TaxTMI 
TaxTMI 
2024 (6) TMI 233
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....tioner : Vinayak Mithal, Arjit Gupta, Manish Gupta, Anurag Mishra, Pragya Pandey, Suyash Agarwal, Nitin Kumar Kesarwani, Suyash Agarwal, Arjit Gupta, Manish Gupta, Aditya Pandey, Atul Gupta, Rishi Raj Kapoor, Manoj Kumar Sinha, Rajneesh Tripathi, Sr. Advocate, Punit Kumar Upadhyay, Indra Deo Mishra, Pankaj Kumar Tiwari For the Respondent : A.S.G.I., C.S.C., Gaurav Mahajan, Naveen Chandra Gupta, A.S.G.I., Amit Mahajan, C.S.C., Gopal Verma, A.S.G.I., Krishna Agarawal, S.S.C., Amit Mahajan, C.S.C., Gopal Verma, A.S.G.I., Gaurav Mahajan, Naveen Chandra Gupta, A.S.G.I., C.S.C., Gaurav Mahajan, Gopal Verma, A.S.G.I., C.S.C., Gaurav Mahajan, Naveen Chandra Gupta, A.S.G.I., Amit Mahajan, C.S.C., Naveen Chandra Gupta, C.S.C., Gopal Verma, Manoj Kumar Sinha, Rajneesh Tripathi, Sr. Advocate, A.S.G.I., C.S.C., Parv Agarwal ORDER HON'BLE DONADI RAMESH, J. 1. Heard Sri Rakesh Ranjan Agarwal learned Senior Counsel assisted by Sri Suyash Agarwal, Sri Divyanshu Agarwal and Sri Vinayak Mittal, Sri Shambhu Chopra learned Senior Counsel assisted by Sri Rajnish Tripathi, Sri Praveen Kumar, Sri Nishant Mishra, Sri Atul Gupta, Sri Abhinav Mehrotra, Sri Venkat Prasad Pasupaleti (through vide....
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....Mr Ramesh Chandra Vs. Goods And Service Tax Council And 4 Others 2017-18 10. 460 of 2024 M/S Vinod Kumar Rai Vs. State Of Up And 2 Others 2017-18 11. 80 of 2024 Ms Lg Electronic India Pvt Ltd Vs. State Of Up And 2 Others 2017-18 12. 825 of 2024 M/S Yuvaan Enterprises Vs. Goods And Service Tax Council And 4 Others 2017-18 13. 522 of 2024 M/S Tara Products And Services Private Limited Vs. Goods And Service Tax Council And 4 Others 2017-18 14. 548 of 2024 M/S Vds Contractor Vs. Goods And Service Tax Council And 5 Others 2017-18 15. 597 of 2024 M/S Mani Electricals Vs. Goods And Service Tax Council And 4 Others 2017-18 16. 841 of 2024 M/S Neptune Suppliers Private Limited Vs. Goods And Service Tax Council And 4 Others 2017-18 17. 897 of 2024 M/S Subhash Infraengineers Pvt. Ltd. Vs. Union Of India And 4 Others 2017-18 18. 902 of 2024 M/S Subhash Infraengineers Pvt Ltd. Vs.Union Of India And 4 Others 2017-18 3. By earlier order, we had consolidated the above described and other petitions raising same and/or similar challenge. Since, only legal issues are involved, Counter Affidavits were required to be filed by the respondents in the lead case i.e. W....
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....due date of furnishing of Annual Return. For F.Y. 2017-18 such order order could be passed upto 31 December 2021. Also, under Section 73(3) of the Central Act and the State Act, the mandatory notice preceding an adjudication order [contemplated under Section 73(10) of the Act], could be issued not later than three months prior to the last date on which the Adjudication Order may be passed. Therefore, for the F.Y. 2017-18 such notice could be issued not later than 30 September 2021. 7. It is a fact, F.Y. 2017-18 (July, 2017 to March, 2018) was the first year under the GST regime. It is a matter of common knowledge that the revenue authorities and the tax payers alike, faced numerous difficulties in complying the new law. Therefore, the time for making compliances was extended and relaxations were granted by the Government, from time to time. It is on record - vide Notification dated 03.2.2020 issued under Section 44 (as it then existed) read with Rule 80 of the Rules framed under the Central Act, the last date for filing Annual Return for the F.Y. 2017-18 was extended - for the State of Uttar Pradesh, till 07 February 2020. Similar Notification No. 509 dated 05.02.2020 was issued b....
