S.168A GST Act | 'Recommendation' Of GST Council To Extend Limitation Period Can Be Substituted By Subsequent 'Ratification': Telangana HC

The Telangana High Court has upheld the validity of two 2023 notifications, issued by the GST Department post COVID-19 pandemic, for extending the limitation period prescribed for issuing notices under Section 73 of the Central Goods and Services Tax Act, 2017. A division bench of Justice Sujoy Paul and Dr. Justice G. Radha Rani also upheld a notification issued in 2022 for similar purpose. In doing so, it observed, “In the manner statute i.e., Section 168A is worded, there is no cavil of doubt that the Law makers intended to give it a broader umbrella to bring within its shadow, such actions which could not be completed or complied with, due to force majeure…The COVID-19 Pandemic created extraordinary difficulties which could not have been anticipated, measured and solved with mathematical precision. Thus, hair-splitting in many aspects must be eschewed…While dealing with such an extraordinary crisis, Government's action must be viewed in a broad perspective.” The notifications were issued under Section 168A of the GST Act which provides that extension notification can be issued on the recommendation of the GST Council. Arguments Petitioners contended that the pandemic admittedly came to an end before impugned notifications were issued and no force majeure conditions were in existence on the date; whereas Section 168A of the GST Act can be invoked only on availability of 'special circumstances'. It was alleged that the Department was using the COVID-19 pandemic as an excuse to undo their failure of not completing assessments and raising demands under Section 73 within stipulated time. Petitioners also contended that the impugned notification was issued on the basis of a decision taken by the GST Implementation Committee/Law Committee, ratified by the GST Council after six months. It was submitted that 'recommendation' is always prior in time which forms the basis for taking a decision, whereas, 'ratification' is a subsequent exercise for a decision which has already been taken. It was contended that in view of statutory mandate ingrained in Section 168A of the GST Act, subsequent 'ratification' cannot satisfy the requirement of statute i.e., 'on the recommendation of the GST Council'. Petitioners cited a judgment of the Gauhati High Court in M/s. Barkataki Print and Media Services, Dhrubajyoti Barkotoku v. Union of India where it was held that recommendation of GST Council is sine qua non for exercising power under Section 168A of the Act. They also cited Article 279A (4) of the Constitution which envisages that the GST Council 'shall' make recommendations. It was contended that the language used in the provision is mandatory and thus, existence of recommendation of GST Council was a condition precedent for exercising the power. The GST Department on the other hand submitted that it is the subjective satisfaction of the Law makers to decide the period of limitation and the Court is under no obligation to examine the period of extension of limitation on any mathematical scale. On merits, it contended that the impugned notifications were issued in 'modification' of previous notifications and extending limitations and thus, force majeure reasons given in the previous notifications must be read into the impugned notifications. The Department further submitted that time was also extended Section 54 of the GST Act for taxpayers to claim refunds. After exemption, the limitation period of two years became four years. Thus, it was contended that the petitioners were not correct in contending that a step-motherly treatment was given to the taxpayers and limitation was extended in various installments only in favour of Revenue. The Standing Counsel further submitted that four High Courts have previously considered the impugned notifications. The Kerala High Court in Faizal Traders Private Limited v. Deputy Commissioner dismissed the petition against Notification Nos.9/2023 and 13/2022. A Division Bench of the Allahabad High Court in M/s.Graziano Trasmissions v. Goods and Services Tax (2024) did not interfere with Notification Nos.9/2023 and 13/2022. The Karnataka High Court in M/s. Sahaj Construction v. Union of India (2024) declined interference with Notification No.9/2023. The Patna High Court in M/s. Barhonia Engicon Private Limited v. State of Bihar (2024) refused to interfere in the Notifications Nos.9/2023, 56/2023 and 13/2022. Significant to note that the Gauhati High Court in M/s. Barkataki Print and Media Services, Dhrubajyoti Barkotoku v. Union of India (2024) interfered with Notification No.56/2023. However, the Department submitted that the Patna High Court in M/s. Barhonia Engicon (supra) did not agree with this decision. On the point of ratification, the Standing Counsel relied on the Supreme Court's decision in National Institute of Technology v. Pannalal Choudhury (2015) to submit...

S.168A GST Act | 'Recommendation' Of GST Council To Extend Limitation Period Can Be Substituted By Subsequent 'Ratification': Telangana HC

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