State GST Dept. Can't Take Benefit Of Notification Which Is Ultra Vires CGST Act, 2017: Gauhati High Court

The Gauhati High Court has held that the State GST Authorities cannot take the benefit of Notification No. 56/2023-CE, which is also otherwise ultra vires the CGST Act, 2017.

The bench of Justice Devashis Baruah has noted that the GST Council has not made any recommendation till date, and in spite of that, the Central Board of Indirect Taxes and Customs issued a Notification bearing No. 56/2023-CE dated 28.12.2023, thereby extending the period to pass the order under Section 73(9) of the CGST Act, 2017 for the Financial Year 2018-2019 up to the 30.04.2024 and for the Financial Year 2019-2020 up to the 31.08.2024.

The bench observed that prima facie the notification bearing No. 56/2023 is not in consonance with the provisions of Section 168(A) of the Central GST Act, 2017. If the notification cannot stand the scrutiny of law, all consequential actions so taken on the basis of notification would also fail.

Section 168A, with its non-obstante clause, grants the government overriding authority to extend deadlines for completing proceedings and taking action.

The petitioners/assessee challenged the action on the part of the Central Board of Indirect Taxes and Customs in issuance of a notification bearing No. 56/2023 dated 28.12.2023.

The petitioner contended that the notification issued by the Central Board of Indirect Taxes and Customs is ultra vires Section 168A of the CGST Act, 2017 on the ground that there is no recommendation of the GST Council, which is the mandatory requirement for the purpose of issuance of the notification. Referring to the various provisions of the GST Act as well as the 49th Meeting of the GST Council, the GST Council had made a recommendation by extending the time limit for passing of the order under Section 73(9) of the CGST Act, 2017 for the Financial Year 2017-2018 up to 31.12.2023 and for the Financial Year 2018-2019 up to 31.03.2024 and for the Financial Year 2019-2020 up to 30.06.2024.

As per the GST Council recommendation, a notification bearing No. 9/2023-CE was issued on 31.03.2023 by the Central Board of Indirect Taxes and Customs. The GST Council has not made any recommendation till date, and in spite of that, the Central Board of Indirect Taxes and Customs issued a Notification bearing No. 56/2023-CE dated 28.12.2023 by extending the period to pass the order under Section 73(9) of the CGST Act, 2017 for the Financial Year 2018-2019 up to the 30.04.2024 and for the Financial Year 2019-2020 up to the 31.08.2024.

The petitioner contended that as per Section 168A of the CGST Act, 2017 without the recommendation, the government cannot issue the notification for extending the period under Section 168A of the CGST Act, 2017 and as such, the notification bearing No. 56/2023 dated 28.12.2023 is ultra vires the CGST Act, 2017. The notification cannot stand the scrutiny of law in view of the fact that the power to exercise under Section 168A is conferred only on the basis that there is a force majeure.

The department contended that the provisions of Section 11(4) of the Assam GST Act, 2017 permit that certain notifications that relate to Sections 11(1) and 11(2) of the Assam GST Act, 2017 can only be adopted. A notification granting an extension is not conceived in Section 11(4) of the AGST Act, 2017, and as such, the state GST authorities cannot take advantage of the notification bearing No. 56/2023-CE, which is also otherwise ultra vires the CGST Act, 2017.

The court granted an opportunity to the department to place on record their stand as well as bringing on record the materials on which they claim the applicability of the force majeure.

The court held that the petitioners are entitled to interim protection pending the notice and directed that no coercive action shall be taken on the basis of the assessment order dated April 26, 2024.

Counsel For Petitioner: A. Jain

Counsel For Respondent: S. C. Keyal

Case Title: Shree Shyam Steel Versus Union Of India

Case No.: Case No. : WP(C)/3838/2024

Click Here To Read The Order