GST: Sanjoy Manch vs UOI- Jurisdictional issue GST: Calcutta HC Grants Interim Stay

Sanjoy Mallick Vs Union of India & Ors. (Calcutta High Court)

In the case of Sanjoy Mallick vs Union of India & Ors., the Calcutta High Court addressed a jurisdictional issue regarding the extension of time limits for tax proceedings under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner contested the validity of notifications issued by the Central Board of Indirect Taxes and Customs (CBIC) that extended the deadline for initiating tax recovery proceedings for the period April 2018 to March 2019. According to the petitioner, these notifications, including one dated December 28, 2023, were not applicable as the alleged force majeure conditions no longer prevailed when the show-cause notice was issued on December 8, 2023. The petitioner argued that these extensions were a colorable exercise of power and sought a stay on the adjudication order dated April 26, 2024, along with the consequential tax demand.

The Court, recognizing the jurisdictional contention and citing a prima facie case, referred to a similar precedent in OSL Exclusive Pvt. Ltd. vs Union of India & Ors. (2024 SCC Online Cal 2826). It granted an interim stay on the impugned tax demand until February 28, 2025, or further orders, whichever is earlier. The respondents, including the State of West Bengal and the Central Government, were directed to file an affidavit-in-opposition within four weeks, with the petitioner’s reply to follow within two weeks thereafter. The matter is scheduled for hearing in January 2025. The judgment highlights critical issues surrounding the interpretation of Section 168A of the CGST Act and its applicability to extend statutory timelines in non-force majeure scenarios.

Assessee was represented by Advocate Himangshu Kumar Ray

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

Learned counsel appearing for the petitioner is requested to serve a copy of the writ petition on the office of the learned Advocate General, State of West Bengal as well as the Senior Central Government Advocate, Ministry of Law & Justice (Office of Learned Additional Solicitor General of India) within a week.

Mr. Amalesh Ray appears for the petitioner, Mr. Anirban Ray appears for the State and Mr. Ghosh appears for the respondent no.5.

According to the petitioner, ordinarily no proceeding for the tax period 2018-19 could have been initiated against the petitioner after three years from due date of furnishing returns, however, in the present case the respondents on the strength of the notifications dated 5^th July, 2022 and 31s^t March, 2023 issued by the Central Board of Income Taxes and Customs, whereby the time limit as specified in Section (10) of Section 73 of the said Act for issuance of the order under sub-Section 9 of Section 73 in the said Act for recovery of Tax not paid or short paid or input tax credit wrongly availed or utilized relating to the period as specified in the said notification, had been extended, proceeded with the determination of liability for the Tax period April 2018 to March, 2019. The said period for passing an order under Section 73(9) of the said Act has been further extended by a notification dated 28^th December, 2023.

Mr. Ray, learned advocate appearing for the petitioner by referring to Section 168A of the said Act submits that the said Section has been introduced with effect from 31 March 2020, whereunder a power has been conferred on the government to extend the time limit prescribed or notified under the said Act, in special circumstances in respect of actions which cannot be completed or complied with due to force majeure. The aforesaid notifications could not have been relied on for initiation of fresh proceeding. By referring to the order dated 3rd April, 2024 it is submitted that when the show cause cum demand notice under Section 73 of the said Act was issued on 8^th December, 2023, since, there was no force majeure prevailing at that time, the respondents could not have relied on the aforesaid notifications for extending the time for initiation of proceeding in the year 2023. In any event based on the above notifications no fresh proceedings could have been issued. According to the petitioners, the aforesaid notifications as also the aforesaid show cause notice and the adjudication order had been issued in colourable exercise of power. In such circumstances, Mr. Ray prays for a stay of the adjudication order dated 26t^h April, 2024 and the consequential demand.

Mr. Ray and Mr. Ghosh prays for a direction to file affidavit-in-opposition.

Let affidavit-in-opposition be filed within four weeks, reply, if any, be filed within two weeks thereafter.

Taking into consideration the fact that a jurisdictional issue has been raised and 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 21 th March, 2024 in an identical matter in the case of OSL Exclusive Pvt. Ltd. Versus Union of India & Ors. reported in 2024 SCC Online Cal 2826 had been pleased to pass a limited interim order, I do hereby stay the impugned demand made in the order dated 26t^h April, 2024 annexed with annexure P-9 of the writ petition till 28^th February, 2025 or until further order whichever is earlier.

Let this matter appear under the heading “For Hearing” in the Monthly list of January, 2025.