No GST Council Recommendation for Noti. 56/2023 issuance Extending S. 73(10) Time Limit: Gauhati HC stays Coercive Proceedings [Read Order]

The Gauhati High Court observed that Notification No. 56/2023, issued on December 28, 2023, was issued without the GST ( Goods and Services Tax ) Council's recommendation, and thus it does not withstand legal scrutiny and all subsequent actions cannot be sustainable.

The Notification has extended the time limit under Section 73(10) of the GST Act. The bench of Justice Devashis Baruah directed the GST department not to proceed with the coercive actions, however it can pass orders under Section 73(9) of the CGST Act of 2017.

The petitioners challenged the Notification No. 56/2023 and related notice DRC-01 dated May 8, 2024. They argued that the Notification, which extended the limitation period under Section 168(A) of the CGST Act, was issued without the GST Council's recommendation, a requirement set by law.

The petitioners' counsel, N Hawelia, submitted that the powers under Section 168A can only be exercised in cases of force majeure. They referenced the minutes from the 49th GST Council Meeting, which indicated that the reason for requesting an extension was insufficient staffing for audits and assessments. The counsel argued that staffing issues do not constitute a force majeure situation.

Additionally, the petitioners pointed out that the notice issued on May 8, 2024, did not comply with Section 73(2) of the CGST Act, which mandates that notices must be issued three months prior to passing an order under Section 73(9). They contended that if Notification No. 56/2023 is deemed invalid, then the notice issued in its wake should also be considered ultra vires.

The Court observed that there was no GST Council recommendation before the issuance of Notification No. 56/2023. Consequently, the Court deemed that if the Notification itself fails to meet legal standards, all subsequent actions based on it are also unsustainable.

The High Court has prohibited the GST officers from taking any coercive actions until the next hearing on August 21, 2024. However, it has clarified that the authorities may still issue orders under Section 73(9) of the CGST Act.

To Read the full text of the Order CLICK HERE

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