2024 (9) TMI 1398 - HC - GST

Notification extending Section 168A time limits quashed for lacking mandatory GST Council recommendation

HC ruled that Notification No.56/2023-CT extending time limits under Section 168A was ultra vires the Central Act. The notification was issued without ... Power of Government to extend time limit in special circumstances - recommendation of the Goods and Services Tax Council - force majeure - delegated legislation / secondary legislation must conform to parent Act - jurisdictional effect of statutory time-bar under Section 73(10) Recommendation of the Goods and Services Tax Council - force majeure - Power of Government to extend time limit in special circumstances - Validity of Notification No.56/2023-CT issued under Section 168A of the Central Goods and Services Tax Act, 2017 - HELD THAT: - Section 168A permits the Government to extend statutory time-limits only 'on the recommendations of the Council' and where actions cannot be completed due to 'force majeure.' The Court held that the existence of a recommendation is a sine qua non for exercise of the power under Section 168A; the fact that some recommendations of the GST Council may be non-binding on substance does not permit the Government to act in the absence of any recommendation where the parent Act requires one. Notification No.56/2023-CT was issued without any prior recommendation of the GST Council and yet stated it was made 'on the recommendation of the Council.' Because the GST Council was not asked to and did not consider the question of force majeure in relation to the extension in issue, the requisite condition of force majeure tied to a Council recommendation was not satisfied. The Notification therefore constituted a colourable exercise of delegated legislative power and was ultra vires Section 168A. [Paras 39, 40, 46, 47, 49] Notification No.56/2023-CT dated 28.12.2023 is ultra vires Section 168A of the Central Act and is set aside and quashed. Jurisdictional effect of statutory time-bar under Section 73(10) - Power of Government to extend time limit in special circumstances - Validity of Orders-in-Original passed under Section 73(9) for FY 2018-19 and FY 2019-20 in light of absence of a valid extension under Section 168A - HELD THAT: - Section 73(10) fixes the time within which orders under Section 73(9) must be issued. Because Notification No.56/2023-CT was held to be ultra vires and the State had not issued a pari materia notification covering the relevant periods on or after 01.04.2024 (for FY 2018-19) and on or after 01.07.2024 (for FY 2019-20), the Orders-in-Original impugned in the writ petitions were passed beyond the statutory period and were therefore without jurisdiction. The Court set aside and quashed the individual impugned Orders-in-Original listed in the Appendix for the respective petitioners. [Paras 50, 51, 52] The impugned Orders-in-Original passed under Section 73(9) for the listed matters are beyond the period prescribed by Section 73(10) and are set aside and quashed. Power of Government to extend time limit in special circumstances - Challenge to Notification No.9/2023-CT and the State Notification dated 06.09.2024 - HELD THAT: - The Court observed that several impugned Orders-in-Original under challenge concern periods covered by Notification No.56/2023-CT; consequently the challenge to Notification No.9/2023-CT and to the State notification dated 06.09.2024 (replica of No.9/2023-CT) was found to be not relevant to the orders before the Court and was not considered on merits. The Court therefore did not adjudicate the validity of Notification No.9/2023-CT or the State notification dated 06.09.2024. [Paras 38] Challenge to Notification No.9/2023-CT and the State Notification dated 06.09.2024 was not considered as irrelevant to the impugned Orders-in-Original before the Court. Final Conclusion: Notification No.56/2023-CT issued under Section 168A of the Central Act is ultra vires and is quashed; accordingly, the Orders-in-Original passed under Section 73(9) for the specified matters in respect of Financial Year 2018-19 and Financial Year 2019-20, which were issued after the statutory period fixed by Section 73(10) and in the absence of a valid extension under Section 168A, are without jurisdiction and are set aside. The Court's decision does not preclude the Union or State Governments from taking steps lawfully available under Section 168A(2) including issuance of retrospective notifications in conformity with law. Issues Involved:1. Validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT under Section 168A of the Central Goods and Service Tax Act, 2017.2. Validity of orders passed under Section 73(9) of the Central and State Acts.3. Requirement of GST Council's recommendation for exercising power under Section 168A.4. Existence of force majeure for extending the period under Section 168A.Issue-wise Detailed Analysis:1. Validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT under Section 168A of the Central Goods and Service Tax Act, 2017:The Petitioners challenged the validity of Notification No. 9/2023-CT and Notification No. 56/2023-CT on the grounds that the conditions precedent for issuance of the notifications under Section 168A were not fulfilled. Specifically, Notification No. 9/2023-CT was challenged due to the absence of force majeure, and Notification No. 56/2023-CT was challenged for lack of GST Council recommendation and force majeure. The court found that the absence of GST Council recommendation rendered Notification No. 56/2023-CT ultra vires the Central Act, and it was set aside and quashed.2. Validity of orders passed under Section 73(9) of the Central and State Acts:The impugned Orders-in-Original were passed beyond the period prescribed under Section 73(10) of both the Central and State Acts. The court noted that the orders were appealable under Section 107 of the Central Act but could only be challenged under Article 226 of the Constitution if the notifications were ultra vires. Since the notifications extending the period were found invalid, the orders passed under Section 73(9) were without jurisdiction and thus set aside.3. Requirement of GST Council's recommendation for exercising power under Section 168A:The court emphasized that the recommendation of the GST Council is a sine qua non for exercising power under Section 168A. The term 'recommendation' was interpreted in the context of the provisions of the Constitution and the Central Act. The court referred to the Supreme Court's judgment in V.M. Kurian Vs. State of Kerala, which held that recommendations are essential for granting exemptions. Similarly, the GST Council's recommendation is necessary for extending timelines under Section 168A.4. Existence of force majeure for extending the period under Section 168A:The court noted that the definition of force majeure in Section 168A includes natural calamities, war, and epidemics. The GST Council had previously recommended an extension due to COVID-19 but had decided against further extensions. The absence of force majeure consideration by the GST Council before issuing Notification No. 56/2023-CT further invalidated the notification.Conclusion:The court declared Notification No. 56/2023-CT ultra vires the Central Act and set aside the impugned Orders-in-Original passed under Section 73(9). The court clarified that the decision does not prejudice the rights of the Central and State Governments to issue retrospective notifications as per Section 168A(2) of the Central and State Acts. The respective impugned Orders-in-Original were quashed and detailed in the Appendix to the judgment.