Section 168A CGST Act constitutional validity challenge deferred pending Supreme Court decision on related matter

The Punjab and Haryana HC deferred ruling on the constitutional validity of Section 168A of the CGST Act, 2017, which was inserted through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The court noted that the SC had issued notice in a related SLP challenging the same provision and notifications extending compliance timelines under Section 73(10) during COVID-19. The HC held that all connected cases would be governed by the SC's final judgment in the pending matter, with interim orders continuing until the SC's adjudication.

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1. ISSUES PRESENTED and CONSIDERED

The primary issues addressed in this judgment revolve around the validity and constitutionality of Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act) and the notifications issued under it. Specifically, the court examined:

• Whether the insertion of Section 168A in the CGST Act through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) was valid.
• The validity of notifications extending timelines for compliance under Section 73(10) of the CGST Act, particularly in light of the COVID-19 pandemic.
• Whether the notifications were issued with the necessary recommendation of the GST Council.
• The role and authority of the GST Implementation Committee (GIC) and the GST Council in extending statutory timelines.
• The distinction between the powers of the Central Government and the Central Board of Indirect Taxes and Customs (CBIC) in issuing notifications under the CGST Act.
• The applicability of the Supreme Court's suo motu orders extending limitation periods in the context of GST compliance.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of Section 168A of the CGST Act:

The court considered whether the insertion of Section 168A via TOLA was valid, given that TOLA was not introduced as a 'Money Bill' under Article 109 of the Constitution. The petitioners argued that the insertion amounted to an amendment of the CGST Act without following the necessary legislative procedures, rendering it ultra vires.

The court noted that Section 168A was introduced to address compliance issues during extraordinary situations like the COVID-19 pandemic, allowing the government to extend timelines. However, the court refrained from making a determination on the vires of Section 168A, as the matter was pending before the Supreme Court.

Validity of Notifications under Section 168A:

The petitioners challenged several notifications extending compliance timelines under Section 73(10) of the CGST Act, arguing they were issued without the requisite recommendation of the GST Council and did not meet the conditions of "force majeure" as required by Section 168A.

The court examined the procedural history of these notifications, noting that some were issued by the CBIC rather than the Central Government, raising questions about jurisdiction. The petitioners contended that the GIC and Law Committee acted beyond their authority by recommending extensions, which should have been policy decisions reserved for the GST Council.

Ultimately, the court did not rule on the validity of these notifications, deferring to the Supreme Court's pending decision.

Role of the GST Council and GIC:

The court considered arguments regarding the scope of the GST Council's recommendations and the GIC's authority to make decisions on urgent procedural issues. Petitioners argued that the GIC overstepped its remit by making policy decisions, which should have been deliberated by the GST Council.

The court highlighted the procedural framework established in GST Council meetings, which limited the GIC's role to urgent procedural matters, not substantive policy issues.

Distinction between Central Government and CBIC Powers:

The petitioners argued that notifications under Section 168A should be issued by the Central Government, not the CBIC, as the two entities have distinct roles under the CGST Act. The court acknowledged this distinction but did not make a definitive ruling, given the pending Supreme Court case.

Applicability of Supreme Court's Suo Motu Orders:

The court considered whether the Supreme Court's orders extending limitation periods due to COVID-19 applied to GST compliance timelines. Petitioners argued that the orders were limited to judicial and quasi-judicial proceedings, not statutory compliance activities. The court noted this contention but deferred to the Supreme Court's broader determination.

3. SIGNIFICANT HOLDINGS

The court refrained from making final determinations on the issues presented, citing the pending Supreme Court case that would address similar questions. The court's interim order maintained the status quo, allowing proceedings to continue without final orders until the Supreme Court's decision.

Key principles discussed include:

• The necessity of following constitutional procedures for legislative amendments, particularly concerning 'Money Bills.'
• The importance of adhering to statutory requirements for issuing notifications, including obtaining GST Council recommendations where applicable.
• The delineation of roles between the Central Government and CBIC under the CGST Act.
• The limited scope of the GIC's authority in making substantive policy decisions.
• The applicability of judicial orders to statutory compliance timelines.

The court's decision to defer to the Supreme Court underscores the principle of judicial discipline and the importance of uniformity in legal interpretations across jurisdictions.

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