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

Indus Towers Ltd. Vs Union of India (Gauhati High Court)

The Hon’ble Gauhati High Court in the case of M/s. Indus Towers Ltd. v. Union of India [WP(C)/ 529/2024 dated February 12, 2024], 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 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 WP(C)/ 529/2024 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.

Conclusion: The Gauhati High Court’s decision in the Indus Towers Ltd. vs Union of India case underscores the nuanced interpretation of statutory provisions and the application of legal principles. While the petitioner’s challenge against the notification was addressed, the Court balanced considerations of precedent, statutory authority, and equitable relief in its verdict. This case serves as a significant reference point in understanding the judicial stance on matters concerning taxation laws and administrative notifications under the CGST Act.

FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT

Heard Mr. A. Kanodia, learned counsel for the petitioner through virtual mode, assisted by Mr. P. Das, learned counsel for the petitioner and Mr. S.C. Keyal, learned Standing Counsel, CGST for all the respondents.

2. In this writ petition instituted under Article 226 of the Constitution of India, the petitioner has inter alia assailed [i] Notification no. 09/2023 – Central Tax dated 31.03.2023 [Annexure-I]; and [ii] a Demand–cum–Show Cause Notice bearing C. No. IV[15]25/SCN­Bharati/II-D/ACG-II/2023/2429 dated 21.12.2023 [Annexure-II], issued by the respondent 2 to the petitioner.

3. The Notification dated 31.03.2023 is issued in exercise of powers conferred by Section 168A of the Central Goods and Services Act, 2017 and other identical provisions of the Integrated Goods and Services Tax Act, 2017 and the Union Territory Goods and Services Tax Act, 2017. By exercising the said power, the time limit specified under sub-section [10] of Section 73 of the CGST Act for issuance of an order under sub-section [9] of Section 73 for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, relating inter alia to the period, that is, Financial Year : 2018-2019 has been extended upto 31.03.2024. It is on the basis of the said Notification, the Demand–cum–Show Cause Notice dated 21.12.2023 has been issued asking the petitioner to show cause as to why a sum of Rs. 62,06,927/- shall not be demanded and recovered from the petitioner under Section 73[1] of the CGST Act, 2017 and corresponding Section of SGST Act, 2017 as Ineligible Input Tax Credit [ITC] received from the suppliers, who did not file their GSTRTB returns and other amounts under Section 16[4] plus interest and penalty. It is the contention of the petitioner that after the year 2022, there was no COVID-19 pandemic in existence. Attention has been drawn to the order dated 10.01.2022 passed by the Hon’ble Supreme Court of India in Suo Motu Writ Petition [C] no. 3 of 2020 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 28.02.2022. Thus, there was no occasion for the Council to take resort to the factor of Covid­19 pandemic in order to extend the time limit under sub-section [10] of Section 73 of the CGST Act, 2017.

4. The learned counsel for the petitioner has also contended that the Hon’ble Allahabad High Court vide Annexure-IV Order, the Hon’ble Gujarat High Court vide Annexure-V Order, the Hon’ble Punjab & Haryana High Court vide Annexure-VI Order, and the Hon’ble Madras High Court vide Annexure-VII Order have granted interim protection to the noticees, similarly situated like the petitioner herein.

5. Keyal, learned Standing Counsel, CGST has contended that in Civil Appeal no. 4672/2012 [Naresh Chandra Agarwal vs. Institute of Chartered Accountants of India and others], decided on 08.02.2024, the Hon’ble Supreme Court of India has dealt on matters relating to challenge made in respect of rules made in exercise of powers conferred by the governing statute.

6. Issue notice, returnable on 15.03.2024.

7. In the Explanation to Section 168A of the CGST Act, 2017, 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 Act. It is noticed that the time limit under sub-section [10] of Section 73 of the SGCT Act was extended once prior to the Notification dated 31.03.2023.

8. The Hon’ble Allahabad High Court vide Annexure-IV Order, the Hon’ble Gujarat High Court vide Annexure-V Order, the Hon’ble Punjab & Haryana High Court vide Annexure-VI Order, and the Hon’ble Madras High Court vide Annexure-VII Order, have provided interim reliefs to the noticees by inter alia observing that the proceedings in pursuance of the impugned Show Cause Notice may proceed but no final order shall be passed. The said interim orders are stated to be in operation till date.

9. Having considered the above aspects, including the nature of orders passed by 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, it is observed that the petitioner shall file its reply to the impugned Show Cause Notice on or before 15.03.2024. It is further observed that till the returnable date, the proceedings initiated pursuant to the impugned Show Cause notice may proceed, but no final order in respect of the impugned Show Cause Notice shall be passed.

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