Bombay HC Questions Validity of GST Section 168A Notifications Issued Without Council Recommendation

Evie Real Estate Private Limited Vs State of Maharashtra (Bombay High Court)

The Bombay High Court considered a writ petition challenging the validity of certain notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017. The petitioner sought to quash Notification No. 9/2023 and Notification No. 56/2023 issued by both the Union of India and the State of Maharashtra, which extended statutory time limits. The petitioner also challenged a consequential adjudication order dated 29 August 2024 issued under Section 73(9) of the CGST Act in Form GST DRC-07.

The primary contention raised was that the impugned notifications, particularly Notification No. 56/2023 (Central and State), were issued without the recommendation of the GST Council, which is a mandatory requirement under Section 168A. While earlier notifications dated 31 March 2023 and 24 May 2023 were stated to have been issued on such recommendation, the later notifications were alleged to be non-compliant with the statutory requirement and therefore ultra vires. It was argued that if these subsequent notifications were set aside, the adjudication order would also fail as it was passed beyond the permissible limitation period.

The petitioner relied on judicial precedents, including a decision of the Gauhati High Court and a ruling of the Telangana High Court, though it was noted that the Telangana High Court had held that limitation was extended due to a Supreme Court order in the matter of Re Cognizance for Extension of Limitation. It was further submitted that the Telangana High Court judgment is under challenge before the Supreme Court, which is currently seized of the issue.

On behalf of the State, it was argued that Section 168A was introduced through the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to address extraordinary situations such as the Covid-19 pandemic, which qualifies as a force majeure event. It was contended that the issuance of notifications extending timelines was justified in this context. However, the State was unable to confirm whether the subsequent notifications were issued on the recommendation of the GST Council.

After hearing both sides, the Court observed that the petition raises arguable questions of law, particularly regarding compliance with statutory requirements for issuing notifications under Section 168A. The Court also noted that similar issues are pending before the Supreme Court.

In light of these considerations, the Court admitted the writ petition and issued Rule. Respondents waived service in part, and notice was directed to remaining parties. On the question of interim relief, the Court referred to a prior decision of its Nagpur Bench in a similar matter, where coercive action had been restrained. Considering that the validity of the notifications and the consequential adjudication order was under challenge, the Court held that a strong prima facie case was made out.

Accordingly, interim relief was granted, restraining the respondents from taking any coercive steps or further proceedings pursuant to the impugned adjudication order dated 29 August 2024 during the pendency of the petition. The Court also granted liberty to the parties to apply for further directions depending on the outcome of the proceedings pending before the Supreme Court.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. The above Writ Petition challenges the Notification No. 9/2023 – Central Tax dated 31^st March, 2023 and Notification No. 56/2023 – Central Tax dated 28^th December, 2023 issued by Respondent No.4 (Union of India) and Notification No. 9/2023- State Tax dated 24^th May, 2023 and Notification No. 56/2023 dated 16^th January, 2024 issued by Respondent No. 1 ( State of Maharashtra) exercising powers under Section 168A of the Central Goods and Services Tax Act, 2017 (CGST Act). Consequently, the Petitioner also seeks quashing of the impugned Order No. E-536/1106/LTU-03/ GST Audit/2019-20/2024-25/B-174, Mumbai, dated 29^th August, 2024 issued in Form GST DRC- 07 dated 29.08.2024 (Ref. No. ZD270824087894L) passed by Respondent No. 3 under Section 73(9) of the CGST Act.

2. The short point in this Writ Petition is that the Notifications issued under Section 168A, extending the time limits specified under the CGST Act, are wholly illegal and ultra vires. The main ground of challenge is that these Notifications have to be issued on the recommendation of the GST Council (Respondent No.5). It is the case of the Petitioner that though the Notification No. 9/2023-Central Tax dated 31^st March, 2023 and the Notification No.9/2023-State Tax dated 24^th May, 2023 are issued on the recommendation of the GST Council, the subsequent Notifications, namely, Notification No. 56/2023-Central Tax dated 28^th December, 2023 and Notification No. 56/2023-State Tax dated 16^th January, 2024 are not issued on the recommendation of the GST Council. Since there has been non­compliance of the provisions of Section 168A, the same are impugned in the present Writ Petition.

