TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 772
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....02, 36605, 36699, 36704, 36999, 37035, 37042, 37048, 37056, 33112, 37059, 37085, 37331, 37490, 37495, 37498, 37501, 37607, 37688, 37693, 37838, 38092, 38094, 38204, 38218, 38226, 38232, 38338, 38341, 38342, 38360, 38364, 38608, 38930, 38944, 38947, 38940, 38943, 38977, 38998, 39004, 39058, 39260, 39270, 39282, 39333, 39338, 39342, 39396, 39489, 39492, 39495, 39500, 39502, 39503, 39504, 39507, 39773, 39775, 39781, 39787, 39790, 39793, 39776, 39778, 39782, 39784, 39785, 39779, 39780, 39976 & 40064 of 2024 and W.M.P. Nos.21218, 37603, 39226, 39489, 39480, 39477, 39470, 39488, 39472, 39837, 39839, 40583, 40586, 40587, 40594, 40591, 40593, 16980, 1513, 1515, 1517, 16979, 17013, 1522, 1528, 1532, 16977, 2895, 2876, 7210, 7190, 7193, 7211, 7191, 7194, 7730, 10913, 10918, 10919, 10908, 13387, 13464, 13218, 13390, 13398, 13721, 13465, 13720, 14464, 14469, 14466, 19165, 19166, 20480, 20635, 21761, 21763, 22008, 22292, 24006, 9653, 9626, 25185, 25183, 26331, 26330, 26332, 26333, 26449, 26454, 26614, 27031, 27034, 27882, 27883, 28481, 28478, 31082, 31923, 31927, 32363, 32364, 32391, 32395, 36180, 33261, 33262, 33270, 33271, 36179, 34072, 34077, 34075, 35021, 35638, 41554, 35637, 35678, 35675, ....
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....29, 3830, 3959, 3960, 4321, 4323, 4713, 4714, 4179, 4180, 4301, 4303, 4305, 4373, 4955, 5024, 5026, 5030, 5031, 5036, 5039, 5040, 5041, 5074, 5075 of 2025 and W.P.(MD).Nos.1116, 1918, 1919, 12870, 16409, 5687, 1644, 1645, 1646, 5280, 6155, 7311, 6967, 7320, 7485, 7729, 7730, 7734, 7735, 7736, 7874, 9598, 9599, 10048, 10049, 10628, 10674, 11930, 12505, 15016, 16073, 16541, 16715, 23146, 23643, 23652, 23653, 24685, 25442, 26353, 25639, 25932, 25970, 26218, 26219, 26220, 27295, 27634, 27632, 27635, 28242, 29198, 29952, 29951, 30180, 30276, 30277, 30312, 30487, 31166, 31459 of 2024 and W.M.P.(MD) Nos. 11442, 14223, 5381, 1927, 1143, 1142, 11441, 5382, 1928, 19737, 19734, 1683, 1682, 1686, 1687, 1688, 1681, 1685, 19736, 1684, 5062, 5063, 5775, 6736, 6729, 6491, 6737, 6490, 6728, 6874, 6870, 7070, 7071, 7074, 7073, 7076, 7081, 7079, 7082, 7077, 7084, 7165, 7167, 8698, 8727, 8728, 9084, 9085, 9086, 9511, 9512, 9550, 9553, 10628, 11163, 11165, 11166, 13180, 13181, 13963, 13965, 14323, 14324, 14465, 14466, 19616, 19617, 20023, 20021, 20059, 20061, 20029, 20030, 21011, 21010, 21744, 22331, 22332, 21742, 21592, 21593, 21999, 21998, 22032, 22034, 22223, 22224, 22225, 22220, 22221, 22222, 23451....
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....al Duties of Exercise (Goods of Special Importance) (e) Additional Duties of Exercise (Textiles and Textile Products) (f) Additional Duties of Customs (Countervailing Duty, CVD) (g) Service Tax (h) Central Surcharge and Cess State Taxes Subsumed: (a)State VAT (Value Added Tax) (b)Central Sales Tax (c)Luxury Tax (d)Entry Tax (All Forms) (e)Entertainment and Amusement Tax (f)Taxes on Advertisements (g)State Surcharge and Cess 3.Circumstances leading to introduction of Section 168A of CGST Act and impugned notification: 3.1. I shall now deal with the background leading to introduction of Section 168A of CGST Act and impugned notifications. 3.2. During 2019-20, there was outbreak/onset of corona virus pandemic in the country inflicting considerable difficulties on the public at large. A year later, pandemic appeared to relent, only to deceptively re-emerge. A few months after country appeared to be returning to normalcy, there was a second wave resulting in another steep rise in Covid-19 virus cases engulfing the entire nation. The devastation caused by the 2nd wave of Covid was even worse than the 1st wave. The unprecedented crisis caused by Covid-19, necess....
