GST Notification 56/2023 violates Section 168A lacking mandatory GST Council recommendation, interim protection granted

The Gauhati HC found that Notification No. 56/2023 dated 28.12.2023 issued by the Central Board of Indirect Taxes and Customs prima facie violated Section 168A of the CGST Act, 2017, as it lacked mandatory GST Council recommendation. The court held that if the notification fails legal scrutiny, all consequential actions based on it would also fail. Interim protection was granted to the petitioner, restraining coercive action based on the assessment order dated 22.04.2024. Respondents were directed to file affidavits by 15.09.2024.

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Issues:
1. Challenge to the validity of a Notification issued by the Central Board of Indirect Taxes and Customs.
2. Ultra vires of Section 168A of the CGST Act, 2017.
3. Lack of recommendation by the GST Council for the issuance of the Notification.
4. Extension of time limit for passing orders under Section 73(9) of the CGST Act, 2017.
5. Interpretation of "force majeure" in relation to the Notification.
6. Application of the Notification to the Assam Goods and Service Tax Act, 2017.
7. Impugned order passed post the extended period under the Notification.

Analysis:
The petitioner challenged a Notification issued by the Central Board of Indirect Taxes and Customs, contending that it was ultra vires of Section 168A of the CGST Act, 2017 due to the absence of a recommendation from the GST Council. The petitioner argued that the Notification extended the time limit for passing orders under Section 73(9) of the CGST Act, 2017 beyond the Council's recommendations, which was impermissible. Additionally, the petitioner disputed the invocation of "force majeure" in justifying the extension, claiming that the lack of manpower due to the COVID period did not qualify as force majeure.

Furthermore, the petitioner raised concerns regarding the application of the Notification to the Assam Goods and Service Tax Act, 2017, asserting that the State GST Authorities could not nullify the limitations set out in their legislation based on the Central Notification. The petitioner emphasized that the impugned order, passed after the extended period, should be set aside due to the Notification's invalidity under both the CGST Act, 2017 and the AGST Act, 2017.

In response, the respondent's counsel argued that while there was no GST Council recommendation for the Notification, the GST Implementation Committee had made a recommendation, and steps were being taken for GST Council ratification. The respondent contended that upcoming amendments through the Finance Bill, 2024 might address the petitioner's concerns regarding assessment proceedings but highlighted that the enactments were yet to come into force.

Regarding the Assam GST Act, the respondent argued that the Assam GST authorities followed Central GST notifications, making the impugned Notification applicable to Assam GST as well. However, the petitioner's counsel countered this by pointing out that the specific provisions of the Assam GST Act did not encompass notifications granting extensions, thereby rendering the Notification inapplicable to Assam GST.

Ultimately, the Court found prima facie that the Notification was not in line with Section 168(A) of the Central GST Act, 2017. Consequently, the Court granted interim protection to the petitioner, preventing coercive action based on the impugned assessment order until the next hearing date. The respondents were directed to file their affidavits before the specified date for further proceedings.

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