TaxTMI 
TaxTMI 
2024 (6) TMI 233
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....h And Hon'ble Donadi Ramesh JJ. For the Petitioner : 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 A....
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.... And 4 Others 2017-18 9. 46 of 2024 Civil Lines E. K. Road Meerut, Meerut Uttar Pradesh 250001 Through Its Finance Controller 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 cons....
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....e filed till 31 December 2018. By virtue of Section 73(10) of the Central Act and the State Act, the Proper Officer could issue an order of adjudication under sub-Section (9) of that Section, within three years from the 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 Ru....
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....In short, it provided, amongst others, extension of time upto 31.08.2020 with respect to actions for which the time limit for completion or compliance by any authority fell during the period 20 March 2020 - 30 August 2020. A similar 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....
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....etion of other proceedings (by the revenue authorities) and filing of appeals (by the assessees). 14. Third, it has been pointed out that Notification No. 13 of 2022 and 596 of 2022 have not been challenged as despite that extension 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 extens....
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....x body under the scheme of the Central Act and the State Act, was cognizant that the order of the Supreme Court would apply to other quasi judicial and judicial proceedings but not to adjudication proceedings. Applying that principle, it has been 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 notificati....
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....rring to the Energy Watchdog Vs. Central Electricity Regulatory Commission & Ors., (2017) 14 SCC 80, it has been asserted, for any event to describe as a 'force majeure', it must have wholly or partly caused an unavoidable delay on the affected 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 subst....
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....d prejudice to the petitioners and that procedural or substantive protection granted by the principal legislature by incorporating strict conditions under Section 168A has been diluted and thus abused. 26. Third, it has been submitted, the impugned notifications 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 fa....
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....il, at the same time, it would be wrong to say that the Central Government and the State Government are bound to comply the recommendation made by the Council. 31. Referring to Article 279-A(4)(h), it has been described as residuary clause or the default clause. In absence 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&#....
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.... it has been submitted, Notification Nos. 13 of 2022 dated 05.07.2022 and 5 of 1996 dated 21.07.2022, extended the period of limitation to frame the adjudication order upto 30.09.2023. Those notifications were issued, even though six months' time was available from before to 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; ac....
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....nditional legislation. In the context of the first extension of time granted and much time having survived before that extended period of limitation may have come to an end, the second extension of time granted is described to have been obtained only for the sake of convenience of 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 ....
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....judication proceedings. The revenue authorities should have completed those actions irrespective of extension of time granted under Section 168A of the Act. Since the revenue authorities failed to perform those acts, they cannot seek any extension of time, for that reason and purpose. In short, 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....
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....te Act. Power under Section 168-A of the Central Act and the State Act may be exercised only during the currency of 'force majeure' circumstance, only. 47. Also, the general power to grant extension of time created under Section 172 of the Central Act and the State Act remains subject to direct 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 ....
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.... State Government, such notification may never arise. 53. Fourth, as to the fact justification, reference has been made to paragraph 7, 9 and 10 of the Counter Affidavit filed in these proceedings to submit that no effort has been made by the respondents to justify their action. 54. Sri Abhinav Mehrotra has submitted 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 t....
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....hed to the Show Cause Notice dated 23.06.2023 on 28.06.2023. Limitation of time existed up to 30.09.2023. Only because the Proper Officer may have failed to complete the proceedings within time, it can never be claimed that there existed a 'force majeure' circumstance in the present case, as may justify the issuance 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....
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.... no occasion may arise to initiate adjudication proceeding under Section 73 of the Act. Here, it has been emphasised, none of the present cases involve proceeding under Section 74 of the respective Acts. Then referring to the Prefatory note attached to TOLO, it has been submitted that amendment was made to the law, as a direct result 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 Cent....
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....Other than the COVID-19 circumstance existing, due action would have been taken, at the relevant time. Thus, no other fact circumstance exists for the issuance of the impugned notifications. Here, he has also referred to the recommendation of the Law Committee noted in the Minutes of the 49th GST Council, taking note of such facts. 67. To 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 ....
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.... may be attributed to State and Central Governments inasmuch as, Section 168A of the Central Act and the State Act lays down the legislative policy but leaves the circumstance to be appreciated by the Executive - its delegate, to exercise that power on the existence of those circumstances. Thus essential legislative function cannot be described to 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 Governmen....