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.... availed or utilised. 4.2. Section 73 of CGST Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised, in cases not involving fraud, suppression of facts or wilful mis-statement. Sub-section (10) to Section 73 of CGST Act, provides that the proper officer shall issue an order under sub section (9) to Section 73 of CGST Act, determining the amount of tax, interest and penalty within three years from the due date for furnishing annual return for the relevant financial year. The said sub-section (10) of Section 73 of CGST Act, is reproduced below: "73 (10). The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within three years from the date of erroneous refund." 4.3. Sub-section (2) of Section 73 of CGST Act mandates that a show cause notice shall be issued in this regard, at least three months prior to time limit for passing orders specified under sub-section (10). The said sub-section (2) of Section 73 of C....
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....ue date for filing annual return came to be prescribed through rules, with effect from 01.08.2021. Prior thereto, Section 44(1) of the CGST Act, required every registered person to furnish annual return for every financial year on or before 31st December following the end of such financial year. 4.8. It is relevant to note that due dates for filing annual returns provided under Section 44 of CGST and TNGST Act, were extended from time to time, for a variety of reasons inter alia including the fact that GST levy and compliance being new and frequent technical glitches in GST portal, etc. Extensions so granted are Tabulated below. The extensions set out in the Table below were granted in exercise of powers conferred under Section 44 of CGST Act: S.No. Year Original Due date for filing Annual return Extended due date for filing annual return Remarks 1 2017-18 31.12.2018 05.02.2020 (for certain States) and 07.02.2020 (for other States) Notification 6/2020 Central Tax Dt. 03.02.2020 2 2018-19 31.12.2019 30.06.2020 Notification 15/2020 Central Tax Dt. 23.03.2020 30.09.2020 Notification 41/2020 Central Tax Dt. 05.05.2020 30.10.2020 Notification 69/2020 Central Tax Dt. ....
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....e completed or complied with due to force majeure. Above power to issue notifications extending time limits conferred under Section 168A of CGST Act, inter alia in respect of time limit prescribed under Section 73 of CGST Act, is an exception to the legislative policy reflected in Section 73 of CGST Act. Being an exception to legislative policy it ought to be strictly construed. (c) Condition precedent for exercise of power under Section 168A of CGST Act inter alia includes the following viz., (i) There must be a force majeure event affecting implementation of any of the provisions of the CGST Act within the meaning of Explanation to Section 168A of the CGST Act. (ii) Actions for which time limit is specified in or prescribed or notified under the CGST Act "cannot be" completed or complied with. (iii) Such actions cannot be completed or complied with "due to" force majeure. The above ingredients are jurisdictional facts or conditions precedent for exercise of power by the Central Government/State Government under Section 168A(1) of the Acts. (d) Expression "due to", employed under Section 168A of CGST Act, is with reference to and qualifies "force majeure". Expression "....
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....ion 168A of CGST Act, were not placed before GST Council, thus recommendation of GST Council itself is rendered vulnerable to challenge for failing to take into account relevant factors. B. Additional submissions regarding challenge to Notification No.56 of 2023 : 6.4. In addition to the submissions set out above, which is common to the challenge to Notification Nos.9 and 56 of 2023, following additional submissions were made with reference to challenge to Notification No.56 of 2023 dated 28.12.2023: a) Recommendation of GST Council is a pre-condition for issuance of notification in terms of Section 168A of the CGST Act. That impugned Notification No.56 of 2023, was issued even before any recommendation was made by GST Council. Absent such recommendation, the impugned notification would be rendered void for non compliance with the above pre-requisite for exercise of power under Section 168A of CGST Act. b) The impugned notification was issued on the basis of decision of GST Implementation Committee (hereinafter referred to as "GIC"). That in terms of Section 168A of CGST Act, notification ought to be issued by the Government on the recommendation of GST Council. The GST Counc....
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....Constitution would govern, and be binding only until the legislature/executive steps in to substitute vacuum filled by the judicial order. Order under Article 142 of the Constitution has a shelf life only until a specific enactment/executive order is put in place. (Vineet Narain and Others vs. Union of India and another reported in (1998) 1 SCC 226, Kalyan Chandra Sarkar vs. Rajesh Ranjan and another reported in (2005) 3 SCC 284). 6.6. That the orders under Article 142 of the Constitution including the order dated 10.01.2022, whereby the Hon'ble Apex Court excluded the period from 15.03.2020 till 28.02.2022, would cease to have effect with the introduction of Section 168A to the CGST Act with effect from 31.03.2020, and in any view with effect from 05.07.2022 with the issuance of Notification No.13 of 2022 dated 05.07.2022. 7. Case of the Respondents: 7.1. The submission of the respondents can be divided into three parts viz., A) Common submission relating to validity of Notification No.9 and 56/2023; B) Submission relating to validity of Notification No.56/2023; C) Impact of order of Apex Court under Article 142 of the Constitution vis a vis impugned notifications; A) Co....
