The Supreme Court of India has reserved its judgment in a matter regarding the legality of extending the time limit for the adjudication of a Goods and Services Tax (GST) Show Cause Notices (SCN) through notifications issued under Section 168A of the GST Act, 2017 observing differing opinions by State High Courts on the subject.
The matter arose from a Petition for Special Leave to Appeal (SLP) filed by M/S HCC-SEW-MEIL-AAG JV against the Assistant Commissioner of State Tax and Others, challenging the relevance of the above-mentioned notifications in extending the limitation period of adjudication for the Financial Year (F.Y.) 2019-2020.
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In the preceding matter, the Telangana High Court had dismissed M/s.Brunda Infra Pvt. Limited and Others vs. The Additional Commissioner of Central Tax and Others Writ Petition No.1154 of 2024 and its Batch challenging the Notification Nos. 13/2022, 9/2023, and 56/2023, dated July 5, 2022, March 31, 2023, and December 28, 2023, respectively. The facts in brief follow a SCN issued on 31.05.2024 following which the Order-In-Original was passed on 29.08.2024 after the maximum period of limitation prescribed under Section 73(10) of the GST Act utilizing the ‘garb of extension’ provided by the impugned notifications.
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The Petitioner contended the Notifications to be ineligible to extend the override the substantive time limit prescribed under Section 73(10) of the GST Act.
While Section 168A of the GST Act provides the Government the power to extend the time limit under special circumstances, upon the recommendations of the GST Council in matters dealing with ‘force majeure’ events, the Petitioner argued that no force majeure conditions existed when the notifications were issued, and that referenced COVID-19 relaxations had ceased on 28.02.2022 itself.
The Petitioners cited the judgments in Graziano Transmissions v. Goods and Services Tax (2023 TAXSCAN (HC) 1948) , the Allahabad High Court held that Supreme Court orders extending limitation in suo motu jurisdiction were inapplicable to GST proceedings.
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Similarly, the Gauhati High Court in M/s. Barkataki Print and Media Services, Dhrubajyoti Barkotoku v. Union of India (2024) opined that the GST Council recommendation was a sine qua non for the exercise of power under Section 168A.
A Division Bench of Justice Sujoy Paul and Justice G. Radha Rani of the Telangana High Court held that since Section 168A provided for time extensions due to force majeure, the notifications were valid. The court noted that the phrase “on the recommendation of Council” was intended to ensure that the Government received expert input before making decisions, in line with the ‘Doctrine of Cooperative Federalism’.
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In the present matter before the Supreme Court, a Bench of Justice J.B. Pardiwala and Justice R. Mahadevan took cognizance of the conflicting High Court judgments and observed that the issue required comprehensive examination.
While recognizing that Section 168A was intended to address extraordinary circumstances, the Court acknowledged that various High Courts had interpreted its scope differently. Addressing the cleavage of opinion among different High Courts as mentioned by Senior Advocate S. Muralidhar for the Petitioner, the Bench directed the issuance of notice to the Respondents on the present SLP as well as the prayer for interim relief, with the matter to be returned on 07.03.2025.
S. Muralidhar, Aditi Anil Dani, M. Ramachandra Murthy, Niharika Singh, M.A. Karthik, Maitreya Subramaniam and Pallak Bhagat represented the Petitioner.
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