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....imilar Notification was issued by the State Government being Notification No. 445 dated 11.05.2020. Later, another Notification No. 14/2021-Central Tax, dated 01 May 2021 was issued under Section 168A of the Central Act providing for similar extension of time, to perform acts that were required to be performed during 15 April 2021-29 June 2021 upto 30 June 2021. It was complemented by similar Notification No. 496 dated 28.06.2021, issued by the State Government, under the State Act. 10. Later, vide Notification No. 13/2022-Central Tax dated 05 July 2022, issued by the Government of India, (acting through the CBIC) under Section 168A of the Central Act, extended the time limit specified under Section 73(10) of the Central Act for F.Y. 2017-18, upto 30 September 2023. Parallel notification was issued by the State Government being Notification No. 596, dated 21.7.20222 providing for similar extension of time. These notifications have not been challenged. 11. Last, vide Notification No. 9/2023 dated 31.03.2023 issued by the Government of India through the CBIC, the time limitation prescribed under Section 73(10) of the Central Act for F.Y. 2017-18, was extended upto 31.12.2023. A par....
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....of time granted under Section 168-A of the Central Act and the State Act qua adjudication proceedings for F.Y. 2017-18, no action was initiated against the petitioners, during that extended period of limitation. 15. Coming to the challenge raised to Notification No. 9 of 2023 (issued by the Central Government) and Notification No. 515 of 2023 (issued by the State Government) hereinafter collectively referred to as the impugned notifications, it has been submitted, first, the time extension notifications have not arisen on an independent exercise but only by way of partial modification of the first time extension granted. 16. Second, it has been asserted that on 31.03.2023, there did not exist any COVID-19 circumstance at the time of issuance of the impugned notifications. The staff attendance at government and non-government offices stood regularised. Pre-existing office working restrictions were done away. Referring to the impugned time extension clause in Section 168-A of the Central Act and the State Act, it has been submitted that there did not exist any 'force majeure' circumstance. Referring to the order of the Supreme Court passed in Re: Cognizance for Extension of....
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....en emphasised that the process of scrutiny of returns, audit etc., was not covered. The fact that the revenue authorities failed to perform those functions may not be now protected by seeking extension of limitation to pass adjudication order. 19. Third, it has been submitted, no compliance has been made to the statutory requirements of Section 168A of the Act. Since the ingredients of 'force majeure' circumstance did not exist on the relevant date i.e. issuance of the impugned notifications, they are wholly ultra vires. By way of another limb of this submission, it has been further asserted that the Central Government and the State Government should have acted independent of the opinion or advise of the Council. Power to issue the time extension notifications being delegated to the Government, no blind or mute compliance may have been offered by the delegate to the opinion of the Council. Reference has been made to the impugned notifications and also to the resolution of the Law Committee considered by the Council, to submit that both are silent to the existence of 'force majeure' circumstance relevant to the impugned notifications. 20. To clarify, he would submit, unless such c....
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....ed party on the performance of its obligations. Referring to the circumstances that existed viz-a-viz the challenge brought before us and referring to the documents and pleadings, it has been shown, inspections (on 25.2.2022); audit (on 3.2.2022); audit notice (on 14.10.2022); audit order (on 13.12.2022) and various other actions were performed. In such circumstances, it has been submitted, there were no 'force majeure' circumstance as may have prevented the revenue authorities from initiating adjudication proceedings before the cut-off date 30.6.2023. Merely because there may have existed certain difficulties, those may not have been cited as an impossibility. Thus, it has been contended, the issuance of the impugned notifications falls foul with the power vested with the Central Government and the State Government under Section 168A of the Central Act and the State Act. 22. Next, it has been submitted, limitation is a substantive right. It impacts the right of the tax-payers. Referring to the marginal note to TOLA, emphasis has been laid to the words "special circumstance" appearing in the marginal note. Thus, it has been emphasized, the power vested under Section 168A o....
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....tions are discriminatory to the extent they partially modified the earlier Notifications dated 1.5.2021 and 28.6.2021 issued by the Central Government, and State Government respectively. That part of the earlier notifications which were in favour of the petitioner, has been done away. At the same time, the revenue has taken undue benefit by seeking extension of limitation to initiate adjudication proceedings. 27. Fourth, it has been submitted, the impugned notifications are not peripheral but substantive. Time prescription is essential for the purpose of issuance of proceedings in the nature of reassessment and/or adjudication. Wherever extension of time is required, the primary legislation provides for the same. In the present case, that function has been circumscribed by the conditions enumerated under Section 168A of the Act. Therefore, unless the 'force majeure' circumstance (of continuance of COVID-19) was a fact in existence, the primary legislative function cannot be seen to be validly exercised by the delegate - either the Central Government or the State Government. Reliance has been placed on Independent Schools' Association, Chandigarh (Regd.) & Ors. Vs. Unio....