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.... exemption to certain categories of employees from attending offices resulted in delay in scrutiny and audit. Law Committee also proposed that in view of restrictions and difficulties faced due to Covid-19 pandemic, the need for extending the time limit for passing orders under Section 73(10) of CGST Act, by a further period of 3 months for the years 2017-18, 2018-19 and 2019-20. That the extension was in view of the difficulty faced in getting requisite data/information to carry out scrutiny, assessment or audit within the limitation prescribed. e) On the recommendation of GST Council that action, notices, orders under Section 73 of the CGST Act, cannot be completed within the time limit specified under Section 73 of CGST Act, due to force majeure time limit for taking action under Section 73 of CGST Act, stood extended vide impugned notification No.9/2023. f) That Covid-19 pandemic would constitute force majeure for the purposes of Section 168A of CGST Act. The impugned notification No.9/2023 was validly issued in compliance with the mandate contained in Section 168A of CGST Act. g) That Covid Pandemic not only affected the implementation/administration of GST Act, in terms of....
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....as circulated to the Members of the Council and also approved by the Chairperson. Recommendation was tabled in 53rd GST Council Meeting under the head "For information/Ratification", which is in consonance with procedure adopted by Council in 17th GST Council Meeting. Submission of petitioners that there was delegation by GST Council of its function to make recommendation under Section 168A of CGST Act lacks merit. C) Impact of order of Apex Court under Article 142 of the Constitution on the impugned notification: a) The Suo motu orders of the Hon'ble Supreme Court extending the time period for limitation, would in any view save the validity of notices/orders of adjudication from limitation. That power of the Hon'ble Supreme Court under Article 142 of the Constitution is to do complete justice and cannot be limited or restricted by provisions of statute (Delhi Judicial Services Association Tiz Hazari Court, Delhi vs. State of Gujarat and Others reported in (1991) 4 SCC 406). b) That orders under Article 142 of the Constitution do not lose its effect with the issuance of notifications under Section 168A of the CGST Act viz., Notification No.13/2022 dated 05.07.2022. Rel....
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....o 242): 1951 SCR 747; Hamdard Dawakhana vs. Union of India, AIR 1960 SC 554, pp.566, 567). In case of conditional legislation, the legislation is complete in itself but its operation is made to depend on fulfilment of certain conditions and what is delegated to an outside authority, is the power to determine according to its own judgment whether or not those conditions are fulfilled. In case of delegated legislation proper, some portion of the legislative power of the legislature is delegated to the outside authority in that, the legislature, though competent to perform both the essential and ancillary legislative functions, performs only the former and parts with the latter, i.e., the ancilliary function of laying down details in favour of another for executing the policy of the statute enacted. The distinction between the two exists in this that whereas conditional legislation contains no element of delegation of legislative power and is therefore not open to attack on the ground of excessive delegation, delegated legislation proper does confer some legislative power on some outside authority and is therefore open to attach on the ground of excessive delegation. 9.2. It may also....
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.... to which it should be applied : Baxter case [(1957) SCR 604] at pp. 637 & 638. 30. Broadly speaking these are the distinguishing features of the two forms of delegation and these are their characteristics. The question is in which compartment does the power given in the Act fall. " 9.3. Having set out the distinction between conditional and delegated legislation, I shall now examine Section 168A of CGST Act and the impugned notifications issued thereunder. Section 168A of CGST Act reads as under: "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 the 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, droug....
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....roper officer shall issue the order under subsection (9) 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." 9.8. It is necessary to bear in mind that limitations stipulated/provided under an Act, is with a view to ensure finality and certainty and part of public policy. Limitation is essential for public order to ensure that there is no insecurity and uncertainty. Lack of clarity with regard to limitation would result in creating insecurity and uncertainty. In this regard it may be relevant to refer to judgment in Pundlik Jalam Patil v. Executive Engineer, Jalgaon Medium Project reported in (2008) 17 SCC 448: "26. Basically, the laws of limitation are founded on public policy. In Halsbury's Laws of England, 4th Edn., Vol. 28, p. 266, Para 605, the policy of the Limitation Acts is laid down as follows: "605. Policy of the Limitation Acts.-The courts have expressed at least three differing reasons supporting the existence of statutes of limitation, namely, (1) that long dormant cl....
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....fficer, IRDP and Others v. P.D. Chacko reported in (2010) 6 SCC 637 wherein it was held as under: "14. An exception clause is normally part of the enacting section, unlike a proviso which follows an enacting part. Crawford's Interpretation of Laws (1989), p. 128, speaks of exception as follows: "91. Exceptions and provisos.-... The exception, however, operates to affirm the operation of the statute to all cases not excepted and excludes all other exceptions; that is, it exempts something which would otherwise fall within the general words of the statute." 15. It is trite law that an exception clause has to be strictly interpreted and cannot be assumed but be proved. An exception clause is always subject to the rule of construction and in case of doubt, it must befriend the general provision and disfavour the exception." 9.11. It may therefore be necessary to construe Section 168A of CGST Act and impugned notification issued thereunder which purports to extend limitation fixed by Parliament/State legislature strictly. C. Whether a delegated legislation can be challenged on the ground of failing to take into account relevant factors and if so, whether factors relevant for....