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....ic having spread in the country soon after expiry of the extended date of filing of Annual Return for the F.Y. 2017-18. Thus, according to him, no scrutiny or audit of Annual Return for the F.Y. 2017-18 may have taken place prior to the date of filing of Annual Return. In normal circumstance that would could have started soon after expiry of the last date 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 di....
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....dicial and quasi judicial authorities. Read strictly, no appeal or other proceeding before a judicial or quasi judicial authority could ever be rendered time barred for reason of the limitation of time having expired during that disabling period 15.3.2020-28.2.2022. That judicial notice having been taken by the highest Court of the land and it having been thus 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 Indi....
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....unction to the Central and the State Governments and the issuance of the impugned notifications had been made upon the recommendation made by the Council, no defect may be found. 79. He has also referred to the advisory issued by the World Health Organisation dated 05.5.2023. Though that document is not part of the case record, it has been submitted, the issuance 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 th....
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....utory actions, relevant to the dispute brought before us, as they existed at the relevant time. First, Section 44 (1) of the Central Act and State Act read as below: "Section 44 (1) Annual Return (1) Every registered person other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, 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 Commercia....
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....VID-19 across many countries of the world including India, causing immense loss to the lives of people, it has become imperative to relax certain provisions, including extension of time limit, in the taxation and other laws. AND WHEREAS, Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action; Now therefore, in exercise of the powers conferred by clause (1) of article 123 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 m....
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....the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of 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....
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....liances of the provisions of the said Act, as mentioned below- (a) Chapter IV; (b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129; (c) section 39, except sub-section (3), (4) and (5); (d) section 68, in so far as e-way bill is concerned; and (e) rules made under the provisions specified at clause (a) to (d) above;" 90. Then, action was taken under the new law vide issuance of Notification No. 14 of 2021 dated 01.05.2021 issued by the Central Government and a parallel/pari materia Notification No. 496 dated 28.06.2021 issued by the State Government. 91. Thereafter, the following 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 ....
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....rom the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST Act, as well as for issuance of order / demand in respect of erroneous refunds under section 73, by exercising power under section 168A of CGST Act. 3. A draft notification under section 168A of CGST Act, as per the above recommendations of the Law Committee, is placed at Annexure A. 4. In view of the above, the agenda, along with the draft notification, is placed before the GST Council for deliberation and approval." 92. The third action taken under Section 168A of the Act was witnessed by issuance of Notification No. 13 of 2022 dated 05.07.2022 issued by the Central Government and Notification No. 596 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 Go....
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.... (a) Proceedings that need to be initiated or compliances that need to be done by the taxpayers :- These actions would continue to be governed only by the statutory mechanism and time limit provided/extensions granted under the statute itself. Various Orders of the Hon'ble Supreme Court would not apply to the said proceedings/compliances on part of the taxpayers. (b) Quasi-Judicial proceedings by tax authorities :- The tax authorities can continue to hear and dispose off proceedings where they are performing the functions as quasi-judicial authority. This may interalia include disposal of application for refund, application for revocation of cancellation of registration, adjudication proceedings of demand notices, etc. Similarly, appeals which are filed and are pending, 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....
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....The Secretary stated that the Law Committee has recommended the extension of time limit for issuance of SCN and orders. However, the time period for issuance of notices and passing orders for these financial years has already been extended considerably due to extension in due dates of filing annual returns for the said financial years. Further, for FY 2017-18, the date of passing order has already been extended till September 2023. It has been proposed to extend it further from September 2023 to December 2023. He mentioned that while the request of some of the tax administrations was to extend the time limit for a longer period, however, keeping the taxpayers' interest in mind, the Law committee has recommended an extension of only three months for these three financial years. Since all the States have agreed, the 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....
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.... contended, the Central Government and the State Government could not have acted independent to the conditions of the delegation made under Section 168A of the Central Act and the State Act. To the extent the nature of power vested thereunder is concerned, we find ourselves in agreement with the principle that the said sections provide for conditional legislation to arise at the hands of the delegate of the principal legislature i.e. the Central Government and/or the State Government. 97. Also, as to the submission that the said provision authorizes the delegate to act in special circumstances and not by way of general power to be exercised to remove difficulty, we find ourselves in agreement with that submission advanced by learned counsel for the petitioners. Thus, in contrast to Section 172 of the Central Act and the State Act, powers under Section 168A of the Act, may be 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....
