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2025 Supreme(Online)(Tel) 15028
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUJOY PAUL, CJ, G.RADHA RANI, J
M/s. SPIKE TECHNOLOGIES – Appellant
Versus
The Assistant Commissioner of State Tax – Respondent
WP/29507/2024
The extension of time limits under the GST Act requires prior recommendations from the GST Council to ensure validity and prevent arbitrary actions by the government.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 168A - Extension of time limit due to COVID-19 pandemic - Notifications challenged for lack of force majeure - Court emphasized that time limits can only be extended under special circumstances as per statute - Notification No. 56/2023 criticized for not following necessary recommendation process of GST Council, as it was based on ratification rather than initial recommendation. (Paras 1, 9, 101, 129)
(B) The principle of strict interpretation of taxation statutes - The requirement for a notification or action is to align with the statutory provisions and must include recommendations from the GST Council as a condition precedent for validity. (Paras 60, 106, 113)
Facts of the case:
Petitioners sought to challenge multiple notifications extending limitation for tax compliance that were argued to be issued without proper authority and due process, concerning financial years impacted by the COVID-19 pandemic. (Paras 1-4, 103-104)
Findings of Court:
The court identified that the impugned notifications were issued without proper recommendations from the GST Council, thus deeming them invalid. Additionally, the court ruled that the statutory provisions must be strictly adhered to and that recommendations are essential for the validity of extensions. (Paras 116-121)
Issues: The primary issues were whether the government could extend statutory limitations without prior GST Council recommendations and if such notifications constituted an abuse of power. (Paras 2, 11)
Ratio Decidendi: The court concluded that notifications lacking necessary recommendations from the GST Council are void, highlighting the importance of following statutory procedures in tax matters. Additionally, it determined that statutory limitations cannot be extended arbitrarily but must align with the legislative framework provided in the GST Act. (Paras 94, 95)
Result: Writ petitions dismissed, petitioners allowed a statutory remedy of appeal.
COMMON ORDER
(per Hon’ble SP,J)
In this batch of writ petitions, the petitioners have called in question the legality, validity and propriety of notification Nos.13/2022, dated 05.07.2022, 9 and 56/2023, dated 31.03.2023 and 28.12.2023, respectively. The pari materia/ corresponding notification Nos.118/2023, dated 25.08.2023 and 170/2023, dated 17.12.2023 issued by State of Telangana are also subject matter of challenge. These notifications are admittedly issued in purported exercise of power under Section 168A of The Central Goods and Services Tax Act, 2017 (for short, ‘the GST Act’).
Factual background and Contention of the petitioners:
2. The facts are taken from W.P. No. 33390 of 2024. Sri S. Ravi, learned Senior Counsel representing Sri P. Venkata Prasad, learned counsel for the petitioner, submits that this matter relates to F.Y. 2019-2020. The show-cause notice was issued on 31.05.2024. The Order-in-Original (‘OIO’) was passed on 29.08.2024 after the maximum period of limitation prescribed under Section 73(10) of the GST Act. Under the garb of extension of limitation as per impugned notifications, said OIO came to be passed. Criticizing the impugned notification Nos. 9 and 56 of 2023, it is contended that on the date of issuance of these notifications, no force majeure conditions were in existence. Section 168A of the GST Act, in no uncertain terms makes it clear that limitation can be extended on availability of ‘special circumstances’. In absence of force majeure circumstance on the date of issuance of notifications, these notifications cannot be said to be passed based on enabling provision.
3. To buttress aforesaid contention, the letter written by Secretary, Home Department to Chief Secretaries of all the States, dated 22.03.2023 was highlighted to establish that there was no need to invoke provisions of the Disaster Management Act, 2005. Thus, COVID-19 period, admittedly, came to an end before impugned notifications were issued. Paragraph Nos. 6(1), (6), (7) and (8) of said letter were relied upon.
4. The next limb of argument is that COVID-19 relaxations/extensions are not available to the Government. Notification Nos. 35/2020, dated 03.04.2020 and 14 of 2021, dated 01.05.2021, were referred to show that time for completion or compliance of any action was extended upto 30.06.2021. Hence, only for compliance of Section 73 of the GST Act, the time limit was extended till 31.12.2023 or 30.04.2024/31.08.2024. For any other compliance, time limit was extended only upto 30.06.2021. Thus, any extension of time beyond 30.06.2021 is impermissible even by invoking Section 168A of the GST Act.
5. Furthermore, the extension was made vide Notification No.13/2022-Central Tax, dated 05.07.2022, wherein time limit under Section 73(10) of the CGST Act for F.Y. 2017-18 was extended upto 30.09.2023 by excluding the intervening period between 01.03.2020 to 20.08.2022 for recovery of erroneous refund cases under Section 73(10) and refund claims under Section 54. The above extension was issued on 05.07.2022 allowing the Department to issue notices on or before 30.09.2023. Assuming that above extension was valid and is in consonance with Section 168A, there was no requirement for any further extension. Thus, it appears that the Department is using the COVID-19 pandemic as an excuse and reason to undo their failure of not completing assessments and raising demands under Section 73 within stipulated time.
6. Heavy reliance is placed on CBIC Circular No.157/13/2021- GST, dated 20.07.2021, to canvass the point that the understanding of respondent-Department is that the orders passed by Supreme Court in suo motu jurisdiction extending limitation period are not applicable to the Department. Similarly, CBIC instructions No. 2/2021, dated 22.09.2021, expects strict adherence to the time line provided under Section 73 of the GST Act and does not take excuse of difficulties arising out of COVID-19 pandemic.
7. The time limit can be extended only on avail