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....mstances of a case, a subordinate legislation may be struck down a arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19(1)(a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant. " 9.15. It is thus clear that a delegated legislation can be challenged on the ground of failing to take into account relevant factors. Keeping the above principle in mind and on a reading of Section 168A of CGST Act, it would appear that condition precedent for exercise of power under Section 168A of CGST Act inter alia includes the following viz., (i) There must be a force majeure event affecting the implementation of any of the provisions of the Acts within the meaning of the Explanation to Section 168A of the CGST Act. (ii) Actions for which tim....
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....ever be obtained", and would not cover a case where the landlord's consent to the assignment of a lease is not yet forthcoming but might be obtained in the future (29 Equities v Bank Leumi (UK) [1987] 11 All E.R.108) (Source: Stroud's Judicial Dictionary of words and phrases by Daniel Greenberg, Eighth Edition.)." 9.18.1. From a reading of the above extracts of the meaning "due to" and "cannot", it leaves no room for any doubt that "force majeure", must be the cause for the authorities being unable to complete or comply with action to be taken under the Act, within the time limit specified in or prescribed under the Act. Applying the same to the present batch of case, it is but necessary to show that authorities under GST Act were unable to issue notices or pass orders within the limitation provided under Section 73(2) and Section 73(10) of CGST Act, due to Covid pandemic. 9.19. The expression "due to" would reveal that inability to complete or comply with actions to be taken under the Act within the time limit specified in a prescribed or notified must be closely/proximately connected to "force majeure". In other words, force majeure must be shown to be the most proximat....
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.... all times and continue to follow covid-appropriate behaviors strictly." b) D.O.No.40-3/2020-DM-I(A) of the Home Secretary, Government of India, dated 22.03.2022 addressed to all Chief Secretaries of all States. The relevant portion of the letter is extracted hereunder: "2. Over the last 24 months, significant capacities have been developed for various aspects of management of the pandemic, such as diagnostics, surveillance, contact tracing, treatment and vaccination, hospital infrastructure and the general public has much higher level of awareness on the COVID appropriate behaviour. States and UTs have also developed their own capacities and systems and implemented their detailed State/UT specific plans for managing the pandemic. Over the last seven weeks or so there has been a steep decline in the number of cases. The total caseload in the country stands at 23,913 only and daily positivity rate has declined to 0.28%. It is also worth mentioning that with the combined efforts, a total of 181.56 Cr vaccine doses have been administered. 3. After taking into consideration the overall improvement in the situation and preparedness of the Government to deal with the pandemic, NDMA....
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....vides that where it appears to the proper officer that any tax 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, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. The proper officer shall issue the order within three years 43 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. The due dates for filing of annual returns for FY 18, FY 19 and FY 20 were 5/7 February 2020, 31 December 2020 and 31 March 2021, respectively. Almost two year....
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....r shortage of funds for tax compliance during internal audit. In the era of self-assessed tax regime, internal audit is one of the main tools for ensuring compliance by the taxpayers. Further, departmental action against non-compliant taxpayers is a time bound activity under section 73 of CGST Act, 2017. Audit, therefore, recommends that suitable administrative measures should be taken to address the shortage of staff in Audit Commissionerates. Till the time man-power shortage is addressed, the Department may take into account the available staff strength for planning the number of units for internal audit with focus on high risk taxpayers" ..... d. Report of CAG for the period 2021-22 bearing No.7 of 2024 dated 21.06.2024. The relevant portion is extracted hereunder: "........ 3.2.2 Standard Operating Procedure (SOP) for Scrutiny of Returns The Board had issued a Standard Operating procedure (SOP) for scrutiny of returns for FY17 and FY18 in March 2022. Audit observed that the aforesaid SOP was issued as an interim measure as the Scrutiny Module for online scrutiny of returns has not been made available on the Department's back-end IT application i.e. CBIC-GST applicat....
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....of the 47th Meeting of the GST Council held on 28th and 29th June, 2022 relevant portion is extracted hereunder: "Agenda Item 3 (xiv): Note for extension of limitation under Section 168A of the CGST Act, 2017 7.53 The Principal Commissioner, GST Policy Wing mentioned that requests were made to extend the period of limitation under Sections 73/74 and Sections 54/55 on account of problems 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. He informed that the issue was deliberated by the Law Committee in its meeting held on 11.04.2022 and 07.05.2022. The Law Committee observed that Centre as well as State governments were working with reduced staff, along with staggered timings and exemption to certain categories of employees from attending offices, from time to time during COVID period. Further, it was a conscious policy decision not to do enforcement actions in the initial period of implementation of GST Law, thereby no action for scrutiny, audit etc. could be undertaken during initial period of GST implementation. Since the due date of filing Annual return for FY 2017-18 ....