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.... consideration. 103. In the first place, the powers under Section 168A of the Act is legislative and not an administrative power. While submissions have been advanced by some of learned counsel for the petitioners suggesting, the power under Section 168A of the Act was an administrative or executive power, at the same time, as submitted by Sri Mahajan, there can be no doubt as to the true nature of that power. Prescription of limitation to perform an action is a pure legislative function. In absence of any doubt thereto, the extension of limitation prescribed by law also remains legislative. The power to condone delay may be granted both to the executive and the judicial bodies, at the same time, the prescription in law, as to limitation remains exclusively, a legislative function. 104. Seen in that light, discretion existed with the principal legislature to prescribe such limitation as it may have considered proper. In fact, 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 the....
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....ion to be granted with respect to proceedings contemplated under Section 73 of the Central Act and the State Act, for the F.Ys. 2017-18, 2018-19 and 2019-20. In that regard, the discussion at the 49th meeting of the Council further reveals - representations had arisen before the Council from some tax administrations, seeking further extension of timelines. The basis for such representations have been noted in the minutes as "difficulties were faced by the government department during COVID period", (i) due to reduced staff; (ii) staggered timing; (iii) exemption to certain categories of employees and; (iv) leading to delay in process of scrutiny and audit. For those reasons, it was represented to the Council that the proper functioning could arise only after COVID restrictions, were lifted. Further, it was represented that the earlier time extension granted was not sufficient, specifically considering the delay in scrutiny and audit process. 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 ....
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....e pandemic COVID-19 disrupted all human activities across all continents and left no strata of the society, organisation or institution or other entity, unaffected over a long duration of time. The full impact of the COVID-19 is still to be assessed. 112. Then, directly material to our discussion before the Council it had been specifically represented to provide for suitable extensions of time keeping in mind the fact that the scrutiny and audit work with respect to Annual Returns for the F.Ys. 2017-18, 2018-19 and 2019-20 could not be done for reason of reduced working staff, staggered timings and exemptions granted to various category of employees, to attend office establishments, during the spread of the pandemic COVID-19. It was specifically included through the agenda item material that no action for scrutiny and audit etc. could be undertaken during the initial period of the GST implementation. That recital may not be cited as a self-disabling 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....
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....and undeniable to the petitioners that the time kept ticking and hard as the times were and despite continuance of the extreme circumstances and disablement accompanying, caused by COVID-19, life moved on. Economic activity was witnessed. Businesses continued to exist, resulting in Monthly and Annual Returns being filed both for the entire duration of time through which COVID-19 pandemic spread (in waves), and continued to disable human activity. Thus, Annual Returns came to be filed for the subsequent F.Ys. 2018-19 and 2019-20 as well. All such returns remained subject to scrutiny and audit. It is that volume of work that has been taken note of and considered in the 47th and 49th meetings of the Council. With reference to that work, legislative decisions have been made, in the backdrop of the disruption caused by the pandemic COVID-19. 117. Also, we are also unable to accept the submission advanced by learned counsel for the petitioners that the process 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 ....
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....he Central Act and the State Act. Though the Proper Officer may remain authorised to act under Section 73 of the Central Act and the State Act independent of an audit and scrutiny at the same time that outcome would be dictated by facts of an individual case but not by way of a principle in law. In the entire scheme of the Central Act and the State Act, by way of procedure, steps contemplated under Section 61 and 65 would remain a normal occurrence. By very nature and by virtue of specific provisions of the Central Act and the State Act, those would have to precede action under Section 73 of those enactments. 120. The upshot of the above discussion is that the consideration offered by the Council in its 47th and 49th meetings, as has been extracted and discussed above was relevant to the exercise of power under Section 168A of the Central Act and the State Act. Neither the existence of material on which the discussion had arisen nor the discussion itself may be described as extraneous or irrelevant to the statutory 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 Govern....
