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2025 (5) TMI 43 - HC - GSTValidity of Notification Extending the deadlines for issuing show cause notices and passing adjudication orders - challenges the vires of multiple notifications - COVID-19 pandemic - Proper procedure not followed prior to the issuance - prior recommendation of the GST Council is essential for extending deadlines - notification No. 09 of 2023 (Central Tax) notification No. 56 of 2023 (Central Tax) notification No. 09 of 2023 (State Tax) notification No. 56 of 2023 (State Tax). HELD THAT - A perusal of the above would show that various High Courts have taken a view and the matter is squarely now pending before the Supreme Court. The challenge to the notifications itself various counsels submit that even if the same are upheld they would still pray for relief for the parties as the Petitioners have been unable to file replies due to several reasons and were unable to avail of personal hearings in most cases. In effect therefore in most cases the adjudication orders are passed ex-parte. Huge demands have been raised and even penalties have been imposed. Broadly there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court this Court is of the prima facie view that depending upon the categories of petitions orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases proceedings including appellate remedies may be permitted to be pursued by the Petitioners without delving into the question of the validity of the said notifications at this stage. The said categories and proposed reliefs have been broadly put to the parties today. They may seek instructions and revert by tomorrow i.e. 23rd April 2025.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this batch of writ petitions under Article 226 of the Constitution of India are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of Notifications Extending Time Limits under Section 168A of the GST Act Relevant Legal Framework and Precedents: Section 168A of the GST Act empowers the Central Government to extend the time limits for issuance of SCNs and passing of adjudication orders for specified financial years, subject to prior recommendation of the GST Council. The GST Council is a constitutional body tasked with making recommendations on issues relating to GST. The notifications in question (Nos. 09 and 56 of 2023 for Central and State Tax) extended deadlines for financial years 2017-18, 2018-19, and 2019-20 due to delays caused by the COVID-19 pandemic. Various High Courts have adjudicated on the validity of these notifications. The Allahabad High Court upheld Notification No. 9 of 2023 (Central Tax), the Patna High Court upheld Notification No. 56 of 2023 (Central Tax), whereas the Guwahati High Court quashed Notification No. 56 of 2023 (Central Tax). The Telangana High Court expressed reservations about the validity of Notification No. 56 of 2023 (Central Tax), and the matter is presently pending before the Supreme Court in SLP No. 4240/2025. Court's Interpretation and Reasoning: The Court noted that the challenge to the notifications primarily revolves around compliance with the procedural requirement under Section 168A that the GST Council must recommend the extension prior to issuance. It was noted that Notification No. 9 of 2023 had the requisite prior recommendation, whereas Notification No. 56 of 2023 (Central Tax) was issued without prior GST Council recommendation and only ratified post issuance, which is contrary to the statutory mandate. Key Evidence and Findings: The Court examined the dates of issuance of the notifications and the corresponding GST Council meetings and recommendations. Notification No. 56 of 2023 (State Tax) was issued on 11th July 2024 after the expiry of the limitation period under Notification No. 13 of 2022 (State Tax), raising further questions on its validity. Application of Law to Facts: The Court recognized the statutory mandate requiring prior GST Council recommendation and observed that the failure to adhere to this procedure renders Notification No. 56 of 2023 (Central Tax) vulnerable to challenge. The Court also acknowledged the conflicting High Court decisions and the ongoing Supreme Court proceedings on the issue. Treatment of Competing Arguments: Petitioners argued that the notifications were invalid due to procedural lapses and that the extensions were unwarranted. Respondents contended that the delays caused by the pandemic justified the extensions and that the notifications were valid. The Court noted the split judicial opinion and the Supreme Court's intervention. Conclusions: The Court refrained from expressing a final opinion on the validity of the notifications, deferring to the Supreme Court's pending adjudication. It acknowledged the prima facie procedural irregularities in Notification No. 56 of 2023 (Central Tax) and the issuance of Notification No. 56 of 2023 (State Tax) beyond the prescribed limitation period. Issue 2: Procedural Fairness and Relief to Petitioners in Light of Delayed Proceedings Relevant Legal Framework: Principles of natural justice require that parties be given a fair opportunity to present their case, including filing replies and availing personal hearings before adjudication. The GST adjudication process under Section 73 involves issuance of SCNs and passing of Orders-in-Original, which must comply with due process. Court's Interpretation and Reasoning: The Court noted submissions from counsel that many petitioners were unable to file replies or avail personal hearings due to various reasons, leading to ex-parte adjudication orders and imposition of penalties. The Court expressed a prima facie view that irrespective of the validity of the notifications, petitioners should be afforded an opportunity to place their stand before the adjudicating authorities. Key Evidence and Findings: The Court observed that significant demands and penalties have been raised against petitioners, often without their participation in the proceedings, which raises concerns of fairness. Application of Law to Facts: The Court indicated that procedural safeguards and opportunities for hearing must be upheld, and that appellate remedies should be allowed to petitioners even if the notifications extending limitation periods are ultimately upheld. Treatment of Competing Arguments: Petitioners emphasized the need for relief due to procedural lapses and inability to participate. Respondents highlighted the statutory framework and pandemic-related delays but did not dispute the necessity of fair opportunity. The Court leaned towards protecting petitioners' rights to be heard. Conclusions: The Court proposed to pass orders permitting petitioners to present their case before adjudicating authorities and pursue appellate remedies, without prejudging the validity of the notifications at this stage. Issue 3: Impact of Conflicting Judicial Decisions and Pending Supreme Court Proceedings Relevant Legal Framework: Judicial discipline requires lower courts to follow binding precedent and respect ongoing higher court proceedings. The Supreme Court is the final arbiter on constitutional and statutory interpretation. Court's Interpretation and Reasoning: The Court noted the divergent views of various High Courts on the validity of the notifications and the pendency of the Supreme Court's decision in the related SLP. It referred to the Punjab and Haryana High Court's order, which refrained from expressing an opinion on the vires of Section 168A and the notifications, deferring to the Supreme Court's forthcoming judgment. Key Evidence and Findings: The Court acknowledged the Supreme Court's interim order dated 21st February 2025, which issued notice and listed the matter for hearing, reflecting the importance and complexity of the issues. Application of Law to Facts: The Court applied the principle of judicial restraint and adherence to the hierarchy of courts by deferring final adjudication on the notifications' validity to the Supreme Court. Treatment of Competing Arguments: Both parties recognized the Supreme Court's role as the final authority. The Court balanced the need to protect parties' rights with the necessity to avoid conflicting judgments. Conclusions: The Court disposed of the writ petitions with directions that the interim orders continue to operate and that the final decision of the Supreme Court would be binding on all parties. 3. SIGNIFICANT HOLDINGS "In terms of Section 168A, prior recommendation of the GST Council is essential for extending deadlines." "Notification No. 56 of 2023 (Central Tax) was issued contrary to the mandate under Section 168A of the Central Goods and Services Tax Act, 2017 and ratification was given subsequent to the issuance of the notification." "The matter is squarely now pending before the Supreme Court." "Almost all the issues, which have been raised before us in these present connected cases and have been noticed hereinabove, are the subject matter of the Hon'ble Supreme Court in the aforesaid SLP." "Keeping in view the judicial discipline, we refrain from giving our opinion with respect to the vires of Section 168-A of the Act as well as the notifications issued in purported exercise of power under Section 168-A of the Act which have been challenged." "Depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority." "In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage."
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