Madras HC Strikes Down GST Time Extensions Notification u/s 168A: What It Means for Pending Adjudications

In a recent ruling, the Madras High Court struck down two GST notifications issued under Section 168A of the Central Goods and Services Tax (CGST) Act, 2017, which extended the time limits for adjudicating GST proceedings related to the financial years 2017-18, 2018-19, and 2019-20. The decision is expected to have a wide-ranging impact on ongoing and past adjudications that relied on these now-invalidated extensions.

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The case was brought before the court by Tata Play Limited, which challenged the validity of Notification No. 56/2023-Central Tax dated 28.12.2023 and a corresponding state government order dated 02.01.2024. These notifications had extended the deadline for passing adjudication orders for FY 2019–20 up to 31.08.2024.

The petitioner’s counsel argued that the notifications were issued without fulfilling the mandatory conditions set out under Section 168A, namely the requirement of a force majeure situation (like COVID-19) and prior recommendation of the GST Council.

They further challenged the demand raised under Section 73 of the CGST/TNGST Act, amounting to over Rs. 1,019 crore, including tax, interest, and penalty. This demand was issued through a show cause notice and order, both of which were allegedly based on the disputed extension of limitation periods under Section 168A. The petitioner argued that these proceedings were without jurisdiction and in violation of Articles 14 and 19(1)(g) of the Constitution.

They submitted that the extension notifications lacked the prerequisite recommendation from the GST Council, as required under the CGST Act. The counsel pointed out that the government had instead relied on a decision of the GST Implementation Committee (GIC), which is neither a constitutional nor a statutory authority.

The bench, led by Justice Mohammed Shaffiq, agreed with this position and observed that the GIC’s decision could not substitute for a proper recommendation of the GST Council, which is a constitutional body under Article 279A.

The court also rejected the government’s defense that the notification had been ratified by the GST Council at a later date, holding that post-facto ratification does not meet the legal requirement of prior approval under Section 168A. It explained that the extension of limitation periods under taxing statutes must strictly adhere to the statutory framework and cannot be exercised through administrative discretion.

The court quashed Notification No. 09/2023 and Notification No. 56/2023, declaring them ultra vires to Section 168A. It also set aside all related adjudication orders passed under the authority of these notifications. The court directed that all such cases be remanded for fresh adjudication and granted taxpayers eight weeks to respond to any new show cause notices that may be issued.

The ruling is expected to offer relief to taxpayers who received GST notices or orders relying on the extended timelines declared invalid by the court. It emphasizes the importance of adhering to constitutional procedures and statutory safeguards when exercising powers under the GST law. The full judgment is awaited.

Madras HC - MS TATA PLAY LIMITED V. UNION OF INDIA AND 4 OTHERS.

[WP/17184/2024]

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