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....bsence of any power vested in the Council to make such recommendation, merely because under Article 279-A(6), the Council may determine its procedure in the performance of its functions, may not give rise to any other power or sphere for exercise of such power to make any recommendation. Thus, it has been suggested, the provision of Section 168-A of the Central Act and the State Act, are not wholly inconsistent to Article 279-A. Any recommendation made by the Council to the Central Government and the State Government that is not in consonance with the Constitutional and/or statutory law, would remain unenforceable. 32. Next, Sri Praveen Kumar offered a clarification at the very beginning. He would submit, Section 168-A is a piece of conditional legislation. The conditions on which delegate may act are specifically prescribed therein. There can be no doubt or imagination as to that. Thus, only when an 'action' for which time limit may have been prescribed, specified or notified, cannot be completed or complied within that time, only then, the Central Government and/or the State Government may act, to provide for time extension. Having laid that premise, he would proceed to ....
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....o complete or comply with the timelines to perform specified actions. Since those notifications were never assailed, more than enough time was made available to the revenue authorities to initiate and complete action that had yet not been initiated. In that regard, he would submit, the words "cannot be completed or complied" refer to an impossibility in fact and/or in law. In absence of notices issued to initiate any adjudication proceeding, the stage was not set to record any satisfaction that the action to pass adjudication orders could not be completed or complied. 36. Referring to P. Ramanatha Aiyar's, The Law Lexicon, Second Edition 1997, he would elaborate that word 'cannot' includes a legal inability, as well as a physical impossibility. (The Newbattle, 54 LJPD & A 16). Further, referring to the said law lexicon, he would elaborate that the word 'complete' may only mean to finish; accomplish that which one starts out to do. (Black's Law Dictionary). He has also referred to and relied on Article 356 (1) of the Constitution of India and the decision of the Supreme Court in S.R. Bommai v. Union of India, AIR 1994 SC 1918, to submit that strict meaning of th....
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....the revenue authorities. 38. Referring to the words 'due to force majeure' used under Section 168A of the Act, he would submit, the legislature clearly intended, conditional legislation may arise only as direct consequence of a 'force majeure' circumstance existing for which reason, any action may remain from being completed or complied. Insofar as it cannot be disputed that the COVID-19 circumstance came to an end in the year 2021 itself, and in any case did not extend beyond January and February, 2022, exercise of that conditional legislation after expiry of the 'force majeure' circumstance, is ultra vires the Central Act and the State Act. 39. Shri Atul Gupta has offered another hue to the submissions advanced in these proceedings. He would submit, the impugned notifications are discriminatory. By virtue of the language used in Section 73 and Section 74 of the Central and the State Act, a clear demarcation exists between a registered person from whom tax may have remained to be collected, for reasons other than the fraud and those from whom due tax may remain to be collected for reason of fraud. Legislative wisdom remains, to treat the two categories of....
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....rt, it is his submission, the entire action of issuance of the impugned notifications is wholly discriminatory and arbitrary. Therefore, it falls foul of Article 14 of the Constitution of India. He has referred to and relied on Shayara Bano v. Union of India, (2017) 9 SCC, to submit, even a principal legislation is not immune to the test of manifest arbitrariness. Here, the challenge is to delegated legislation. In absence of any justifiable 'force majeure' circumstance shown to exist as may have allowed for such delegated power to arise or to be exercised, the unjust and arbitrary result growing from it, clearly establishes its invalidity. 43. Shri Nishant Mishra would first submit, repeated extensions granted in a routine way are contrary to the legislative intent and object expressed in the language of Section 168A of the Central Act and the State Act. That provision contemplates a limited intervention to be made by the Central or the State Government for reason of 'force majeure' circumstance having obstructed any action that was required to be completed or complied during the existence of continuance of 'force majeure' circumstance. Referring to UP Goo....
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....rect legislative check inasmuch as any order thereunder must be approved by the respective principal legislative body, in contrast, under Section 168-A of the Central Act and the State Act, power may be exercised within the confines of the self limitations of that section. The general power was exercised by the Central Government and the State Government whereby the date of filing of Annual Return for the period 01.07.2017 to 01.07.2018 had been extended to 31.12.2019 and again to 31.01.2020, respectively. 48. Second, the reason given in the minutes of the 49th meeting of the GST Council only establish difficulty. They do not refer to existence or continuance of a 'force majeure' circumstance. To that extent, those recommendations are contrary to the express provisions of Section 168A of the Central Act and the State Act. Further, it has been submitted, the consideration of reasons in the 49th Meeting of the Council do not constitute or give rise to appreciation of any 'force majeure' circumstance. At best, the Council discussed the difficulties faced by some of the "tax administrations". 49. Even in the agenda considered by the Council, the discussion exists only....