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....he FY 2017-18, 2018-19 and 2019-20 to 31.12.2024. However, LC felt that considering the delay in scrutiny, audit and assessment process for the FY 2017-18, 2018- 19 and 2019-20 due to restrictions and difficulties faced in COVID-19 period, there may be a need to provide some additional time under section 73(10) of CGST Act for the said financial years in such a manner so that there is no bunching of last dates for issuance of SCN/order under section 73 for these financial years as well as for the subsequent financial years. 4.2. LC, accordingly, recommended that the time limit under section 73(10) of CGST Act for the FY 2017-18, 2018-19 and 2019-20 may be extended as below by issuance of a notification under section 168A of CGST Act: i. For FY 2017-18, the time limit under section 73(10) may be extended from the present 30th September 2023 to 31st December 2023; ii. For FY 2018-19, the time limit under section 73(10) may be extended from the present 31st December 2023 to 31st March 2024; iii. For FY 2019-20, the time limit under section 73(10) may be extended from the present 31st March 2024 to 30th June 2024." 9.25. From the above material, the following position appears ....
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....not being able to effectively carry on with scrutiny/audit (which forms the basis for action under Section 73 of CGST Act primarily) was thus even according to the Ministry not due to force majeure as contemplated by the Explanation to Section 168A of CGST Act. It thus appears the reasons for the authorities under the CGST Act not being able to complete or comply with issuance of notice or pass orders under Section 73(2) or 73(10) of CGST Act, appears to be more in view of systemic deficiencies and failure to recruit/appoint adequate officers which are causes that are self inflicted/created. Given the above, GST Council could not have recommended the issue of a further Notification/G.O. extending time under Section 73 of the Acts. 9.27. Ministry of Personnel, Public Grievances and Pension, Government of India and the communication by the Home Secretary, Government of India would show normalcy had returned even has early as February, 2022. It is trite that different ministries/department of the Government must speak in one voice [(2016) 1 SCC 560], there cannot be conflicting stands more importantly on factual aspects by two different ministries. Moreover, in this case if one keeps....
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....ure" mentioned in the Explanation. The expression "otherwise" cannot be isolated from the remaining part of the Explanation. It does not have independent existence. It appears to me that there is merit in the submission of the petitioner inasmuch as on a reading of Explanation under Section 168A of the CGST Act as a whole, it appears that the expression "otherwise" is used as an alternate to the cause of force majeure i.e., force majeure may be caused by nature or force majeure caused otherwise than by nature. Even assuming "otherwise", employed in Section 168A of CGST Act, qualifies any other calamity, by no conceivable process of reasoning it would cover self inflicted inefficiencies. 9.31. I would also think that the expression "otherwise", employed in Explanation to Section 168A of CGST Act may have to be understood keeping in view the rule of ejusdem generis i.e., when particular words pertaining to a class, category or genus are followed by general words, the general words must be construed as limited to things of the same kind as those specified (Kavalappara Kottarathil Kochuni vs. State of Madras, AIR 1960 SC 1080, pg.1103). This is in view of the fact that the expression ....
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....the validity of the impugned notifications primarily on the premise that once there is force majeure, the Government is conferred with the power to extend time limit for action provided under the Act. The extent of the extension of time was a matter of discretion falling within the domain of the executive. "17. Thus, if there is force majeure as defined in Section 168A, the Government is empowered to extend the limitation period for taking actions which could not be completed or complied with due to force majeure. No one can deny that COVID-19 was a force majeure as it was a pandemic that caused large-scale human tragedy and suffering all over the world and paralyzed the world, including economic activities. 18. The notifications in Exts. P7 and P8 were issued by the Central Government on the recommendation of the GST Council based on a suo motu order passed by the Supreme Court in consideration of the COVID-19 pandemic. The GST Council, in its 47th meeting held on 28th and 29th June 2022 took note of the effect of the Covid-19 pandemic and agreed with the recommendation of the Law Committee. It was observed that the Central and the State Governments were working with reduced s....
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....nce we have held that issuance of the time extension application was a legislative function and there existed material and due deliberation/ consideration over/of to that material, before the legislative function was performed, the first condition of existence of circumstances for exercise of the said power described as conditional legislation, stood fulfilled. Therefore, the ratio of the decision of the Supreme Court in Mohit Minerals Private Limited (supra) is also of no avail. By way of principle it may not be doubted that the recommendations of the Council remained persuasive. The Central Government and the State Government were not duty bound to conform thereto. However, in absence of any fact shown to exist, the Central Government and the State Government have exercised their conditional legislative function in accordance with law. No palpable illegality or arbitrariness has been shown to exist as may warrant any deeper examination by the Court." c) Barhonia Enigcon Pvt. Ltd. vs. State of Bihar reported in 2024 SCC OnLine Pat 8366: 9.37. The High Court looked to proceedings before GST Council and found application of mind to relevant facts and proceeded to observe that Covi....
