In a recent judgment, the Gauhati High Court quashed Notification No. 56/2023, issued by the Central Board of Indirect Taxes and Customs ( CBIC ) on December 28, 2023, deeming it ultra vires to Section 168A of the Central Goods and Services Tax (CGST) Act, 2017.
The petitioner challenged the notification on two primary grounds: lack of recommendation from the GST Council and the absence of valid “force majeure” circumstances that Section 168A requires for extending deadlines.
The case arose from CBIC’s issuance of Notification 56/2023, which extended the deadline for passing orders under Section 73(9) of the CGST Act. The notification allowed deadlines for the financial year 2018-2019 to be extended until April 30, 2024, and for the financial year 2019-2020 until August 31, 2024.
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The petitioner argued that these extensions were made without the mandatory recommendation of the GST Council, as stipulated under Section 168A of the CGST Act. The petitioner referred to the 49th GST Council meeting, where the Council extended deadlines only up to December 31, 2023, March 31, 2024, and June 30, 2024, for the financial years 2017-2018, 2018-2019, and 2019-2020, respectively. No further recommendations were made after this meeting.
The petitioner’s counsel submitted that any extension of deadlines under Section 168A must be based on GST Council recommendations. The failure to secure such a recommendation rendered Notification 56/2023 unlawful. Additionally, the counsel argued that Section 168A could only be invoked in cases of “force majeure” events, such as the COVID-19 pandemic.
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However, the 49th GST Council meeting minutes revealed that the extensions were granted due to a lack of manpower to complete audits and assessments, which could not be classified as “force majeure.” As the COVID-19 period had ended, the petitioner contended that the extension lacked legal grounds.
The petitioner also pointed out the disparity between the CGST and Assam GST (AGST) Acts, both of which govern tax collection in Assam. The AGST Act contains similar provisions to Section 168A of the CGST Act, yet no similar extension was granted by the Assam government for the financial years 2018-2019 and 2019-2020. This discrepancy further invalidated the notification, as it was inconsistent with the AGST Act’s limitation provisions.
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The respondent, represented by Mr. S.C. Keyal admitted that the GST Council had not recommended the extension in Notification 56/2023. However, he defended the notification by stating that it was issued based on a recommendation from the GST Implementation Committee.
He also mentioned that steps were being taken to ratify the notification through the GST Council, though this had yet to occur. Furthermore, Mr. Keyal referred to the Finance Bill 2024, which proposed amendments to the CGST Act, suggesting that the petitioner would receive relief under the new provisions once enacted.
After hearing the arguments, the bench of Devashis Baruah ruled that Notification 56/2023 was inconsistent with Section 168A of the CGST Act and could not withstand legal scrutiny. Consequently, any actions based on the notification, including the extension of deadlines for passing orders, were deemed invalid.
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