Summary: India is positioning itself as a business-friendly destination, but inefficiencies in its tax administration present significant challenges for taxpayers. Despite initiatives like Make in India, the recent case of Barkataki Print and Media Services vs. Union of India highlights systemic issues within the tax department. The Central Government’s Notification No. 56/2023-Central Tax, extending deadlines for tax orders under Section 73(10) of the CGST Act, was issued without proper consultation from the GST Council, raising concerns about its validity. The Honorable High Court noted that the department’s contradictory affidavits illustrated a lack of adherence to constitutional and procedural norms, with initial admissions of oversight later refuted. The court emphasized that the phrase “on the recommendation of the Council” was misleading, as there was no official recommendation from the GST Council at the time of the notification’s issuance. This case underscores the detrimental effects of mismanagement and lack of transparency within the tax authorities, eroding trust and complicating business operations. Such inefficiencies not only hinder compliance but also raise concerns about the integrity of the tax administration, highlighting the urgent need for reform to improve taxpayer experiences.
India has been making remarkable strides towards business-friendly environment, positioning itself as a favorable destination for international investment. With initiatives like Make in India and Atmanirbhar Bharat, the country has seen significant economic growth, infrastructure development, and a drive to ease doing business, attracting global investors.
However, certain inefficiencies within the country’s tax administration continue to pose significant hurdles for businesses and taxpayers, undermining the ease of doing business.
The Central Government has issued Notification No. 56/2023-Central Tax dated 26th December 2023, which extended the deadline for tax orders under Section 73(10) of the CGST Act and was under challenge before the Honourable High Court of Gauhati, in the case of Barkataki Print and Media Services vs. Union of India, (2024) 22 Centax 479 (Gau.). The argument raised by the petitioner before the Honourable high court was that this notification was required to be issued after the recommendation of the GST council, and whereas the council recommendation has not been taken and hence the Notification is ultra vires.
Without going into the merits of this argument, what has come to the observation of the honourable high court is that the department has filed its first affidavit without reading of the provisions of Constitution and the provisions of the Act. The department has made, “a complete summersault”, from its earlier stand taken before the high court.
Initially, the CGST department admitted in its affidavit that this procedural step was overlooked. However, in a later affidavit, the department shifted its stance, arguing that the GST Council’s recommendation was not mandatory, despite the earlier acknowledgment of the oversight. This contradictory position raised concerns about transparency and accountability within the tax administration.
The relevant portions of the judgment are as follows:
“22. On the basis of the said recommendation, the Notification No.9/2023-CT was issued on 31st of March 2023 whereby the period for passing the order in terms of Section 73(9) was extended for the Financial Year 2017-18 up to 31st of December,2023; for the Financial Year 2018-19 up to 31st March, 2024 and for the Financial Year 2019-20 up to the 30th of June, 2024.This Notification No.9/2023-CT is impugned in some of the writ petitions.
23. The record further reveals and more particularly from the stand of the CGST in their first affidavit filed in WP(C)No.1229/2024 that though the period was extended vide the Notification No.9/2023-CT but as the time limit for issuance of notice in terms of Section 73(2) of the Central Act for the financial year 2018-19 was expiring on 31.12.2023 and there was no meeting of the GST Council scheduled to be held, the Central Government issued the Notification No.56/2023-CT thereby extending the time limit for passing of the order under Section 73(9) for the financial year 2018-19 up to 30th April, 2024 and for the financial year 2019-20 up to 31st August, 2024.
24. It is pertinent to mention herein that in spite of the fact that there was no recommendation from the GST Council but in the Notification No. 56/2023-CT, the Central Government had used the phrase “on the recommendation of the Council”. It is also apposite to take note of circular bearing No.FNO.CBIC-20/10/07/2021-GST/516 dated 14.05.2024 which was issued by the Deputy Commissioner, GST to all the Principal Chief Commissioners/ Chief Commissioners of Central Tax and Customs, DGRI, DGGI wherein at Clause 2.8.1, it was categorically mentioned that there was no recommendation taken prior to issuance of the Notification No.56/2023-CT dated 28.03.2023 and the request for recommendation shall be placed before the GST Council for ratification in the next meeting. In addition to that, in the first affidavit filed by the Assistant Commissioner, Law in WP(C) No.1229/2024, the same stand was taken. It is also relevant to mention that during the course of the hearing, the relevant excerpts of Meeting of the GST Council in its 50th, 51st, 52nd, 53rd and 54th Meeting were placed wherein also there is no mention of any recommendation from the GST Council.
25. This Court finds it pertinent to mention that in WP(C) No.1229/2024 another affidavit-in-opposition was filed wherein it was mentioned that the affidavit-in-opposition which was filed on 01.06.2024 may not be taken into consideration for the ends of justice inasmuch as the said affidavit was filed on non-reading of the provisions of the Constitution and the Central Act. A perusal of the said affidavit shows that a complete summersault had been made by the CGST to its earlier standby stating that the recommendation is not binding. However, there is no explanation to the content of the Notification No. 56/2023-CT wherein it is mentioned that the said Notification had been issued on the recommendation of the GST Council.”
The Honourable High Court has also observed that even the Central Government has made use of the words, “on the recommendations of the council”, while in fact there exists no recommendation from the council till date for this notification which has been issued under the powers of Section 168A of the CGST Act, 2017.
This case has highlighted the mismanagement by tax authorities, who not only failed to follow proper legal procedures but also made contradictory statement. Such inefficiency and misrepresentation harm the trust necessary for smooth business operations. It also raises questions on the lenient approach being taken by the department while making affidavits before a Constitutional Court.
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