Case Law Details
Anmol Stainless Private Limited & Anr. Vs Deputy Commissioner of State Tax (Calcutta High Court)
Calcutta High Court has granted a stay on a demand notice issued to Anmol Stainless Private Limited, citing a prima facie case against the validity of notifications that extended the limitation period for issuing show cause notices (SCNs) under the Goods and Services Tax (GST) regime. The court observed that the extension of time, purportedly under Section 168A of the WBGST/CGST Act, 2017, appeared questionable given the absence of “force majeure” circumstances at the time the SCN was issued.
The petitioner, Anmol Stainless Private Limited, challenged the show cause cum demand notice issued on April 30, 2024, in respect of the tax period April 2019 to March 2020. This notice led to an adjudication order dated August 27, 2024, and a consequential demand. The central thrust of the petitioner’s argument, as presented by learned advocate Mr. Kanodia, was the alleged improper reliance by the tax authorities on Central Board of Indirect Taxes and Customs (CBIC) Notifications No. 31st March, 2023 (Notification 9/2023-CT) and 28th December, 2023 (Notification 56/2023-CT).
Mr. Kanodia explained that these notifications aimed to extend the time limit for issuing orders under Section 73(9) of the GST Act, which deals with the recovery of tax not paid or short paid, or input tax credit wrongly availed or utilized, by extending the time limit specified in Section 73(10).
The petitioner’s counsel referred to Section 168A of the GST Act, introduced with effect from March 31, 2020. This section grants the government the power to extend prescribed or notified time limits only “in special circumstances in respect of actions which cannot be completed or complied with due to force majeure.” The petitioner contended that as there was no prevailing force majeure when the proceedings were initiated in April 2024 for the period of April 2019 to March 2020, the respondents could not have legitimately relied on the aforementioned notifications to extend the time limit.
It was argued that the notifications, the show cause notice, and the subsequent adjudication order were issued in a “colourable exercise of power,” infringing upon a “valuable right” that had already accrued in favor of the petitioner, presumably referring to the expiry of the original limitation period. Based on these arguments, Mr. Kanodia sought a stay on the operation of the impugned order and the consequential demand.
Mr. Siddiqui, learned advocate for the State GST authorities, countered by requesting the court to allow the filing of affidavits, arguing that the writ petition could not be decided without a proper exchange of pleadings.
The High Court acknowledged that a “jurisdictional issue” had been raised, necessitating a full hearing of the writ petition. Consequently, the court directed the respondents to file an affidavit-in-opposition within four weeks, with the petitioner granted three weeks thereafter to file a reply, if any.
Significantly, the court decided to grant interim relief to the petitioner. It noted that a “prima facie case has been made out” by the petitioner. The court also took into consideration a previous order by a coordinate Bench of the Calcutta High Court dated February 13, 2024, in an “identical matter,” OSL Exclusive (P.) Ltd. v. Union of India (2024) 21 Centax 400 (Cal.)/2024 165 com 652 (Calcutta)/2024 SCC OnLine Cal 2826. In that case, a similar limited interim order was passed.
Drawing parallels with the OSL Exclusive precedent and recognizing the prima facie strength of the petitioner’s arguments, the Calcutta High Court stayed the impugned demand made in the order dated August 27, 2024 (Annexure P-6 to the writ petition). This interim stay will remain in effect until the end of December 2025 or until further order, whichever is earlier.
The issue of the validity of Notifications 9/2023-CT and 56/2023-CT has been a subject of contention across various High Courts in India. These notifications, among others, were issued to extend time limits for various GST compliances, including the issuance of assessment orders, often citing the COVID-19 pandemic as a “force majeure” event. However, their application to tax periods well past the immediate pandemic impact and the procedural compliance with Section 168A, particularly the requirement for prior GST Council recommendations, have been widely challenged.
For instance, the Delhi High Court, in a recent case, acknowledged a “cleavage of opinion” among different High Courts regarding the validity of these notifications. While some High Courts, like Allahabad and Patna, have upheld the validity of certain notifications, the Guwahati High Court has quashed Notification No. 56/2023-CT, finding it ultra vires the CGST Act for being issued without the mandatory recommendation of the GST Council. The Telangana High Court has also made observations questioning its validity. The Supreme Court of India is currently seized of the matter in S.L.P No 4240/2025 titled M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors., specifically addressing whether the time limit for adjudication of SCNs and passing orders under Section 73 could have been extended by these notifications under Section 168A.
The Calcutta High Court’s decision in Anmol Stainless Private Limited & Anr. Vs. Deputy Commissioner of State Tax aligns with the broader judicial scrutiny of these extended limitation periods. By granting a stay based on a prima facie case and the jurisdictional issue, the court implicitly acknowledges the significant legal questions surrounding the authority’s power to extend limitation periods without a clear and present “force majeure” as envisioned by Section 168A, or without proper procedural adherence like GST Council recommendations. This interim relief provides immediate succor to the assessee while the larger legal questions are adjudicated, potentially by the Supreme Court. The case is set for further hearing after the exchange of affidavits.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. Affidavit-of-service filed in court today be taken on record.
2. Kanodia learned advocate appearing for the petitioner, by placing reliance on the notifications dated 31st March, 2023 and 28th December, 2023 submits that the Central Board of Indirect Taxes and Customs by the aforesaid notifications have extended the time limit as specified in Section 73(10) of the WBGST/CGST Act, 2017 (herein referred to as the “said Act”) for issuance of the order under Section 73(9) of the said Act for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, relating to then period as specified in the said notifications.
3. By referring to Section 168A of the said Act the petitioner claims that the said section has been introduced with effect from 31st March 2020, whereunder a power has been conferred on the government to extend the time limit prescribed or notified under the Act in special circumstances in respect of actions which cannot be completed or complied with due to force majeure. By referring to the order dated 27th August 2024, it is submitted that the show cause cum demand notice under Section 73 of the said Act was issued on 30th April, 2024 in respect of the tax period April 2019 to March 2020. Since, there was no force majeure prevailing then, the respondents could not have relied on the aforesaid notifications for extending the time for initiation of proceeding in April 2024. According to the petitioner the aforesaid notifications as also the aforesaid show cause notice and the adjudication order had been issued in colourable exercise of power. A valuable right has already accrued in favour of the petitioner. In such circumstances, Mr. Kanodia prays for stay of operation of the aforesaid order and the consequential demand.
4. Siddiqui, learned advocate appearing on behalf of the State GST authorities submits that the present writ petition cannot be decided without calling for affidavits. He submits that the respondents should be granted opportunity to file affidavit-in-opposition.
5. Having regard to the aforesaid and since a jurisdictional issue has been raised, the writ petition shall be heard. Let affidavit-in-opposition to the present writ petition be filed within a period of four weeks from date. Reply thereto, if any, be filed within three weeks thereafter.
6. Taking into consideration the fact that a prima facie case has been made out by the petitioner, and the fact that a coordinate Bench of this Court by an order dated 13th February, 2024 in an identical matter in the case of OSL Exclusive (P.) Ltd. Union of India (2024) 21 Centax 400 (Cal.)/2024 165 com 652 (Calcutta)/2024 SCC OnLine Cal 2826 had been pleased to pass a limited interim order, I propose to stay the impugned demand made in the order dated 27th August, 2024 as appearing at annexure P-6 to the writ petition till the end of December 2025 or until further order, whichever is earlier.
7. Liberty to mention after expiry of the period for exchange of affidavits.
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