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....ubmitted that the impugned notifications must satisfy twin conditions of 'force majeure' circumstance existing and also the impossibilities (both legal and factual), in the completion of actions. Unless the twin conditions are specifically satisfied, the action taken to issue the impugned notifications may not be valid. According to him, issuance of the impugned notifications which is an executive action is based on mixed reasons. He has relied on Dwarika Prasad Sahu Vs. State of Bihar & Ors., AIR 1975 SC 134 and State of Mysore Vs. P.R. Kulkarni & Ors., AIR 1972 SC 2170 to submit, it is not possible to cull out with any certainty, which reason prevailed with the Council and which part of the recommendation made by the Council prevailed with the Central Government or the State Government, especially because the reasons contained in the minutes of 48th Meeting of the Council refer to extraneous circumstance i.e. facts and measures falling outside twin test of 'force majeure' circumstance existing and impossibility to perform due action, for that reason. 55. In his submission, by lapse of time especially after the second/Delta Wave of the pandemic COVID-19 got over, no '....
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....e of the impugned notification. 59. Also, it has been asserted that the power vested on the Central and the State Government, is not a general power. It has been used most casually, multiple times. Referring to Circular No. 157 of 2021, dated 20.7.2021, it has been submitted that on the own understanding of the revenue, the order passed by the Supreme Court in Re: Cognizance for Extension of Limitation (supra) did not apply to adjudication proceeding. In any case the present is not a case where no proceeding may have been initiated. However, admittedly the order dated 8.12.2023 passed in this case travels beyond the issue raised in the Show Cause Notice. To that extent, the order is wholly unsustainable. 60. Next, Shri Ayush Mishra, learned counsel appearing for the petitioner in Writ-Tax No. 437 of 2023 has also adopted the submissions advanced by the other counsel of the petitioner. In addition, he has laid emphasis on the letter written by the Secretary to Chief Secretaries of all the States dated 22.03.2022 wherein it was informed, considering the overall improvement in the situation and preparedness of the government in dealing with the pandemic, the National Disaster Manage....
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....t of the spread of COVID-19. The Ordinance followed by the Act/TOLA were enacted merely to deal with the consequences arising from the spread of COVID-19, amongst other on the Central Act and the State Act. 64. While a general relaxation was granted under Section 3 of TOLO, with respect to Act Nos. 27 of 1957, 22 of 2021, 17 of 2013, 22 of 2015, 28 of 2016, 3 of 2020, the Central Act is conspicuous by its absence in that list of enactments appearing in Section 2(1)(a) of the TOLO. Insofar as the Central Act is concerned, TOLO/TOLA made special mention by incorporating Section 168A to the Central Act. Relying on the same, he would submit, there is a clear legislative understanding discernible from a plain reading of the said provision to deal with and provide differently all taxation and other laws in one way and the Central Act in another. In the Central Act, a separate section 168A, was incorporated. 65. Referring to the Explanation thereto, it has been submitted, the provisions of Constitution of India, he would submit, the Central Act and the State Act would take effect from the date to be recommended by the Council. Thus, in his submission, Constitution has given primacy to t....
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....o buttress his submission, Shri Mahajan would submit, challenge has arisen in the context of legislative function and not an administrative action. So long as the delegate of the principal legislature was vested with the authority to issue the impugned notifications and insofar as relevant circumstances are clearly seen to exist - that prompted the exercise of delegated function and further inasmuch as the procedural requirements, of prior recommendation of the Council did exist, the test of reasonableness stands satisfied. 68. Here, he has referred to State of Tamil Nadu Vs. P. Krishnamurthy & Ors., (2006) 4 SCC 517 to submit that there exists a presumption in favour of constitutionality and validity of a subordinate legislation and the burden to prove otherwise remains on the challenger i.e. the petitioners before this Court. Further, as to the grounds on which subordinate legislation may be struck down, amongst others, it may be either for lack of legislative competence or violation of fundamental rights or violation of another statute or failure to conform to the statute or repugnancy to other laws of the land or manifest arbitrariness. In considering the challenge raised to t....
