TaxTMI 
TaxTMI 
2024 (9) TMI 1398
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.... the instant batch of writ petitions, the Petitioners herein have challenged their respective Order-in-Original passed under Section 73(9) of the Central Goods and Service Tax Act, 2017 (for short 'the Central Act') as well as Assam Goods and Services Tax Act, 2017 (for short 'the State Act') on the ground that the Notification No.9/2023-CT dated 31.03.2023 and the Notification No.56/2023-CT dated 28.12.2023 by which the period for passing of the order under Section 73(10) of the Central Act was extended in exercise of the powers under Section 168A of the Central Act was ultra vires the Central Act. In addition to that, the Petitioners have assailed the imposition under the State Act on the ground that there is no Notification issued under Section 168A of the State Act extending the period for passing order under Section 73(10) of the State Act. 3. The Notification No.09/2023-CT and Notification No.56/2023-CT are challenged on the grounds that the condition precedent for issuance of the Notifications in exercise of powers under Section 168A of the Central Act were not fulfilled. To elaborate, the Notification No.9/2023-CT is challenged on the ground that in absence of force maje....
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.... Article forms the basis of empowering the Parliament as well as the State Legislatures to make laws with respect to goods and service tax by the Union or by the State. Article 246A of the Constitution is reproduced here in below. "246 A. Special provision with respect to goods and services tax.- (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation.-The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council." 7. From a perusal of the above quoted Article, it would be seen that it provides the Parliament and the State Legislature the concurrent power to legislate on Goods and Service Tax. Article 246A starts with a non-obstinate cla....
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....e-Chairperson of the Council for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the States on- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from, the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Ut....
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.... of Article 279A. Sub-Article (4) of Article 279A is of paramount importance for the purpose of the instant proceedings taking into account that the said Sub- Article stipulates in what fields the GST Council shall make recommendation to the Union and the States. The scope and interpretation of the recommendation(s) made by the GST Council would be specifically dealt with in the later segments of the instant judgment. 10. Before further proceeding to analyze Article 279A of the Constitution, it is relevant to note that a reading of the Objects and Reasons of the Constitution (122nd Amendment) (GST) Bill, 2014, the Parliamentary reports and the speeches would indicate that Article 246A and Article 279A were introduced with the objective of enhancing cooperative federalism and harmony between the States and the Centre. In that context, Article 279A(6) of the Constitution is required to be analyzed. Sub-Article (6) of Article 279A brings into effect the concept of cooperative federalism. In terms with the said Sub-Article, the recommendations to be made by the GST Council has to be made through a harmonized deliberation between the federal units. 11. This Court further finds it ....
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....ad been defined in the Explanation to Section 168A to mean a case of (i) war, (ii) epidemic, (iii) flood, (iv) drought, (v) fire, (vi) cyclone, (vii) earthquake or any other calamity caused by the nature or otherwise which would effect the implementation of any other provisions of the Act. Therefore, it would be seen that in order to exercise the power under Section 168A, the Government would be required to show that on account of the force majeure, it was beyond the control of the Authorities to complete or comply within the time limit specified/prescribed/notified in the Act. 16. Sub-Section (2) of Section 168A is also very relevant inasmuch as it empowers the Government to issue a notification in terms with Sub-Section (1) of Section 168A and such power shall also include the power to give retrospective effect from a date not earlier than the date of commencement of the Act. 17. Section 44 of the Central Act stipulates the requirement of filing of the Annual Return for every financial year in FORM GSTR-9 on or before the 31st day of December following the end of such financial year, through the common portal, either directly or through a facilitation center notified by the....
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....rder under Section 73(9) 2017-18 07.02.2020 07.11.2022 07.02.2023 2018-19 31.12.2020 30.09.2023 31.12.2023 2019-20 31.03.2021 30.12.2023 31.03.2024 20. In the meantime, as Section 168A was incorporated to both the Central Act and the State Act, a notification was issued bearing No.13/2022- CT dated 05.07.2022 whereby in exercise of the powers under Section 168A, the time limit specified under Sub-Section (10) of Section 73 of the Central Act for issuance of the order under Sub-Section (9) of Section 73 for the Financial Year 2017-18 was extended upto 30th of September, 2023. 21. The records further reveals that various tax administrations requested before the GST Council seeking recommendation for extending the period in respect to the financial year 2017-18, 2018-19 and 2019-20. The GST Council in its 49th Meeting recommended extension of the time limit under Sub-Section (10) of Section 73 of the Central Act for Financial Years 2017- 18, 2018-19 and 2019-20 for only three months. The relevant portion of the 49th Meeting of the GST Council being pertinent to the dispute involved is reproduced herein under: "Agenda item 4(vii) : Ext....
