CBIC Extended SCN and Order Deadlines; Bombay High Court Stays Garnishee GST Notice

The Bombay High Court citing CBIC Notification No. 56/2023-Central Tax dated December 28, 2023, which extended the deadline for issuing show cause notices (SCNs) and orders, granted an interim stay on the garnishee notice.

The State Tax Officer, Thane Division, Thane (Respondent No. 3) issued a Garnishee GST Notice in Form DRC-13 dated February 14, 2025, asking Respondent Bank to pay the Government Rs. 2,18,77,406 for the tax that the Petitioner owed under the GST Act. The applicant, NTT Data Business Solutions Pvt Ltd, contested this notice.

Notification No. 56/2023-Central Tax dated December 28, 2023, and Notification No. 56/2023-State Tax, No. MGST-1524/C. R.6/Taxation-1 dated January 16, 2024, issued u/s 168A of the Central Goods and Services Tax Act, 2017 read with Section 168A of the Maharashtra Goods and Services Tax Act, 2017 are also contested, including the garnishee notice, show cause notice, and order.

The CBIC through GST Notification No. 56/2023-Central Tax dated 28.12.2023, announces an extension of the due dates outlined in s. 73(10) for issuing an order under s. 73(9) for recovery tax that has been underpaid or not paid, or for ITC that has been improperly used or obtained for any intent other than fraud or willful misrepresentation or suppression of facts.

The extension concerns the following directives issued u/s 73(9) of the CGST Act for the fiscal years 2018–19 and 2019–20: FY 2018–19, until April 30, 2024, and FY 2019–20, until August 31, 2024.

The petition challenges the contested order, garnishee notice, and SCN on various grounds. One of the arguments raised is that the Petitioner was never served with the Show Cause Notice, resulting in a breach of natural justice standards that leaves the challenged order open to appeal. The garnishee notice cannot stand and should be set aside if the order is granted.

It was claimed by the applicant that the order must have been issued by March 31, 2024. But based on the notifications on December 28, 2023, and January 16, 2024, as we cited before, the order was passed on August 13, 2024. It was ruled by the applicant that such notifications breach Section 168A of the CGST Act and the MGST Act as they were not been issued as per the suggestions of the GST council which is one of the obligatory conditions of Section 168A. In any matter, the order could not stand if such notifications are set aside as the submission was incurred post-due date.

As per the department, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, was the reason section 168A came into force. As per the government, section 168A was made to address cases similar to the pandemic and wars, which would include the COVID-19 pandemic. She claimed that no exemption could be incurred to the issuance of the above-mentioned notifications once the same clause is in place and the COVID-19 pandemic is regarded as a force majeure occurrence.

In the Writ Petition, the presented claims are still pending adjudication in several orders Writ Petitions, along with Writ Petition No. 5146 of 2024 and Writ Petition No. 5471 of 2024. These notifications of CBIC have been overturned already via the Gauhati High Court. Even after ruling in favour of the applicant in the same case, it was concluded by the Telangana High Court that the assessment was not limited to time as per the Supreme Court’s order in “Re-Cognizance for extension of limitation in (2022) (1) TMI 385-SC ORDER.”

It was noted by the division bench, which is made up of Justices B. P. Colabawalla and Firdosh P. Pooniwalla that the applicant has not merely made out a case for admission but also for grant of interim relief. The court ruled that a substantial prima facie case is made out for granting interim relief to the applicant.