Time Limit for Issuance of SCN & Order under GST Act Extended by CBIC Notification: Bombay HC stays Garnishee Notice [Read Order]

Citing CBIC Notification No. 56/2023-Central Tax dated December 28, 2023, which extended the deadline for issuing show cause notices (SCNs) and orders, the Bombay High Court granted an interim stay on the garnishee notice.

 The State Tax Officer, Thane Division, Thane (Respondent No. 3) issued a Garnishee Notice in Form DRC-13 on February 14, 2025, directing Respondent Bank to pay the Government Rs. 2,18,77,406/-for the tax that the Petitioner owed under the GST Act. The Petitioner, NTT Data Business Solutions Pvt Ltd, challenged this notice.

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Notification No. 56/2023-Central Tax dated December 28, 2023, and Notification No. 56/2023-State Tax, No. MGST-1524/C. R.6/Taxation-1 dated January 16, 2024, issued under Section 168A of the Central Goods and Services Tax Act, 2017 read with Section 168A of the Maharashtra Goods and Services Tax Act, 2017 are also challenged, along with the garnishee notice, show cause notice, and order.

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Via Notification No. 56/2023-Central Tax dated 28.12.2023, the CBIC announces an extension of the deadline set forth in s. 73(10) for issuing an order under s. 73(9) for recovery tax that has been underpaid or not paid, or for ITC that has been improperly used or obtained for any purpose other than fraud or willful misrepresentation or suppression of facts. The extension particularly concerns the following directives issued under Section 73(9) of the CGST Act for the fiscal years 2018–19 and 2019–20: FY 2018–19, until April 30, 2024, and FY 2019–20, until August 31, 2024.

The petition challenges the contested order, the contested garnishee notice, and the contested show-cause notice on a number of grounds. One of the arguments raised is that the Petitioner was never served with the Show Cause Notice, resulting in a violation of natural justice standards that leaves the contested order open to appeal. Naturally, the garnishee notice cannot stand and must be set aside if the order is granted.

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The petitioner argued that the order should have been issued by March 31, 2024. However, on the basis of the notifications dated December 28, 2023, and January 16, 2024, as we mentioned earlier, the order was passed on August 13, 2024. The Petitioner contends that these notifications violate Section 168A of the CGST Act and the MGST Act since they were not issued in accordance with the GST Council's recommendation, which is one of Section 168A's mandatory conditions. In any case, the order cannot stand if these notifications are set aside since the submission was made after the deadline.

The department said that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, was the reason Section 168A went into effect. According to the government, section 168A was created expressly to address situations like pandemics and wars, which would include the COVID-19 pandemic. She argued that no exemption can be made to the issuance of the aforementioned Notifications once this clause is in place and the Covid-19 Pandemic is considered a force majeure occurrence [as defined by Section 168A]. 

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The arguments presented in the Writ Petition are still pending adjudication in a number of other Writ Petitions, including Writ Petition No. 5146 of 2024 and Writ Petition No. 5471 of 2024.  These CBIC Notifications have already been overturned by the Gauhati High Court. Despite ruling in favor of the petitioner in this case, the Telangana High Court concluded that the assessment was not time-barred due to the Supreme Court's order in "Re-Cognizance for extension of limitation in (2022) (1) TMI 385-SC ORDER."

The division bench, which is made up of Justices B. P. Colabawalla and Firdosh P. Pooniwalla observed that the Petitioner has not only made out a case for admission but also for grant of interim relief.The court held that a strong prima facie case is made out for granting interim relief to the Petitioner.

To Read the full text of the Order CLICK HERE

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