GST Limitation Regime vs Executive Notifications: Judicial Review of Time-Limit Notifications under the CGST Act

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....OVID-19 pandemic. The Court undertook an extensive review of (i) the statutory scheme of limitation under the CGST Act, (ii) the scope and prerequisites of Section 168A, (iii) the deliberative record of the GST Council and its Implementation Committee (GIC), (iv) and the effect of the Supreme Court's suo motu orders under Article 142 excluding a defined period for computation of limitation. The decision is significant for administrative law and indirect tax practice: it addresses the limits of delegated/conditional legislation; delineates requisite causal nexus between a force majeure event and failure to comply with statutory timelines; clarifies the mandatory nature (but not binding effect) of GST Council recommendation for secondary....

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....statute's operation - and is therefore more in the nature of delegated legislation requiring judicial scrutiny. The Court observed: "limitation is founded on public policy and its prescription primarily legislative in character" and thus any exception ought to be strictly construed. 2. Strict construction of Section 168A as an exception Because Section 168A operates as an exception to the legislatively prescribed limitation regime (Section 73), the Court reiterated the established rule that exceptions must be strictly interpreted. Section 73(2) and (10) fix time-frames for issuing show-cause notices and orders; Section 168A permits extension where actions "cannot be completed or complied with due to force majeure." The Court emphasise....

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....exts; however, where the statute prescribes recommendation for secondary legislation, the recommendation is a sine qua non. The Court held that recommendations by the GIC cannot substitute for the GST Council: issuing Notification No.56/2023 prior to GST Council recommendation and relying on post-facto ratification was invalid. The Court relied on general principles against sub-delegation (delegatus non potest delegare) and on precedents that ratification cannot cure absence of statutorily required prior approval. 5. Interaction with Supreme Court's Article 142 orders The petitioners contended the Supreme Court's order excluding 15.03.2020-28.02.2022 from computation of limitation should operate to provide a larger limitation peri....

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....ndation and based on GIC recommendation was invalid - post-facto ratification does not cure the statutory defect. * The term "otherwise" in the Explanation to Section 168A is constrained by ejusdem generis and cannot encompass self-inflicted systemic deficiencies or staffing shortages. * The Supreme Court's order under Article 142 excluding 15.03.2020-28.02.2022 remains operative and provides a larger limitation period than that created by the impugned notifications; notifications that diminish the effective limitation relative to the Article 142 order are erroneous and arbitrary. Ratio: Notifications u/s 168A must be issued on the recommendation of the GST Council, after taking into account materials demonstrating that force majeu....