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....have been left to the imagined appreciation of the Executive. 72. Reliance has been placed on Naresh Chand Agarwal Vs. Institute of Chartered Accountants of India, Neutral Citation 2024 INSC 94, to emphasize that the Court may first determine and consider the source of power which is relatable to the rule and second, it must determine the meaning of subordinate legislation itself. Finally, it must decide whether the subordinate legislation is consistent to the scope of power delegated. Then, relying on Reckitt Benckiser India Private Limited Vs. UOI (2024) GSTL 113 (Del), it has been submitted, the words - "with respect to" are similar to the words "in respect of" used under Section 168A of the Central Act and the State Act. Those are words of wide amplitude and thus the power delegated to the Central Government and the State Government under that provision of law must be interpreted to include ancillary, incidental and necessary matters. It may not be confined to the direct actions as propounded by learned counsel for the petitioners. Therefore, the words "in respect of" though used in conjunction with the words "actions" do not restrict the exercise of power under Section 168A o....
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....e being 07.2.2020. That work was completely disabled occasioned by the spread of the pandemic COVID-19. The lockdown itself was declared on 25.3.2020. It was followed by extreme measures taken by the Central Government under the Disaster Management Act, 2005 restricting the movement of citizens, curtailing their activities and resulting in staggered attendance at government offices with restricted timings and exemption to certain class of employees. Only minimum/necessary works were being performed at government offices, including by the revenue authorities. Therefore, the action taken by the Central and the State Governments/delegates is in conformity to the provisions of Section 168A of the Central Act and the State Act. Sri Mahajan would submit, neither the Council nor the Government have acted mechanically. 75. Besides the discussion offered to the circumstances and the 'force majeure circumstance' and their consequences resulting in non-initiation/completion of the preliminary steps that were required to be undertaken before any valid adjudication may have arisen i.e. steps involving scrutiny and audit, both, the Council as well as the Central Government were mindful of the f....
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....us recognised that no judicial or quasi judicial proceeding could be conducted for reason of disablement occasioned by spread of the pandemic COVID-19, the similar appreciation made by the Council while making a recommendation though couched differently, cannot be faulted for the reasons and circumstances pressed by the petitioners. In the present case, the period during which a scrutiny or audit or adjudication may have arisen for F.Y. 2017-18, began on 08.2.2022. Barely a month thereafter it got disabled, on 15.3.2020. It remained disabled till 28.2.2022. He has also referred to and relied on the decision of the Supreme Court in Dhanrajamal (supra) and Super Agrotech Ltd. Vs. State of U.P. and Others, (2006) 9 SCC 203. Also, he has relied on the decision of the Supreme Court in Vivek Narayan Sharma and Others Vs. Union of India and Others (2023) 3 SCC 1 to rely on the principle that a judicial review being claimed may not extend to test the fairness of the decision but only to the manner in which it may have been taken. Decisions that arise on consideration of numerous factors may never be tested on the merits of the decision made. 77. Last, it has been submitted that the impugn....
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....ce of that document cannot be denied. He would thus submit, the World Health Organisation first declared the pandemic COVID-19, not a Global Health Emergency, as late as on 05.5.2023. Therefore, the contention advanced by learned counsel for the petitioners that the COVID-19 circumstance came to an end in the year 2022, has been resisted. He would submit, it has clearly recognised that the COVID-19 pandemic and the circumstances arising therefrom continued to exist till May 2023. 80. As to the submission advanced by Sri Nishant Mishra that the impugned notification (by the State Government), was not issued on the strength of the recommendation made by the Council, that has been objected. In his submission, that Notification was also issued on the strength of the recommendation of the Council. 81. Then referring to the period of disruption recognised by the Supreme Court being 15.3.2020-28.2.2022 which is 01 year 11 months and 15 days, it has been submitted, if that period is to be excluded from the period of limitation that was otherwise available to the revenue authorities to pass adjudication orders for the F.Y. 2017-18 and that period were to be added to the normal period of l....
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....rson, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year. Provided that the Commissioner may, on the recommendations of the Council and for reasons to be recorded in writing, by notification, extend the time limit for furnishing the annual return for such class of registered persons as may be specified therein: Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner. 84. Notification No.6 of 2020 dated 03.02.2020 issued by CBIC and Notification No.509 dated 05.02.2020 issued by the Commissioner Commercial Tax, extended the last date of filing of Annual Return for FY 2017-18 for the State of U.P., to 07.02.2020. Then, Section 73 of the Central Act and the State Act (1), (2) (9) (10) reads as below: Section 73 - Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilfulmisstatement or suppression of....