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....al 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." 22. On the basis of the said recommendation, the Notification No.9/2023-CT was issued on 31st of March 2023 whereby the period for passing the order in terms of Section 73(9) was extended for the Financial Year 2017-18 up to 31st of December, 2023; for the Financial Year 2018-19 up to 31st March, 2024 and for the Financial Year 2019-20 up to the 30th of June, 2024. This Notification No.9/2023-CT is impugned in some of the writ petitions. 23. The record further reveals and more particularly from the stand of the CGST in their first affidavit filed in WP(C) No.1229/2024 that though the period was extended vide the Notification No.9/2023-CT but as the time limit for issuance of notice in terms of Section 73(2) of the Central Act for the financial year 2018-19 was expiring on 31.12.2023 and there was no meeting of the GST Council scheduled to be he....
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....fication is ultra vires the provisions of Section 168A of the Central Act. It is further submitted that in spite of having no recommendations, the Central Government for reasons other than bona fide, have resorted to falsehood by mentioning in the Notification No.56/2023-CT that there was a recommendation and as such, the manner in which the power has been exercised by the Central Government while issuing the impugned Notification No.56/2023-CT amounts to colorable exercise of power. The learned counsel appearing on behalf of the Petitioners further submitted that the Respondent Authorities on the basis of the Notification No.56/2023-CT had passed various impugned orders under Section 73(9) of the Central Act as well as the State Act and as such, the said orders are without jurisdiction having been passed beyond the period prescribed in Section 73(10). It has also been submitted to the effect that a perusal of Section 168A of the both the Central Act and the State Act shows that the recommendation of the GST Council is a condition precedent, there cannot be a subsequent ratification by the GST Council. The learned counsels for the petitioners further submitted that although in the ....
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....urther submitted that when Section 168A of both the Central Act and the State Act categorically mentions "on the recommendations of the Council", the power to extend can only be on the recommendation of the Council. It was submitted that the judgment in the case of Union of India and Another Vs. Mohit Minerals Private Limited reported in (2022) 10 SCC 700 does not lay a proposition that without recommendations, the Union Government or the State Government can exercise the power under Central Act or the State Act. The said judgment is only for the proposition that in certain cases, the recommendation of the GST Council is not binding whereas in respect to secondary legislations, it is binding. It was therefore contended that when Section 168A of both the Central Act or the State Act stipulated that only on recommendation, the power can be exercised, then it is only following the mandate of the said stipulations, the power could have been exercised. 31. Per Contra, Mr. S. C. Keyal, the learned Standing counsel appearing on behalf of the CGST submitted that in view of the coming into effect of the Finance Act, 2024, no cause of action in respect to the instant writ petition survive....
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.... Government of Assam which is pari materia to the Notification No.56/2023-CT. 36. The learned counsels appearing on behalf of the Petitioners in reply submitted that the submission made by the learned Standing counsel for the CGST insofar as the applicability of the Finance Act, 2024 is concerned is misconceived taking into account that the provisions of Section 114 to 157 of the Finance Act, 2024 which are the amendments sought to be made to the Central Act have not yet been notified. ANALYSIS AND DETERMINATION: 37. I have the learned counsels for the parties and have given anxious consideration to the respective submission. 38. This Court has duly taken note of that the impugned Orders-in-Original which are challenged in the instant batch of writ petitions are orders passed in respect to the Financial Year 2018-19 and 2019-20. The impugned Order- in-Original insofar as Financial Year 2018-19 are concerned have been passed on or after 01.04.2024. Insofar as WP(C) No.4990/2024 which relates to Financial Year 2019-20, the impugned Order-in-Original was passed on 30.08.2024. Under such circumstances, the challenge so made to the Notification No.9/2023-CT as well as the pa....