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....) Report of CAG for the period 2021-22 bearing No.7 of 2024 dated 21.06.2024. 9.40. This Court has already found supra that the above materials are relevant and ought to have been taken note of by the GST Council, while making the recommendation under Section 168A of CGST Act, but left out by the GST Council while making the recommendation thereby vitiating the same. In that view of the matter this Court is of the view that the impugned notifications suffers from the vice of not complying with the statutory mandate inasmuch as the recommendation itself is made without keeping in view relevant material. It is also found supra that a delegated legislation is open to challenge on the ground of failing to take into account relevant material. The impugned notification does not even contain a recital that actions under Section 73 of CGST Act viz., issuance of notice and passing of orders within the time limit provided under sub section (2) and (10) of Section 73 of CGST Act was only due to Covid (force majeure). In the circumstances this Court is of the view that the impugned notifications cannot be sustained. D) Whether recommendation by GST Council for issuance of notifications under....
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....mmendations are binding. As a matter of first principle, the provisions of the Constitution, which is the grundnorm of the nation, cannot be interpreted based on the provisions of a primary legislation. It is only the provisions of a primary legislation that can be interpreted with reference to the Constitution. The legislature amends the Constitution by exercising its constituent power and legislates by exercising its legislative power. The constituent power of the legislature is of a higher constitutional order as compared to its legislative power. Even if it is Parliament that has enacted 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." 9.42. I would think reliance by the Revenue on the above decision to suggest that the recommendation by GST Council is not mandatory is wholly misplaced. It is important to note that Mohit Minerals was dealing with a recommendation under Article 279A of Constitution of India, on the other hand, we are dealing....
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.... the timelines and without the recommendations, the exercise of the power would be legally not sustainable. On the other hand, the effectiveness of the recommendation has to be judged on the principles of whether such recommendation is binding on the Union or the State. For example, the GST Council may have made a recommendation to carry out a particular exercise by the Government under the Central Act or the State Act. The said recommendation may be binding upon the Government or may not be depending upon the purpose of the enactment. But the fact that it is not binding cannot be construed to mean that the Government can 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." (emphasis supplied) 9.44. In the light of the above discussion, I am of the view that recommendation of GST Council for issuance of notification under Section 168A of CGST Act is mandatory but not binding on the government for the purposes of issuance of notifications under Section 168A of CGST Act. E) Whether ratification of recommendation by GIC by the GST Council post issuance of Notificati....
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....of delegation the authority vested with the power to perform an act cannot sub delegate. In this regard it may be relevant to refer to the following judgments: a) Marathwada University v. Seshrao Balwant Rao Chavan, reported in (1989) 3 SCC 132 : "20. ..... It is a settled principle that when the Act prescribes a particular body to exercise a power, it must be exercised only by that body. It cannot be exercised by others unless it is delegated. The law must also provide for such delegation. Halsbury's Laws of England (Vol. I, 4th End., para 32) summarises these principles as follows: "32. Sub-delegation of powers.- In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, unless sub-delegation of the power is authorised by express words or necessary implication. There is a strong presumption against construing a grant of legislative, judicial or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind." 9.49. Now, let us turn to the question of the impact of ratifi....
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.... under sub-section (2) of Section 26 of the RBI Act is for effecting demonetisation. The said power has to be exercised on the recommendation of the Central Board. As already discussed hereinabove, RBI has a pivotal role in the matters of monetary policy and issuance of currency. The scheme mandates that before the Central Government takes a decision with regard to demonetisation, it would be required to consider the recommendation of the Central Board. We find that, in the context in which it is used, the word "recommendation" would mean a consultative process between the Central Board and the Central Government." 9.50. The above judgment may not have any applicability to the facts of the present case inasmuch as in terms of Section 168A of the CSGT Act in order to extend time limit in special circumstance, notification may be issued by the Central Government on the recommendation by the GST Council. The impugned Notification came to be issued without recommendation of the GST Council, thus the mandate contained in Section 168A of CGST Act was not complied with. Recommendation by the GST Council was only by way of ratification of a decision of GIC and subsequent to the issuance o....
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....mendation by GIC Council ratified by GST Council after issuance of impugned Notification No.56/2023, would not constitute compliance with the mandate contained on recommendation in Section 168A of CGST Act. 9.54. Importantly, at the time of issuance of notification No.56/2023 there was only recommendation/resolution of GIC which was later ratified by GST Council after issuance of notification No.56/2023, this is yet another reason as to why the impugned notification would be rendered bad inasmuch as it may well constitute abdication of authority by GST Council or arrogation/usurpation of power by GIC which is conferred on the GST Council under the CGST Act, which would vitiate the recommendation. In this regard it may be relevant to refer to the judgment of Hon'ble Supreme Court in the case of State of U.P. v. Maharaja Dharmander Prasad Singh reported in (1989) 2 SCC 505: "55....The authority cannot permit its decision to be influenced by the dictation of others as this would amount to abdication and surrender of its discretion. It would then not be the authority's discretion that is exercised, but someone else's. If an authority "hands over its discretion to another....