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.... of the Constitution, the President is pleased to promulgate the following Ordinance:- 86. Since provisions of TOLO & TOLA are pari-materia, for the sake of brevity, the provisions of Section 7 of TOLA read as below: 7. After section 168 of the Central Goods and Services Tax Act, 2017, the following section shall be inserted, namely: 168A. Power of Government to extend time limit in special circumstances: (1) Notwithstanding anything contained in this Act, the Government may, on the recommendations of Council, by notification, extend the time limit specified in, or prescribed or notified under, this Act in respect of actions which cannot be completed of complied with due to force majeure. (2) The power to issue notification under sub-section (1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act. Explanation-For the purposes of this section, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act. 87. The final order pa....
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....f Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. 6. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is dismissed as withdrawn" 88. At the same time, first extensions of time were provided invoking the general power to remove difficulties, enacted under Section 172 of the Central Act and the State Act. However, those extensions were granted arising from different circumstances namely, teething problems faced by all stake holders upon introduction of Central Act and the State Act. We find those are not relevant. Therefore, no reference is being made to the same. 89. Acting under the new provision - Section 168A of the Act, the first action emerged by issuance of Notification No. 35 of 2020 dated 03.04.2020 by the Central Government and a parallel/pari materia Notification No. 445 dated 11.05.2020 issued by the State Government. For ready reference, we extract the relevant portion of the Notification No. 35 of 2020. It reads as below : "Notification-GST-Central GST (CGST) MIN....
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....wing agenda item arose at the 47th Meeting of the GST Council held on 28/29 June 2020. "1. Section 73 of the CGST Act, 2017 provides that the proper officer shall issue the order demanding any tax that has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund. 2.1 Some of the members of the Law Committee highlighted the problem being faced by the taxpayers as well as tax administration in respect of demands and refunds getting time barred due to long period of lockdown/restrictions on account of Covid-19 pandemic. A request was made to consider extension of timelines in respect of proceedings under: i. Section 73 and 74 ii. Section 54 and 55 2.2 The issue was deliberated by the Law Committee in its meeting held on 11.04.2022 and 07.05.2022. The Law Committee ....
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....dated 21.07.2022 issued by the State Government. Again those are pari materia. For ready reference, we take note of the contents of Notification No. 13 of 2022. It reads as below : "GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS NOTIFICATION No. 13/2022-Central Tax "New Delhi, the 5th July, 2022 G.S.R.......(E).- In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) and section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) and in partial modification of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), No. 35/2020-Central Tax, dated the 3rd April, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 235(E), dated the 3rd April, 2020 and No. 14/2021-Central Tax, dated the 1st May, 2021, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 310(E), dated ....
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.... can continue to be heard and disposed off and the same will be governed by those extensions of time granted by the statutes or notifications, if any. (c) Appeals by taxpayers/tax authorities against any quasijudicial order :- Wherever any appeal is required to be filed before Joint/Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where a proceeding for revision or rectification of any order is required to be undertaken, the time line for the same would stand extended as per the Hon'ble Supreme Court's order. 5. In other words, the extension of timelines granted by Hon'ble Supreme Court vide its Order dated 27.04.2021 is applicable in respect of any appeal which is required to be filed before Joint/Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to be undertaken, and is not applicable to any other proceedings under Central Act and the State Act." 94. The fourth action w....
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....said time limits could be extended. 5.7.2 Hon'ble Member from Bihar stated that while this proposal could be considered, however, it should be decided that such an extension in timelines for these financial years under sub-section (10) of section 73 of CGST Act is being made for the last time. The Council agreed with the recommendation of the Law Committee made in agenda item 4(vii), along with the proposed notification." 95. Consequently, the Central Government issued the impugned Notification No. 9 of 2023 dated 31.3.2023 and the State Government issued impugned Notification No. 519 dated 24.4.2023. They are pari materia. In material part, Notification No. 9 of 2023 reads as below: "GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS New Delhi: 31.03.2023 Notification No. 09/2023 - Central Tax S.0.1564(E). In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), and section 21 of the Union territory Goods and Services Tax Act, 20....
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.... exercised: (i) On the recommendation made by the Council; (ii) By issuance of notification to extend the time limitation specified or prescribed or notified under the Central Act and the State Act; (iii) In respect of actions which cannot be completed or complied, (iv) Due to "force majeure". 98. As to the nature of "force majeure", the Explanation to the said section offers an inclusive definition namely - war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by the nature. The words "otherwise affected" take colour from the terms and expressions appearing earlier. 99. In addition to the four conditions noted in the preceding paragraph, the Explanation also suggests that the power may be exercised in a situation where in the presence of a "force majeure" circumstance, the implementation of any of the provisions of Central Act and the State Act may have been impaired, to the extent it may necessitate extension of time limits, referred to Section 168A(1) of the Act. 100. Tested on the above principle, as a fact, the recommendation of the Council to issue the impugned notifications - to extend the time limit, exist. Also, the occurrence of ....
