2025 (11) TMI 1420 - HC - GST

GST assessment and Section 168A limitation extension notification quashed, matter remanded for fresh, reasoned adjudication on merits

Indra Versus The Deputy State Tax Officer (ST), Theni – 1, The State of Tamil Nadu, The Union of India

HC considered a challenge to a GST assessment order and the notification issued under section 168A of the 2017 enactments, where the petitioner had not ... Challenge to assessment order and notification issued u/s 168A of the Goods and Services Tax Enactments, 2017 - petitioner has not replied to the notices that proceeded the impugned order - extension of time limitation for adjudication of SCN - HELD THAT:- It is noticed that a detailed order has recently been passed by the Principal Bench of this Court in a batch of cases in M/s.Tata Play Limited vs. Union of India and others [2025 (7) TMI 772 - MADRAS HIGH COURT], wherein impugned notification issued under Section 168A of the Act has been quashed with certain directions. This writ petition is disposed of by quashing the impugned assessment order and the case is remitted back to the respondents to pass fresh order on merits. ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned assessment order for the assessment year 2019-2020 is sustainable where the petitioner did not reply to antecedent notices and the petition challenging the order was filed belatedly. 2. Whether notifications issued under Section 168A of the Goods and Services Tax enactments, which alter reckoning of limitation by excluding or including the period 15.03.2020 to 28.02.2022, are legally valid. 3. Whether a decision of the Principal Bench quashing the said notifications and directing exclusion of the period 15.03.2020 to 28.02.2022 is binding on the Court and necessitates quashing/remittal of the impugned assessment order. 4. Whether interim relief in the form of lifting attachment of the petitioner's bank account is appropriate pending re-assessment or further orders. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of the impugned assessment order where the petitioner failed to respond to notices and filed belatedly Legal framework: Principles of writ jurisdiction and adjudicatory discipline require timely challenge to tax assessments and observance of statutory and procedural timelines; assessee's failure to respond to notices is relevant to merit but does not in itself oust judicial review. Precedent Treatment: The Court acknowledged its ordinary practice of putting litigants 'to terms' when petitions are belated or antecedent statutory opportunities were not availed; however, that practice is subject to exceptions where larger legal questions or binding precedents affect validity of impugned action. Interpretation and reasoning: While the petitioner's non-response and delay would ordinarily militate against interference, the existence of an authoritative decision by the Principal Bench invalidating the governing notification on which the assessment relied requires substantive consideration overriding procedural strictness. Ratio vs. Obiter: Ratio - procedural default does not preclude relief where the impugned order rests on a provision/notification subsequently found vitiated by binding decision. Obiter - general remark that ordinarily the Court may have put the petitioner to terms. Conclusions: The Court declined to dismiss on procedural grounds because the impugned assessment was premised on a notification that the Principal Bench quashed; thus procedural default was subordinated to the question of validity of the enabling notification. Issue 2 - Legality of notifications under Section 168A altering limitation by treatment of the pandemic period Legal framework: Section 168A (and related limitation provisions under the CGST Act) governs extension/curtailment or exclusion of limitation periods for initiation/completion of tax proceedings; orders under Article 142 and allied judicial pronouncements concerning relief during pandemic period bear on the computation of limitation. Precedent Treatment: The Principal Bench's decision concluded that authorities shall benefit from exclusion of 15.03.2020 to 28.02.2022 pursuant to the Supreme Court order under Article 142; further, certain notifications (Nos.9 and 56 of 2023 in the cited order) were held vitiated on multiple grounds. Interpretation and reasoning: The notifications were invalidated because they (a) diminished/curtailed limitation contrary to the object of Section 168A and the Supreme Court order; (b) rested on erroneous assumptions about scope/effect of the Supreme Court order; (c) extinguished vested rights of action by diminishing limitation and were arbitrary; (d) were issued without adequate materials and proper statutory process, including issuance prior to recommendations of the GST Council and relying on an improper recommending body. Ratio vs. Obiter: Ratio - notifications that effectively curtail limitation or proceed on erroneous assumptions about higher court orders, or that are issued without statutory mandate or proper recommendation, are vitiated for being arbitrary and for extinguishing vested rights. Obiter - specific factual observations about the recommending body's identity and timing relative to Council recommendations. Conclusions: The notifications altering computation of limitation in the manner criticized were quashed as illegal, arbitrary, and ultra vires the statutory scheme; exclusion of the pandemic period (15.03.2020-28.02.2022) for reckoning limitation was recognized as applicable in light of the Supreme Court order interpreted by the Principal Bench. Issue 3 - Binding effect of the Principal Bench's order and consequence for the impugned assessment Legal framework: Decisions of coordinate/binding benches of the same High Court, especially Principal Bench rulings, guide subsequent adjudication within the Court; where such a decision quashes a foundational notification, actions taken under that notification are susceptible to challenge. Precedent Treatment: This Court followed the Principal Bench order in subsequent matters and applied its operative directions to the present petition; the Principal Bench's conclusions were applied to quash the impugned assessment order and remit for fresh consideration. Interpretation and reasoning: Because the assessment order was grounded in the vitiated notification and because the Principal Bench had adjudicated the legality of that notification, the Court concluded that quashing the assessment and remitting the matter for fresh decision on merits was the appropriate remedy rather than dismissing for delay or procedural lapses. Ratio vs. Obiter: Ratio - a Principal Bench ruling invalidating a notification that underpins an assessment warrants quashing of assessments made thereunder and remittal for re-adjudication. Obiter - reference to this Court's practice of following that Principal Bench order in other cases. Conclusions: The impugned assessment order was quashed and the matter remitted to the authorities to pass a fresh order on merits, applying the law as declared by the Principal Bench; the Court expressly left open respondents' right to proceed further in light of any final Supreme Court order in related proceedings. Issue 4 - Appropriateness of lifting bank attachment pendente lite Legal framework: Interim relief to lift attachment may be granted where impugned action is set aside or where continued attachment would cause irreversible harm and the court finds sufficient cause to vacate provisional measures. Precedent Treatment: Having quashed the assessment order and remitted for fresh consideration, the Court treated the attachment as ancillary to the vitiated assessment action and directed immediate lifting. Interpretation and reasoning: Continued attachment of bank accounts, after quashing the underlying assessment, would be unjustified and disproportionate; accordingly, the Court ordered attachment to be lifted forthwith without delay. Ratio vs. Obiter: Ratio - where an underlying assessment is quashed, ancillary coercive measures (such as bank attachments) effected pursuant thereto should be lifted immediately. Obiter - none. Conclusions: The attachment of the petitioner's bank account was ordered to be lifted immediately; no costs were imposed. Cross-references and Ancillary Observations The Court's relief rests on following the Principal Bench determination concerning the pandemic exclusion period and the invalidity of the notifications; the decision explicitly preserves the respondents' ability to re-prosecute the matter in conformity with the law and any ultimate pronouncement of the Supreme Court in pending related proceedings. The Court balanced procedural discipline against a controlling substantive ruling nullifying the foundation of assessment proceedings, giving precedence to rectifying the legal error over penalizing procedural delay.