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ISSUES PRESENTED AND CONSIDERED
1. Whether Notification No.09/2023 (Central Tax) and the corresponding State notification issued under Section 168A of the Tamil Nadu GST Act are legally sustainable insofar as they affect the reckoning of limitation by excluding the period 15.03.2020 to 28.02.2022.
2. Whether the impugned notifications operate to diminish or curtail limitation made available by a judicial order under Article 142 of the Constitution and thereby unlawfully extinguish vested rights or render exercise of assessment powers arbitrary.
3. Whether the impugned notifications are vitiated by erroneous assumptions of law, failure to examine relevant materials, or by being issued before or on improper recommendations (i.e., without requisite GST Council recommendation or relying on an improper recommending body).
4. Whether the consequential assessment order passed by the assessing authority in view of the impugned notifications is sustainable, and if not, what remedial course (quashing and remand, treating the order as show cause notice, opportunity to be heard) should follow.
ISSUE-WISE DETAILED ANALYSIS
Issue 1 - Legal framework for reckoning limitation vis-à-vis the period 15.03.2020-28.02.2022
Legal framework: The limitation regime under the Central/State GST enactments (Section 73 and Section 168A contextually) governs time-limits for assessment and related proceedings; this interacts with the judicial order issued under Article 142 of the Constitution which directed exclusion of the period 15.03.2020 to 28.02.2022 for limitation reckoning.
Precedent treatment: The Principal Bench decision (referred to and followed) held that authorities shall have the benefit of exclusion of that period while reckoning limitation under relevant GST provisions in accordance with the Supreme Court order under Article 142.
Interpretation and reasoning: The Court accepts the Principal Bench conclusion that the exclusion proclaimed by the Supreme Court governs limitation computation and that statutory or executive measures cannot curtail the benefit thereby conferred.
Ratio vs. Obiter: The acceptance that the exclusion period must be given effect is ratio; reliance on the higher court's Article 142 order is central to the decision.
Conclusion: The exclusion of 15.03.2020 to 28.02.2022 must be applied when computing limitation for GST assessments; notifications purporting otherwise are impermissible.
Issue 2 - Validity of the impugned notifications for diminishing limitation and extinguishing vested rights; arbitrariness
Legal framework: Executive notifications under fiscal statutes must not operate contrary to constitutional orders or arbitrarily curtail substantive or procedural rights conferred by judicial pronouncements.
Precedent treatment: The Principal Bench held Notification Nos.9 and 56 of 2023 vitiated for diminishing limitation and for being arbitrary in crucial respects; this treatment is followed.
Interpretation and reasoning: The notifications were found to proceed on an erroneous assumption regarding the limitation available post the Article 142 order, and by so doing they curtailed limitation that was available to authorities, thereby extinguishing vested right of action and exhibiting arbitrariness. The issuance without proper examination of relevant materials further underpins arbitrariness.
Ratio vs. Obiter: The conclusion that notifications which diminish judicially-declared limitation are invalid is ratio. Observations about arbitrariness and extinguishment of vested rights support the legal conclusion and form part of the operative reasoning.
Conclusion: The impugned notifications are legally unsustainable to the extent they curtail the exclusion period and thereby diminish limitation; they are vitiated by arbitrariness and erroneous assumptions.
Issue 3 - Validity of notifications issued prior to or without proper recommendatory process
Legal framework: Notifications affecting GST regime that require recommendation/consultation (as per the statutory scheme) must comply with mandated processes; non-compliance can render them illegal.
Precedent treatment: The Principal Bench treated a notification made prior to recommendations of the GST Council or based on an improper recommending body as vitiated; this position is applied.
Interpretation and reasoning: A notification issued before required recommendations or based on recommendations of a body that cannot substitute the GST Council fails the statutory mandate and is therefore invalid.
Ratio vs. Obiter: The requirement of compliance with statutory recommendatory processes is a ratio supporting invalidation where mandates are disregarded.
Conclusion: Notifications issued without adherence to the statutory recommendatory process are invalid to that extent.
Issue 4 - Validity of the consequential assessment order and appropriate remedy (quashment, remand, opportunity to be heard)
Legal framework: Where foundational notifications are held invalid, consequential adjudications premised on them may be quashed and remitted for fresh consideration; principles of natural justice require opportunity of hearing before fresh orders are passed.
Precedent treatment: The Court, following the Principal Bench, remanded matters to assessing authorities to pass fresh orders afresh after treating impugned assessments/acts as show cause notices and affording opportunity to object/hear.
Interpretation and reasoning: Because the assessment order was passed in the shadow of the impugned notification(s) now held unsustainable, the assessment is quashed as tainted and must be reconsidered on merits in light of the correct legal position on limitation and after affording the taxpayer hearing. The impugned order is to be treated as an addendum to the show cause notice; timelines for filing objections and for authorities to pass fresh orders are prescribed.
Ratio vs. Obiter: The quashment of the assessment and remand with directions to treat the order as a show cause notice and to afford hearing is ratio for remedying orders founded on invalid notifications.
Conclusion: The assessment order is quashed and remitted for fresh decision within a stipulated time; the impugned order shall be an addendum to the show cause notice, the petitioner must file a reply within the prescribed period, and the assessing authority must afford hearing before passing fresh orders.
Cross-references
All remedies and conclusions follow and are cross-referenced to the Principal Bench decision which held (i) exclusion of 15.03.2020-28.02.2022 applies, (ii) impugned notifications are vitiated for the reasons enumerated, and (iii) remand with opportunity to be heard is the appropriate course for assessments affected thereby.
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