Notification challenged as there was no force majeure in existence to exercise power under Section 168A

[CA Bimal Jain]

The Hon’ble Gauhati High Court in the case of M/S INDUS TOWERS LIMITED (FORMERLY KNOWN AS BHARTI INFRATEL LIMITED) VERSUS THE UNION OF INDIA AND 4 ORS., THE ASSISTANT COMMISSIONER OF CGST AND CX, THE PRINCIPAL COMMISSIONER OF CGST AND CX, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE CHAIRPERSON GOODS AND SERVICE TAX COUNCIL - 2024 (2) TMI 761 - GAUHATI HIGH COURT, held that as per interim orders passed by the various High Court in respect to Notification No. 09/2023-CT dated March 31, 2023 (“the Notification”), the Assessee shall file the reply to the Notice, however, till the returnable date, no final order in respect of the Impugned Notice shall be passed. Hence, this Court passed the same order in the present case as well.

Facts:

M/s. Indus Towers (“the Petitioner”) was issued the Demand-cum-Show Cause Notice dated December 21, 2023 (“the Impugned Notice”) was issued asking to show cause as to why a sum of Rs. 62,06,927/- shall not be demanded and recovered from the Petitioner under the Sub-Section (1) of Section 73 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and corresponding Section of State Goods and Services Tax Act, 2017 (“the SGST Act”) as ineligible Input Tax Credit (“ITC”) received from the suppliers, who did not file their FORM GSTR-3B returns and other amounts under the Section 16(4) of the CGST Act plus interest and penalty.

The Notification was issued in the exercise of powers conferred by Section 168A of the CGST Act and other identical provisions of the IGST Act and the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”). By exercising the said powers, the time limit specified under the Sub-Section (10) of Section 73 of the CGST Act for issuance of an order under the Sub-Section (9) of Section 73 of the CGST Act for recovery of tax not paid or short paid or of ITC wrongly availed or utilized, relating inter alia to the period, that is, Financial Year 2018-2019 has been extended upto March 31, 2024.

The Petitioner contended that after the year 2022, there was no COVID-19 pandemic in existence. Further, attention was drawn to the Order dated January 10, 2022, passed by the Hon'ble Supreme Court of India in Suo Motu Writ Petition (Civil) no. 3 of 2020 [IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION - 2022 (1) TMI 385 - SC ORDER] to contend that the Hon'ble Supreme Court of India after taking all the factors into account, had extended the period of limitation only upto February 28, 2022. Thus, the Council did not need to take resort to the factor of the COVID-19 pandemic to extend the time limit under Sub-Section (10) of Section 73 of the CGST Act.

Hence, aggrieved by the circumstances, the present writ petition was filed before the Hon’ble High Court.

Issue:

Can Notification be challenged if issued under Section 168A of the CGST Act?

Held:

The Hon’ble Gauhati High Court in M/S INDUS TOWERS LIMITED (FORMERLY KNOWN AS BHARTI INFRATEL LIMITED) VERSUS THE UNION OF INDIA AND 4 ORS., THE ASSISTANT COMMISSIONER OF CGST AND CX, THE PRINCIPAL COMMISSIONER OF CGST AND CX, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE CHAIRPERSON GOODS AND SERVICE TAX COUNCIL - 2024 (2) TMI 761 - GAUHATI HIGH COURT held as under:

• Observed that, in the Explanation to Section 168A of the CGST Act, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake, or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the CGST Act. Therefore, the time limit under Sub-Section (10) of Section 73 of the SGST Act was extended once before the Notification dated March 31, 2023.
• Held that, the Hon'ble Allahabad High Court, the Hon'ble Gujarat High Court, the Hon'ble Punjab & Haryana High Court, and the Hon'ble Madras High Court, have provided interim reliefs to the noticees by observing that the proceedings in pursuance of the notices may proceed but no final order shall be passed. The said interim orders are stated to be in operation till date. Therefore, the Petitioner shall file the reply to the Impugned Notice on or before March 15, 2024. Further, till the returnable date, the proceedings initiated pursuant to the Impugned Notice may proceed, but no final order in respect of the Impugned Notice shall be passed.

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