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....rt in the said judgment observed that the word "recommendation" is "a statement expressing commendation or a message of this nature". However, taking into account that the word "recommendation" was not defined in the Kerala Building Rules, it was observed that the meaning of the word "recommendation" has to be understood in the context of the provisions of the Kerala Building Rules and the object behind the Rules. Paragraph No.7 of the said judgment being relevant is quoted herein below: "7. Learned counsel appearing for the appellant urged that the application submitted by the 5th respondent having not been processed in conformity with Rule 5 of the Rules and, therefore, the said application could not have been entertained by the State Government. It was also argued that in the absence of any recommendation by GCDA and the Chief Town Planner, the State Government could not have granted exemptions from operation of the Rules for construction of an eight-storeyed building by the 5th respondent. Whereas, learned counsel for the 5th respondent contended that the meaning of the word "recommendation" does not necessarily mean "a no-objection certificate" by GCDA and the Chief T....
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....he context of the provisions of the Rules and the object behind such Rules. The Rules with which we are concerned here provide for regulation and construction of a building in an urban area. The object behind the Rules is maintenance of public safety and convenience. The Municipal Corporation, GCDA, and the Chief Town Planner are entrusted with the functions and duties for carrying out development and regulation of building in the urban area. These are the authorities on the spot who have special and technical knowledge to advise the Government whether public safety and convenience requires dispensing with the provisions of the Rules while permitting construction of an eight- storeyed building. Thus, the meaning of the word "recommend", when read in the context of the Rules shows that it means "giving of a favourable report opposed to an unfavourable one". We, therefore, find that recommendations by GCDA and the Chief Town Planner are sine qua non for granting exemption from operation of the Rules by the State Government. In the absence of such recommendations, the State Government was not legally justified in granting exemption from operation of the Rules for construction of a hig....
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....ion to the Union and the States is mentioned in Article 279A(4) of the Constitution. It is also apposite to observe that the recommendation to be made shall be guided by the need for a harmonized structure of Goods and Service Tax and for development of a harmonized national market for Goods and Service Tax in terms with Article 279A(6). Article 279A(9) stipulates the value of the votes of the Central Government vis-à-vis the State Government i.e. one third of the votes cast and two third of the votes cast respectively. The role of the GST Council is succinctly explained by the Supreme Court in the case of Mohit Minerals Pvt. Ltd. (supra) at paragraph No.50 and the same is quoted herein below: "50. Article 246-A vests Parliament and the State Legislatures with a unique, simultaneous law-making power on GST. It is in this context that the role of the GST Council gains significance. The recommendations of the GST Council are not based on a unanimous decision but on a three-fourth majority of the members present and voting, where the Union's vote counts as one-third, while the States' votes have a weightage of two-thirds of the total votes cast. There are two s....
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....important features of Indian federalism is "fiscal federalism". A reading of the Statement of Objects and Reasons of the 2014 Amendment Bill, the Parliamentary reports and speeches indicate that Articles 246-A and 279-A were introduced with the objective of enhancing cooperative federalism and harmony between the States and the Centre. However, the Centre has a one-third vote share in the GST Council. This coupled with the absence of the repugnancy provision in Article 246-A indicates that recommendations of the GST Council cannot be binding. Such an interpretation would be contrary to the objective of introducing the GST regime and would also dislodge the fine balance on which Indian federalism rests. Therefore, the argument that if the recommendations of the GST Council are not binding, then the entire structure of GST would crumble does not hold water. Such a reading of the provisions of the Constitution diminishes the role of the GST Council as a constitutional body formed to arrive at decisions by collaboration and contestation of ideas." 46. Therefore, from the above analysis, it is apparent that the object behind the insertion of the Article 246A and Article 279A and over....
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.... act without a recommendation of the GST Council if the Central Act or the State Act stipulates that the Government can exercise on the recommendation of the GST Council. (ii) At this stage, this Court finds it pertinent to further deal with the judgment of the Supreme Court in the case of Mohit Minerals Pvt. Ltd. (supra) and under such circumstances, the said judgment was rendered. A perusal of the facts of the said judgment would show that two Notifications bearing No.8/2017 and 10/2017 were the subject matter of challenge. These notifications were issued on the recommendation of the GST Council. The Gujarat High Court set aside both the Notifications No.8/2017 and 10/2017 being unconstitutional for exceeding the powers conferred by the IGST Act and the Central Act. In the Appeal before the Supreme Court, the learned Attorney General amongst other contentions submitted that taking into account the constitutional scheme and that the Union and the States have agreed to go by the recommendations of the GST Council in every aspect of GST law wherever required, the recommendations so made by the GST Council were binding and must be respected in the spirit of collaborative fed....
