A Supreme Court Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan took note of the conflicting High Court rulings, emphasizing the need for a thorough legal examination.
The Supreme Court of India has reserved its judgment on the contentious issue of whether the government can extend the adjudication time limit for Goods and Services Tax (GST) Show Cause Notices (SCN) through notifications issued under Section 168A of the GST Act, 2017. This matter before the supreme court arises from a Special Leave Petition (SLP) filed by M/S HCC-SEW-MEIL-AAG JV against the Assistant Commissioner of State Tax and Others, challenging the validity of these notifications for extending the limitation period concerning the Financial Year 2019-2020.
Conflicting High Court Rulings
The issue gained prominence due to conflicting rulings by various High Courts. In a prior judgment, the Telangana High Court dismissed Writ Petition No. 1154 of 2024, filed by M/s. Brunda Infra Pvt. Limited and Others, challenging the validity of Notification Nos. 13/2022, 9/2023, and 56/2023, dated July 5, 2022, March 31, 2023, and December 28, 2023, respectively. The petitioners argued that these notifications unlawfully extended the time limit prescribed under Section 73(10) of the GST Act.
The case involved an SCN issued on May 31, 2024, followed by an Order-in-Original passed on August 29, 2024, beyond the prescribed limitation period as per section 73(10) of the GST Act. The petitioners contended that the government exceeded its authority by invoking Section 168A to extend the limitation period, despite the absence of any force majeure event, as COVID-19 relaxations had officially ended on February 28, 2022.
Legal Arguments and Precedents
The petitioners relied on key High Court rulings to strengthen their argument. In Graziano Transmissions v. Goods and Services Tax (2023 TAXSCAN (HC) 1948), the Allahabad High Court held that Supreme Court orders extending limitation under suo motu jurisdiction did not apply to GST proceedings. Similarly, in M/s. Barkataki Print and Media Services, Dhrubajyoti Barkotoku v. Union of India (2024), the Gauhati High Court opined that GST Council recommendations were mandatory before invoking Section 168A.
Contrarily, the Telangana High Court, in a Division Bench ruling comprising Justice Sujoy Paul and Justice G. Radha Rani, upheld the notifications. The court reasoned that Section 168A explicitly allowed extensions due to force majeure events. It emphasized that requiring GST Council recommendations ensured government decisions aligned with the Doctrine of Cooperative Federalism.
Supreme Court’s Observations
A Supreme Court Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan took note of the conflicting High Court rulings, emphasizing the need for a thorough legal examination. While acknowledging that Section 168A was designed to address exceptional circumstances, the court noted the varied interpretations of its applicability.
Senior Advocate S. Muralidhar, representing the petitioners, highlighted the inconsistencies in judicial decisions. Considering the significance of the matter, the Bench issued a notice to the respondents regarding the SLP and the request for interim relief. The case is scheduled for further proceedings on March 7, 2025.
Legal Representation
The petitioners were represented by a distinguished legal team, including S. Muralidhar, Aditi Anil Dani, M. Ramachandra Murthy, Niharika Singh, M.A. Karthik, Maitreya Subramaniam, and Pallak Bhagat.
Conclusion
With the Supreme Court reserving its verdict, the case has significant implications for GST law, particularly on whether Section 168A can be invoked to extend adjudication timelines without force majeure conditions. The ruling will likely provide much-needed clarity on the government’s power to extend limitations under the GST framework, ensuring uniformity in judicial interpretation across states.
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