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....ra Sarkar v. Rajesh Ranjan, (2005) 3 SCC 284). The orders under Article 142 of Constitution of India has a limited shelf life i.e., until legislature or executive steps in and occupies/covers the field. It is submitted that extension of limitation, if any, by virtue of orders under Article 142 of Constitution of India by the Apex Court would cease to have effect with the introduction of Section 168A of CGST Act and in any view with the issuance of Notification No.13 of 2022. 9.56. To the contrary it is submitted by learned counsel for the respondents by placing reliance on judgment of Telangana High Court that in view of order under Article 142 of Constitution of India by the Hon'ble Apex Court, the authorities under the Act would have the benefit of the exclusion granted by the Apex Court vide order dated 10.01.2022 while computing limitation under sub section (2) and (10) of Section 73 of CGST Act. 9.57. It appears to me that the submission by the petitioner that the orders of the Hon'ble Apex Court under Article 142 of the Constitution, in particular, the last order dated 10.01.2022, whereby the period between 15.03.2020 and 28.02.2022, stood excluded for the purposes ....
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....and u/s 12-A of the Commercial Courts Act, 2015 and u/s. 138 NI Act, 1881. 5 April 27, 2021 i) Restored the earlier order dt. 23.03.2020 & 08.03.2021 and extended the limitation period as prescribed any general or special laws in respect of all Judicial or Quasi- Judicial Proceedings till further orders. ii) Period from 14.03.2021 till further orders shall also excluded in computing the period u/s 23(4), 12-A, 138. 6 September 23, 2021 Excluded the period from 15.3.2020 to 02.10.2021 in computing limitation period for any suit, appeal, application, and also excluded the period prescribed u/s 23(4) & 29-A of Arbitration and conciliation Act, 1996 and u/s 12-A of the Commercial Courts Act, 2015 and u/s. 138 NI Act, 1881. 7 January 10, 2022 i) Restored the earlier order dt. 23.03.2020 in continuation with subsequent orders dated 08.03.2021, 27.4.2021 & 23.09.2021 ii) Excluded the period from 15.3.2020 till 28.02.2022 in computing limitation period general or special laws in respect of all Judicial or Quasi- Judicial Proceedings and also excluded the period prescribed u/s 23(4) & 29-A of Arbitration and conciliation Act, 1996 and u/s 12-A of the Commercial Courts Act, 2015 a....
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....isos (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." 9.62. A reading of the above order of the Hon'ble Supreme Court dated 10.01.2022 would show that the Hon'ble Supreme Court provided for exclusion of time from 15.03.2020 till 28.02.2022 for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. Having examined the order of the Apex Court, it may be necessary to take a look at the notifications issued under Section 168A of CGST Act in particular impugned notifications. The relevant portion of impugned notifications reads as under: (i) Notification No.9 of 2023: "NOTIFICATION No.09/2023-Central Tax New Delhi, dated the 31st March, 2023 S.O1564(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....
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....Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 516(E), dated the 5th July, 2022, and No. 09/2023-Central Tax, dated the 31st March, 2023 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number G.S.R. 1564(E) dated the 31st March, 2023, the Government, on the recommendations of the Council, hereby, extends the time limit specified under sub- section (10) of section 73 for issuance of order under sub-section (9) of section 73 of the said Act, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, relating to the period as specified below, namely:- (i) for the financial year 2018-19, up to the 30 th day of April, 2024; (ii) for the financial year 2019-20, up to the 31 st day of August, 2024." 9.63. Let us contrast the order's of the Hon'ble Supreme Court, with the impugned notifications issued under Section 168A of CGST Act, it would be clear that the orders of the Hon'ble Supreme Court made under Article 142 of the Constitution, in particular, order dated 10.01.2022 provides for exclusion of the period between 15.03.2020 and 28.02.2022 while r....
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....and the concept of "computation of that period". ..... 14. In our view, there is no merit in the contention advanced on behalf of the appellant that by virtue of Section 458- A the period of limitation is extended by one year. Part III of the Limitation Act excludes certain circumstances mentioned in Sections 12 to 24 for computation of the period of limitation. Similarly, Section 458-A provides for an additional circumstance which is not there in the Limitation Act which is required to be taken into account as an item of exclusion in the matter of computation of the period of limitation of five years prescribed by Section 543(2). That circumstance is a period spent between the date of commencement of winding up of the company and the date on which the winding-up order is passed plus one year therefrom. If this period of limitation is to stand excluded it is only by virtue of Section 458-A which circumstance is not contemplated by Sections 12 to 24 of the Limitation Act." ii) Consolidated Engg. Enterprises v. Irrigation Deptt., reported in (2008) 7 SCC 169, wherein while dealing with limitation prescribed under Section 34(3) of Arbitration and Conciliation Act, for an applica....
