GST notification challenged as inconsistent with Section 168A of Central GST Act 2017, interim protection granted

The Gauhati HC challenged notification No. 56/2023 dated 28.12.2023 issued by the Central Board of Indirect Taxes and Customs, finding it prima facie inconsistent with Section 168(A) of the Central GST Act, 2017. The court held that if the notification fails legal scrutiny, all consequential actions based on it would also fail. The petitioner was granted interim protection against coercive action based on the assessment order dated 18.04.2024. The court directed respondents to file affidavits by 19.08.2024, requiring examination of force majeure applicability considering GST Council's 49th Meeting minutes, with matter listed for 21.08.2024.

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Issues:
Challenge to the validity of a notification issued by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017 without a recommendation from the GST Council. The applicability of force majeure in extending the time limit for passing orders under Section 73(9) of the CGST Act, 2017. The impact of the notification on the Assam Goods and Service Tax Act, 2017.

Analysis:

1. The petitioner challenged a notification issued by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017, arguing that it was ultra vires due to the absence of a recommendation from the GST Council. The petitioner contended that the notification extending time limits for passing orders lacked the necessary recommendation, rendering it invalid under the law. The petitioner also highlighted that the power to extend time limits under Section 168A is contingent upon the existence of force majeure circumstances, which were not present in this case.

2. The petitioner further argued that the reasons cited for the extension, such as a lack of manpower hindering audit and assessment processes, did not qualify as force majeure. The petitioner emphasized that the COVID period had ended, and the extension granted was unjustified. Additionally, the petitioner pointed out discrepancies between the extension granted under the CGST Act and the corresponding provisions in the Assam Goods and Service Tax Act, 2017, asserting that the notification had adverse implications on the latter.

3. In response, the respondent standing counsel for the Central GST defended the notification, citing a recommendation from the GST Implementation Committee as the basis for its issuance. The respondent acknowledged the impending amendments through the Finance Bill 2024, suggesting that the petitioner would receive relief concerning assessment proceedings once the amendments were enforced. However, the respondent clarified that the amendments were pending implementation.

4. The standing counsel for Assam GST contended that the state authorities followed notifications issued by the Central GST, implying that the impugned notification would apply to Assam GST as well. Conversely, the petitioner's counsel argued that the extension granted by the impugned notification did not align with the provisions of the Assam GST Act, 2017, and thus could not be adopted by the state authorities.

5. The court prima facie found the impugned notification to be inconsistent with Section 168(A) of the Central GST Act, 2017, indicating potential legal flaws. The court recognized the petitioner's entitlement to relief as proposed in the Finance Bill 2024 and noted the necessity of examining the applicability of force majeure in extending time limits, requiring the respondent authorities to substantiate their position. Consequently, the court granted interim protection to the petitioner, restraining coercive actions based on the impugned assessment order until further proceedings.

6. The court directed the respondents to submit their affidavits by a specified date, signaling a comprehensive review of the issues raised. The matter was listed for further hearing to address the complexities surrounding the notification's validity and the implications on the petitioner's rights under the GST Acts.

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