In a significant development, the honorable Gauhati High Court in Mahabir Tiwari v. Union of India [2025] 175 taxmann.com 176 (Gauhati) has declared Notification No. 56/2023-Central Tax dated 28.12.2023, issued by the CBIC to extend the time limit under Section 73(10) of the CGST Act for FYs 2018-19 and 2019-20, as ultra vires the CGST Act, 2017. The court quashed both the Notification and the consequent demand orders issued against the assessee. This judgment may have far reaching consequences so far as the validity of these extensions and consequent show cause notices and orders under these extensions are concerned.
Background of the Case
The petitioner, Mahabir Tiwari, challenged the following:
- Notification No. 56/2023-Central Tax, which extended the limitation period under Section 73(10) for FYs 2018-19 and 2019-20.
- A subsequent demand-cum-show cause notice dated 30.05.2024.
- The Order-in-Original dated 29.08.2024 confirming a tax demand of ₹1.20 crore.
The petitioner argued that:
1.The extension was not based on any force majeure event as required under Section 168A.
2. The extension was issued without the mandatory recommendation of the GST Council.
Key Legal Issues
1.whether recommendation of the GST Council mandatory under Section 168A of the CGST Act for extension of limitation?
2. Does absence of force majeure invalidate the Government’s power to extend timelines under Section 168A?
3. Are actions taken based on such an invalid notification legally sustainable?
Observations & Ruling by the Court
The Court observed that similar challenge to vires of Notification No. 56/2023 was presented before the co-ordinate bench of this Court in Barkataki Print and media services and there the Bench disposed off the petitions by declaring the Notification No. 56/2023 as ultra vires the CGST Act.
Section 168A: Conditional Delegation of Power
The Court emphasized:
- Section 168A permits the Government to extend time limits only upon recommendation of the GST Council.
- The presence of force majeure is a prerequisite for invoking Section 168A.
“The existence of a recommendation is a sine qua non for exercising the power under Section 168A to extend the timelines.” — Gauhati HC
The Court discussed whether recommendation of GST Council is a sine qua non for exercise of power under Section 168A?
The Court invoked Article 279A and Article 246A of the Constitution and reiterated the principle of cooperative federalism as laid down in the Supreme Court’s ruling in Mohit Minerals Pvt. Ltd..
The HC clarified:
- The GST Council’s recommendation, although not legislatively binding, is mandatory wherever expressly required by the statute, like in Section 168A.
- The absence of such recommendation renders the notification invalid. Thus the recommendations of the GST Council were held to be a sine qua non before exercising powers under Section 168A of the Act.
3. No Force Majeure = No Power to Extend
- The court pointed out that the Government failed to identify or declare any force majeure event justifying the extension for FY 2019-20.
- The 49th GST Council Meeting itself declined further extensions, underlining no justification existed.
Final Decision
- Notification No. 56/2023-Central Tax dated 28.12.2023 was quashed as ultra vires.
- SCN and Order-in-Original issued under the extended timelines were also quashed.
- The petitioner, Mahabir Tiwari, was granted full relief.
Implications of the Judgment
1.Critical Precedent: Reinforces that procedural compliance (especially with GST Council’s role) is to be observed strictly wherever applicable. Notifications extending time lines is a special privilege to the department which must adhere to the procedural regularities including pre conditions if any.
2. Check on Arbitrary Extensions: Prevents misuse of delegated legislative powers.
3. Clarity on Force Majeure: Simply issuing a notification without demonstrating actual circumstances of force majeure as contemplated in the section itself won’t suffice under Section 168A.
Reference:
Author Bio
Sir,
Pl.comment on issuance of notfn by Govt. overlooking SC decision in (2022) 37 J.K.Jain’s GST & VR 42 Cognizance For Extension of Limitation. Such notfn is in utter disregard to the principles laid down by the Hon’ble Supreme
Court. I have covered entire details in my article titled “Extension of Time limit for issuance of SCN or Adjudication Order─Ground of ‘Force Majeure’ u/s 168A(1)” pub in (2024) 42 J.K.Jain’s GST & VR Pages A-5 to A-6.
CA Om Prakash Jain s/o J.K.Jai, Jaipur
TEL: 9414300730/ 9462749040/0141-3584043