Notification 56/2023 ruled ultra vires Section 168A CGST Act for lacking mandatory GST Council recommendation

The Gauhati HC held that notification No. 56/2023 dated 28.12.2023 was ultra vires Section 168A of the CGST Act, 2017, as it lacked mandatory GST Council recommendation. The court ruled the notification could not withstand legal scrutiny, making all consequential actions based on it invalid. The petitioner was granted interim protection from coercive action under the impugned assessment order dated 24.04.2024. The court directed respondent authorities to present their position on force majeure applicability, considering the 49th GST Council meeting minutes, and granted relief as proposed in Financial Bill 2024.

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Issues:
1. Challenge to the issuance of a notification by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017 without the recommendation of the GST Council.
2. Ultra vires nature of the notification No. 56/2023 dated 28.12.2023 under the CGST Act, 2017.
3. Applicability of force majeure in extending the time limit for passing orders under Section 73(9) of the CGST Act, 2017.
4. Conflict between the provisions of the CGST Act, 2017 and the Assam Goods and Service Tax Act, 2017 regarding extension of time limits.

Detailed Analysis:
1. The petitioner challenged the issuance of a notification by the Central Board of Indirect Taxes and Customs under Section 168A of the CGST Act, 2017 without the recommendation of the GST Council. The petitioner argued that the notification, No. 56/2023 dated 28.12.2023, was ultra vires as it extended the time limit for passing orders without the necessary recommendation. The petitioner contended that the power to extend the period under Section 168A is contingent upon a force majeure event, which was not present in this case. The petitioner also highlighted that the GST Council had not made any recommendation post the initial extension granted. The petitioner further argued that the lack of manpower for audit and assessment, as cited in the GST Council meeting minutes, did not qualify as force majeure.

2. The petitioner also raised concerns regarding the extension granted under the notification conflicting with the provisions of the Assam Goods and Service Tax Act, 2017. The petitioner pointed out that the State GST Authorities cannot nullify the limitations set out in the AGST Act, 2017 by adopting the extension granted under the impugned notification. The petitioner emphasized that the impugned order pertained to the Financial Year 2018-19 and was passed post the extended deadline, making it necessary to challenge the validity of the notification.

3. The respondents, represented by the Standing Counsel, argued that while there was no recommendation for the issuance of the impugned notification, steps were being taken to seek GST Council ratification. The respondents highlighted upcoming amendments through the Finance Bill 2024 that might impact the assessment proceedings. The Assam GST authorities contended that they follow the notifications issued by the Central GST, making the impugned notification applicable to them. However, the petitioner countered this argument by citing Section 11(4) of the Assam GST Act, 2017, which does not provide for the adoption of notifications granting extensions.

4. The Court, after hearing arguments from both sides, found prima facie that the impugned notification was not in line with the provisions of Section 168A of the CGST Act, 2017. The Court acknowledged the petitioner's entitlement to reliefs proposed in the Finance Bill 2024 and deemed further examination necessary regarding the applicability of force majeure in extending the time limit. Consequently, the Court granted interim protection to the petitioner, restraining coercive action based on the impugned assessment order until the next date. The respondents were directed to file their affidavits, and the matter was listed for further proceedings.

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