section 168A.
- Notifications extinguish the vested right of action with the authorities under CGST Act by diminishing the limitation, thus suffering from the vice of arbitrariness.
- Notifications were issued without examining the relevant material – Office Memorandum of the Ministry of Personnel, D.O.No.40-3/2020-DM-1(A) of the Home Secretary, Government of India (iii) CAG Report No.5 of 2022, and (iv) CAG Report dated 21 June 2024.
- Notification No.56/2023-Central Tax was issued even prior to the recommendations of the GST Council and thus was illegal as failed to comply with the statutory mandate. Recommendations of GIC cannot be a substitute for GST Council.
While holding so, the Court in Tata Play Limited v. Union of India observed the following:
- Discretion under Section 168A is delegated legislation and not conditional legislation.
- Referring to meaning of ‘due to’ and ‘cannot’ in Section 168A, it was observed that that ‘force majeure’, must be the cause for the authorities being unable to complete action to be taken under the Act, within the prescribed time limit. Mere casual connection between force majeure and inability to complete actions may not be adequate for exercise of power under Section 168A.
- Authorities were not able to comply with issuance of notice or pass orders under Section 73(2) or (10) more in view of systemic deficiencies and for are causes that were self-inflicted/created. The same cannot be attributed to Covid-19. Also, expression ‘otherwise’ in Section 168A is used as an alternate to the cause of force majeure, i.e., force majeure may be caused by nature or force majeure caused otherwise than by nature.
- Recommendation of GST Council for issuance of notification under Section 168A is mandatory but not binding on the government for issuance of notifications.
- Recommendation by GIC Council ratified by GST Council after issuance of Notification No.56/2023 would not constitute compliance with the mandate on recommendation.
One of the assessees was represented by Lakshmikumaran & Sridharan Attorneys here