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....it is the submission advanced by some of the learned counsel for the petitioners that if the prescription of limitation is provided by the impugned notification had been made by the principal legislature, there may not have arisen any valid challenge thereto. 105. Therefore, the narrow compass in which the present issue is to be examined is: if the delegation made is uncanalised and/or if the delegate had acted contrary to the conditions and stipulations of the principal legislation. On the first issue, there is no doubt. In fact, it is the submission of Shri Praveen Kumar and learned Senior counsel and the other counsel for the petitioners that the principal legislature has laid down strict conditions for exercise of special powers to extend the limitation. As to the second issue, we need to examine the manner in which such extension may have been granted. 106. The occurrence of the pandemic COVID-19 is an admitted fact. Further, arising therefrom, Re:Cognizance for Extension of Limitation (supra), the Supreme Court took cognizance of that occurrence and relaxed the period of limitation (in all), beginning 15.03.2020 to 28.02.2022. Besides, consideration of the same also exists ....
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....ss. 108. Upon that representation and its consideration, the Law Committee vide its meeting dated 8.2.2023 opined that it may not be desirable to extend the timelines as may lead to "bunching" of last dates of issuance of Show Cause Notices and passing of orders under Section 73 of the Act. At the same time, the Law Committee formed an opinion favourable to grant a limited extension of time. Accordingly, time extensions were granted for F.Y. 2017-18 up to 31.12.2023, for F.Y. 2018-19 up to 31.03.2024 and for F.Y. 2019-20 up to 30.06.20204. 109. Thus, in the context of a conditional legislative function exercised by the Central Government and the State Government on the recommendation made by its expert i.e., Council, we find it difficult to hold that there was no application of mind by the delegate in issuing the impugned Notifications. The material existed as has been discussed above. The application of mind is writ large on the face of the agenda and minutes relied by learned counsel for the petitioners and admitted to the respondents. 110. Once we have held that issuance of the time extension application was a legislative function and there existed material and due deliberati....
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....ling act of the revenue authorities. It is undisputed to the petitioners that the last date of filing of Annual Return for the F.Y. 2017-18 was extended up to 7.2.2020. Consequently, no scrutiny or audit for the F.Y. 2017-18 may have been (effectively) undertaken, before that day. That function may have arisen only within a reasonable time thereafter. 113. As to the construction of reasonable time, in the context of the legislative policy providing for a three year time (to frame an adjudication order), from the last date of filing of Annual Return and further keeping in mind the legislative policy providing for issuance of Show Cause Notice up to two years and nine months from the last date of filing of Annual Return, that reasonable period of time extended up to November, 2022. 114. While the order of the Supreme Court in Re : Cognizance for Extension of Limitation (supra) may not per se apply to an adjudication proceeding and it is not the case of the respondents that they claim direct benefit of that relaxation of limitation granted for the period 15.03.2020 to 28.02.2022, at the same time, we must remember that judicial notice was taken of the disabling events triggered by t....
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....of framing adjudication order is independent of scrutiny and audit of Annual Returns. To offer that construct to the language of Section 73(1) would be over-simplistic. It is true that Central Act and the State Act specifically do not contemplate existence of limitation for prior scrutiny and audit, at the same time Section 61 of Central Act and the State Act provides that a Proper Officer may scrutinise the return, verify its correctness and, inform the registered person of the discrepancies noticed. If the explanation thereto is found acceptable, no further action is contemplated. Failure to comply with those conditions may invite action under Section 65, 66, 67 and even Section 73 of the Act. In that regard, provisions of Section 61 of the Central Act and the State Act read as below: "Scrutiny of returns 61(1) The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto. (2) In case the explanation is found acceptable, the registered person shall be informed accordingly a....
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....tutory requirement of Section 168A of the Act. 121. Again, we may remain reminded that the discussion and the decision made by the Central Government and the State Government on the advise/ recommendation of the Council was not an administrative action but a legislative action. To the extent any legislature may have acted to provide for a law having nexus to the circumstance or the mischief sought to be addressed, to the extent it may be authorised to act in the manner it did, no fault may be found with the same. In exercise of judicial review, we may remain ever reluctant to explore the validity of that action beyond this point. 122. The decision in S.R. Bommai (supra) is not found applicable. In the first place, the issue arose in completely different law context of emergency provision under the Constitution of India. Even otherwise for reasons noted above, we find that the action that could not be completed or complied was adjudication function. The impossibility arose for reason of obstruction caused by the 'force majeure' circumstance to the preparatory action of scrutiny and audit. Once that obstruction had been caused and time lost to COVID-19, the legal and factual imposs....