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....by issuance of appropriate orders under the Disaster Management Act, 2005 etc. First, in the context of a legislative function, the writ Court sitting in judicial review may not look to test the subjective satisfaction of the legislative body or its delegate to see if the law made had the exact/measurable fact justification, for its enactment. The legislative wisdom must remain insulated from that judicial query. Under the Constitutional scheme of division of powers, Courts may never be enthusiastic and may remain disinclined to test the subjective satisfaction of legislatures in enacting laws. In fact, the Courts are neither equipped nor they are expected to undertake that exercise. 125. Then as Sri Nimai Das, learned Additional Chief Standing Counsel has rightly submitted, there is intrinsic evidence in the provision of Section 168A of the Central Act and the State Act that clearly recommends to the Court that the exercise of that power is not intended to be made only during the sufferance of "force majeure" circumstance. Different "force majeure" events may visit the society and may impair its economic functioning for different durations with different intensities. By its ver....
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....nduct any further/deeper enquiry - as to its exact duration, in the context of challenge laid to a legislative action. 128. Submission that the resolution of the 49th meeting of the Council offered only a partial modification of the first time extension, also cuts no ice. The impugned notifications remains referable to exercise of legislative power, under Section 168A of the Central Act and the State Act. It was exercised in the manner prescribed. The fact that the Council chose to make a partial modification remains within the insulated realm of legislative wisdom. 129. The submission that the issuance of the impugned notifications are pre-judicial to the rights and interest of the tax payers does not find our acceptance in the context of the discussion made above. A legislative action cannot be complained of as being prejudicial on account of extension of limitation. Limitation, though statutory, is not a pre-existing vested right of any party. It gets created and extinguished in accordance with the statutory law. Insofar as the statutory law prescribes a limitation, no argument may arise against such prescription made. Further, in the case of conditional legislation, the s....
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....ation at a given time, and what response it offered may never be a justiciable issue. Suffice to conclude, inherent indication exists that initially the legislature treated the COVID-19 pandemic circumstance to be temporary as may pass in a short while. However on its continuance, further extensions may have been felt desirable. Insofar as the power vested under Section 168A is not shown to be a power that may be exercised once as get exhausted upon that exercise made, the legislative wisdom to issue a further notification, would always survive. 133. The submission as to disability of the performing party, while attractive in first place, the same does not require any deeper consideration in view of the discussion made above. In the context of a legislative action, as noted above the level of disability suffered is not justiciable. Unless shown to be manifestly unreasoned or palpably arbitrary or plainly opaque, judicial power may remain to be exercised to examine such issues, any further. Suffice to note that the pleadings made in the 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....
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.... Act. 136. Last, in P. Krishnamurthy (supra), it has been held as below : "Whether the rule is valid in its entirety? 15. There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following grounds: (a) Lack of legislative competence to make the subordinate legislation. (b) Violation of fundamental rights guaranteed under the Constitution of India. (c) Violation of any provision of the Constitution of India. (d) Failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act. (e) Repugnancy to the laws of the land, that is, any enactment. (f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules). 16. The court considering the validity of a subordinate legislation, will have to consider the nature, object and scheme of the enabling Act, and a....
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....shment of the objects of delegation, court might well say, 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires': per Lord Russel of Killowen, C.J. in Kruse v. Johnson [(1898) 2 QB 91 : (1895-99) All ER Rep 105] ." 20. In St. John's Teachers Training Institute v. Regional Director, NCTE [(2003) 3 SCC 321] this Court explained the scope and purpose of delegated legislation thus: (SCC p. 331, para 10) "10. A regulation is a rule or order prescribed by a superior for the management of some business and implies a rule for general course of action. Rules and regulations are all comprised in delegated legislations. The power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details. The legislature may, after laying down the legislative policy....
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...., if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. It has been held that what is best is not always discernible, and the wisdom of any choice may be disputed or condemned. It has been held that mere errors of the Government are not subject to judicial review. It is only the palpably arbitrary exercises which can be declared void. 253. We may gainfully refer to the following observations of this Court in R.K. Garg [R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30] , wherein this Court observed that it should constantly remind itself of what the Supreme Court of the United States said in Metropolis Theater Co. [Metropolis Theater Co. v. City of Chicago, 1913 SCC OnLine US SC 123 : 57 L Ed 730 : 228 US 61 (1913)] : (R.K. Garg case [R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30] , SCC p. 706, para 19) "19. ... 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 would be the impact of a particular immunity or exemption and whether it wou....