3. The reason why the impugned order is challenged, is because if the Notifications dated 28^th December, 2023 and 16^th January, 2024 are set aside, then, as a corollary, the impugned Order would also have to go, as the same is passed beyond the extended period prescribed by Notifications dated 31^st March 2023 and 24^th May, 2023 respectively.

4. Mr. Shah, the learned Senior Counsel appearing on behalf of the Petitioner, submitted that the issue raised in the present Petition is already covered by a decision of the Gauhati High Court. He submitted that though on this issue, the Telangana High Court has held in the favor of the Petitioner, it came to the conclusion that because of the order of the Hon’ble Supreme Court in “Re Cognizance for extension of limitation in (2022) (1) TMI 385 – SC ORDER”, the assessment was not time barred. He submitted that the Order of the Telangana High Court has been challenged before the Hon’ble Supreme Court and now the Supreme Court is seized of the matter. He therefore, submitted that this Writ Petition be admitted, Rule be issued, and Interim Relief be granted.

5. On the other hand, the learned AGP appearing on behalf of the State submitted that Section 168A was brought into force by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 168A was enacted specifically to deal with cases like wars and pandemics etc, and which would include the Covid- 19 Pandemic. He submitted that once this is the provision, and the fact that the Covid-19 Pandemic would be a force majeure event [as contemplated under Section 168A], no exception can be taken to the issuance of the said Notifications. As far as the question whether the Notifications have been issued on the recommendation of the GST Council, the learned AGP submitted that he is not in a position to state whether in fact the two subsequent Notifications dated 28/12/2023 and 16/1/2024 were issued on the recommendation of the GST Council, or otherwise.

6. Having heard Mr. Shah, the learned senior counsel appearing on behalf of the Petitioner, and the learned AGP appearing on behalf of the Respondent, we are of the view that arguable questions are raised in the above Writ Petition. In fact the issues raised in this Writ Petition are also the subject matter of proceedings before the Hon’ble Supreme Court (from the Judgment and order passed by Telangana High Court).

7. In these circumstances, we issue Rule. Respondent Nos. 1, 2 & 3 waive service. Notice of Rule be issued to the remaining Respondents.

8. As far as the Interim Relief is concerned, we find that in a similar matter, [ in the case of Aspect Integrated IT Pvt. Ltd Vs. Union of India (Writ Petition No. 3969 of 2024 dated 8^th July, 2025)], the Nagpur Bench of this Court has directed the Respondents in the said matter not to take any coercive action against the Petitioner. Here also, since the issue is whether the Notifications are valid and whether the impugned order could have been passed (especially, if Notifications dated 28^th December, 2023 and 16^th January, 2024 are set aside),we find that a strong prima facie case is made out for granting interim relief to the Petitioner. In these circumstances, there will be interim relief in terms of prayer clause (e) which reads thus :-

“e. that pending the hearing and final disposal of this petition, this Hon’ble Court be pleased to direct the Respondents by themselves, their officers, subordinates, servants and agents by an interim order and injunction to refrain from acting upon or taking any further steps or proceedings in pursuance of and/or in furtherance of the impugned Order No. E-536/1106/LTU-03/ GST Audit/2019-20/2024-25/B-174, Mumbai, dated 29.08.2024 issued in Form GST DRC – 07 dated 29.08.2024 (Ref. No. ZD270824087894L) by Respondent No. 3 (Exhibit “B”);”

9. We grant liberty to the parties to apply in the event the matter before the Hon’ble Supreme Court is disposed of one way or the other.

10. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.