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....alified. That is, there is no explanation on the value of such a recommendation. Yet the notion that the recommendations of the GST Council transform into legislation in and of themselves under Article 246-A would be far-fetched. If the GST Council was intended to be a decision-making authority whose recommendations transform to legislation, such a qualification would have been included in Articles 246-A or 279-A. Neither does Article 279-A begin with a non-obstante clause nor does Article 246-A provide that the legislative power is "subject to" Article 279-A." (v) The above observations only go to show that the recommendations made by the GST council on its own would not result in a legislation. (vi) In the said judgment, the Supreme Court further dealt with the interpretation of the recommendation vis-à-vis the Central Act and IGST Act, 2017 and observed at paragraph No. 65 and 66 as follows : "65. The contention of the Union is that the recommendations of the GST Council are binding since Parliament and the State Legislatures have agreed to align themselves with the recommendations as is evident from the provisions of the IGST Act and the CGST A....
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.... laws making the recommendations of the GST Council binding on the Central Government for the purpose of notifying secondary legislations, it would not mean that all the recommendations of the Council made by virtue of its power under Article 279-A have a binding force on the legislature." (vii) The above analysis by the Supreme Court would show when a recommendation would be binding and when not. The ratio which emerges from the above paragraphs only show that merely because of a few recommendation of GST Council are binding on the Government, it cannot be argued that all recommendations are binding. The ratio is based on the principle as stated that a Constitutional provision cannot be interpreted on the basis of a primary legislation rather a primary legislation is to be interpreted on the basis of the Constitution. However, the said judgment does not lay down the proposition that as some of the recommendations are not binding, there is no requirement of recommendation by the GST Council to exercise the power. (B) The power to be exercised under Section 168A by the Government is a delegated power to issue a Notification which can be termed as a delegated legisl....
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....d upon the existence of force majeure conditions. In the 49th Meeting of the GST Council, it was clearly recorded that there shall be no further extension beyond the three months in the interest of the tax payers. The Notification No.56/2023-CT was issued without the recommendation and that natural corollary thereof is that the GST Council had no occasion to consider existence of force majeure inasmuch as the same was never placed before the GST Council before issuance of the same. Therefore, the Notification No.56/2023-CT if construed from that angle also would be a notification issued without the force majeure condition being not considered in accordance with law. 49. Under such circumstances, this Court is of the opinion that the Notification No.56/20123-CT is ultra vires the Central Act and the same is not legally sustainable in law. Accordingly, the same is set aside and quashed. 50. It is also very pertinent to mention that the State of Assam have not issued any pari materia notification for the period on or after 01.04.2024 for the Financial Year 2018-19 and for the period on or after 01.07.2024 for the Financial Year 2019-20. 51. Under such circumstances, the impug....
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....assed by the Assistant Commissioner of State Tax, Guwahati challenged in WP(C) No.3661/2024 is set aside and quashed. 5. The impugned Order-in-Original bearing No.ZD1804240485755 dated 30.04.2024 passed by the Assistant Commissioner of State Tax, Guwahati challenged in WP(C) No.3665/2024 is set aside and quashed. 6. The impugned Order-in-Original bearing No.ZD180424027002X dated 24.04.2024 passed by the Assistant Commissioner of State Tax, Goalpara challenged in WP(C) No.3865/2024 is set aside and quashed. 7. The impugned Order-in-Original bearing No.ZD1805240063900P dated 08.05.2024 passed by the Assistant Commissioner of State Tax, Cachar challenged in WP(C) No.3877/2024 is set aside and quashed. 8. The impugned Order-in-Original bearing No.12/SUPDT/OIO/GST/18ADVPP8678D1ZM/Nagaon dated 18.04.2024 passed by the Superintendent of CGST, Nagaon challenged in WP(C) No.4118/2024 is set aside and quashed. 9. The impugned Order-in-Original bearing No.ZD180424045491G dated 30.04.2024 passed by the Deputy Commissioner of State Tax, Guwahati challenged in WP(C) No.4226/2024 is set aside and quashed. 10. The impugned Order-in-Original bearing No.ZD180424046955130 dated 3....