Introduction
In a significant ruling safeguarding taxpayers’ rights, the Hon’ble High Court has set aside a GST demand raised against a petitioner by holding that Notification No. 56/2023-Central Tax dated 28.12.2023—which extended the limitation period for issuing notices under Section 73 of the CGST Act—was ultra vires the statute. The decision reinforces that any extension of limitation under Section 168A of the CGST Act must be based on both force majeure circumstances and a valid recommendation by the GST Council.
Facts of the Case:
The petitioner, a registered assessee under both the Central Goods and Services Tax Act, 2017 and the Arunachal Pradesh GST Act, was served with a Show Cause Notice dated 30.05.2024, proposing a GST demand of over ?1.2 crore. This was followed by an Order-in-Original dated 29.08.2024, issued under Section 73 of the CGST Act for the financial year 2019–20.
However, as per the statute, the time limit for issuing such an order expired on 31.03.2024. The department, through Respondent No. 5, justified its action based on Notification No. 56/2023, which extended the due date to 31.08.2024. The petitioner contested the validity of this notification, arguing that it lacked the legal foundations necessary under Section 168A of the Act.
Issue in the Case:
Was Notification No. 56/2023, which extended the time limit under Section 73(10) of the CGST Act for FY 2019–20, valid and legally sustainable, particularly in the absence of:
Force majeure circumstances as required under Section 168A, and
Recommendation by the GST Council, as also mandated under Section 168A?
Petitioner’s Arguments:
The power under Section 168A can be exercised only in the presence of a force majeure and on the recommendation of the GST Council.
Notification No. 56/2023 was issued without any such recommendation or any proven force majeure situation.
The Coordinate Bench in WP(C) No. 3585/2024 had already held Notification No. 56/2023 to be ultra vires of the CGST Act and set it aside.
Therefore, the Show Cause Notice and Order-in-Original, being time-barred, were also unsustainable.
Respondent’s Stand:
Mr. M. Ete, learned counsel representing the respondents, acknowledged the earlier ruling in Barkataki Print and Media Services versus Union of India WP(C) No. 3585/2024. He submitted that in light of the prior judgment, the Court may pass appropriate orders. There was no active rebuttal to the petitioner’s legal arguments, and the respondent’s position was essentially aligned with the existing judicial precedent.
Court’s Observation & Order:
The Court noted that Section 168A was introduced as a special provision through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. It empowers the Government to extend time limits specified under the CGST Act only under force majeure circumstances, and only on the recommendation of the GST Council.
The Court examined Notification No. 56/2023 and found that:
It lacked any reference to force majeure.
No evidence was presented that the notification was issued on the recommendation of the GST Council, which is a mandatory requirement under Section 168A.
The issuance of the Notification was therefore an unauthorised and colourable exercise of power, making it legally unsustainable.
The Court drew heavily from the earlier ruling in Barkataki Print and Media Services versus Union of India WP(C) No. 3585/2024, which had already struck down Notification No. 56/2023 on identical grounds. The Coordinate Bench had opined that recommendation of the GST Council is a sine qua non for invoking Section 168A and that the term “recommendation” cannot be reduced to mere formality or bypassed by executive discretion.
Final Judgment and Order
In view of the above findings, the Court ruled that:
Notification No. 56/2023-Central Tax dated 28.12.2023 is ultra vires the CGST Act and hence, quashed.
Consequently, the Show Cause Notice dated 30.05.2024 and Order-in-Original dated 29.08.2024, both of which were based on the invalid notification, were also set aside.
The writ petition was allowed in favour of the petitioner.
GST Case Law Mahabir Tiwari Versus The Union of India
Citation-2025 TAXONATION 1319 (GAUHATI) Click here ot read full case law
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