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....ance. Different "force majeure" events may visit the society and may impair its economic functioning for different durations with different intensities. By its very nature of "force majeure" circumstance as advanced by learned Senior Counsel for the petitioners and other learned counsel for the petitioners, remains unpredictable. Both as to its occurrence, duration of its continuance and the impact that it may leave, a "force majeure" event remains a mystery or atleast unpredictable to the human mind and perception, in real time. Only hindsight wisdom, that is so unique to a humans may give rise to a discussion or discourse as to what may have been done and what could have been done and what should have been done in the past. In the context of enacted laws, neither the petitioners nor the Courts may have a say. It would remain a subject best preserved to the legislature, to deal with in real time. 126. As submitted by Sri Mahajan, the words "due to force majeure" are preceded with a general expression "in respect of". Thus besides intrinsic evidence existing in the Explanation to Section 168A of the Act (as discussed above), there is equally convincing evidence available in the us....
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.... as the statutory law prescribes a limitation, no argument may arise against such prescription made. Further, in the case of conditional legislation, the submission that it is not peripheral but substantive also looses its relevance in face of conditions seen fulfilled. Once the conditions for exercise of delegated legislative function stood fulfilled, no further test or scrutiny may arise, in that regard. Therefore, the decision of the Supreme Court in Sudhir Kumar Singh (supra) and Independent Schools' Association (supra) are also of no avail. Here, conditional legislation arose in accordance with law. Therefore, no fault is found therein. Accordingly, the decision in Lachmi Narain (supra) is also not applicable to the present facts. 130. The submission based on doctrine of public trust is found to be wholly foreign to the scope of specific challenge raised to an act of conditional legislation. In face of conditions fulfilled we find no merit in that submission. Therefore, the decision in Tata Housing Development Company Ltd. (supra) is also inapplicable. 131. Reference to Article 279A (4)(h) of the Constitution of India is equally mis-placed. In absence of any fact circums....
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....e Counter Affidavit are not to be seen to test the validity of the law. The burden to establish the invalidity existed on the petitioners. As noted above, we find that burden has remained from being discharged. The fact that the Central Government lifted the measures enforced by it under the Disaster Management Act in the year 2022, lead us to nowhere. They do not militate and they may not ever militate against the judicial notice taken to the effect of the spread of the pandemic COVID-19, remained constant during the period 15 March 2020 to 28th February 2022. 134. The other principle submission advanced by Shri Mehrotra that the entire action taken by the respondents was a colourable exercise of power also cannot be accepted in view of the discussion made above. The power to issue the impugned notifications existed. It is undisputed. In view of our discussion, that power was exercised both within the confines of the legislative conditions and occasioned by circumstances confronted by the legislature. The extent to which the power may have been exercised i.e. the length of time extension granted would also remain outside the scope of judicial review. Suffice to note, no excessive....
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....will have to consider the nature, object and scheme of the enabling Act, and also the area over which power has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute. Where a rule is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity. 17. In Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India [(1985) 1 SCC 641 : 1985 SCC (Tax) 121] this Court referred to several grounds on which a subordinate legislation can be challenged as follows: (SCC p. 689, para 75) "75. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conf....
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....down the legislative policy confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of policy. The need for delegated legislation is that they are framed with care and minuteness when the statutory authority making the rule, after coming into force of the Act, is in a better position to adapt the Act to special circumstances. Delegated legislation permits utilisation of experience and consultation with interests affected by the practical operation of statutes." (emphasis supplied) 137. Also, in Vivek Narayan Sharma (supra), it has been observed as below : 227. This Court in Small Scale Industrial Manufactures Assn. [Small Scale Industrial Manufactures Assn. v. Union of India, (2021) 8 SCC 511] observed that the Court would not interfere with any opinion formed by the Government if it is based on the relevant facts and circumstances or based on expert's advice. The Court would be entitled to interfere only when it is found that the action of the executive is arbitrary and violative of any constitutional, statutory or other provisions of law. It has been held that when the Governme....
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....rve the purpose in view or not. There are so many imponderables that would enter into the determination that it would be wise for the Court not to hazard an opinion where even economists may differ. The Court must while examining the constitutional validity of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the Court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn v. Illinois [Munn v. Illinois, 1876 SCC OnLine US SC 4 : 24 L Ed 77 : 94 US 13 (1877)] , namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies". The Court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary." (emphasis supplied) 254. The Constitution Bench in R.K. Garg [R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30] holds that the Court would not have the necessary competence and expertise to adjudicate upon such an economic issue. The Court cannot possibly assess or evaluate what w....