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.... places a limit on the period of extension of the period of limitation. Thus the proviso to Section 34(3) of the AC Act is also a provision relating to extension of period of limitation, but differs from Section 5 of the Limitation Act, in regard to period of extension, and has the effect of excluding Section 5 alone of the Limitation Act. 54. On the other hand, Section 14 contained in Part III of the Limitation Act does not relate to extension of the period of limitation, but relates to exclusion of certain period while computing the period of limitation. Neither sub-section (3) of Section 34 of the AC Act nor any other provision of the AC Act exclude the applicability of Section 14 of the Limitation Act to applications under Section 34(1) of the AC Act. Nor will the proviso to Section 34(3) exclude the application of Section 14, as Section 14 is not a provision for extension of period of limitation, but for exclusion of certain period while computing the period of limitation. Having regard to Section 29(2) of the Limitation Act, Section 14 of that Act will be applicable to an application under Section 34(1) of the AC Act. Even when there is cause to apply Section 14, the limita....
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.... "67. Perusal of the aforesaid would therefore reveal, that the Court has clearly rejected the objection raised by the Revenue in M.P. Steel Corpn. [M.P. Steel Corpn. v. CCE, (2015) 7 SCC 58 : (2015) 3 SCC (Civ) 510] which was raised relying on the judgment of this Court in Parson Tools & Plants [CST v. Parson Tools & Plants, (1975) 4 SCC 22 : 1975 SCC (Tax) 185]. This Court observed, that the time during which the applicant was prosecuting such application before the wrong court can be excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. This Court distinguished the judgment in Parson Tools & Plants [CST v. Parson Tools & Plants, (1975) 4 SCC 22 : 1975 SCC (Tax) 185] on the ground, that the period provided for filing a revision under the U.P. Sales Tax Act was sufficiently long period of 18 months, beyond which it was the policy of the legislature not to extend limitation any further. Relying on the Consolidated Engg. Enterprises [Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169], it has been observed, that there is a vital distinction between extending time and condoning delay. It was further observed, that like....
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....f the Constitution dealt with "exclusion of limitation" and thus "computation of limitation", the notification under Section 168A of CGST Act provided for "extension of time" thus "period of limitation". In other words, the former dealt with computation of limitation, while latter with period of limitation. They deal with different aspects thus question of supplanting or overlap may not arise. The submission of the petitioner that orders under Article 142 of the Constitution would cease to have effect with the introduction of Section 168A of the CGST Act, fails to bear in mind the above distinction in law. 9.67. This Court finds that the order of the Hon'ble Supreme Court dated 10.01.2022 would continue to govern the limitation inasmuch as it provides for exclusion of time from 15.03.2020 to 28.02.2022 for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, while the impugned notification under Section 168A of CGST Act purports to extend the time limit. Thus, they deal with two different aspects of limitation viz., one relating to computation other relating to period of limitation and there....
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....tinction between the two. It is trite law that when in relation to the same subject-matter, different words are used in the same statute, there is a presumption that they are not used in the same sense: (i) CIT v. East West Import & Export (P). Ltd., Jaipur, reported in AIR 1989 SC 836. (ii) Shri Ishal Alloy Steels Ltd. v. Jayaswalas Neco Ltd., reported in AIR 2001 SC 1161. (iii) Kailash Nath Agarwal v. Pradeshiya Indust and Inv. Corp of U.P. Reported in (2003) 4 SCC 305. b) Effect of legislation founded on a mistaken or erroneous assumption of law - Impugned notifications issued on mistaken or erroneous assumption of the scope of the orders under Article 142 of the Constitution. 9.69. Importantly, the period that would be available on applying the exclusion of the period from 15.03.2020 to 28.02.2022 in terms of the order of the Hon'ble Supreme Court dated 10.01.2022 and extension of time in terms of Notification No.9 of 2023 and 56 of 2023 would be as under: S.No. Financial Year Actual/Original due date for filing Annual return u/s 44(1) Due date extended in exercise of power u/s 44 of CGST Act through Notifications Period of limitation u/s 73(10) of CGST Act Ex....
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....rite that legislation based on mistaken or erroneous assumption has not the effect of making that the law which the legislature had erroneously assumed to be so. In this regard, it may be relevant to refer to the following judgments : (i) Peddinti Venkata Murali Ranganatha Desika Iyengar v. Govt. of A.P. reported in (1996) 3 SCC 75: "13. The question, in that scenario, which emerges is whether Section 76 is a valid piece of legislation, indirectly repealing the Inams Abolition Act or the judgments of that High Court referred to hereinbefore. It is settled law that repeal of an Act divesting vested rights is always disfavoured. Presumption is against repeal by implication and the reason is based on the theory that the legislation, while enacting a law, has complete knowledge of the pre-existing law on the same subject-matter. In the Principles of Statutory Interpretation by Justice G.P. Singh, (5th Edn. 1992 at pp. 186-87) under the caption "Reference to other statutes" in Chapter IV (External Aids to Construction) it has been stated that "a legislation proceeding upon an erroneous assumption of the existing law without directly amending or declaring the law is ineffective to ch....
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....ions whereby the limitation stands diminished/curtailed, it may well affect the vested right of the authorities to take action in terms of the order of the Hon'ble Supreme Court under Article 142 of Constitution of India, which provided for a larger period. It is trite that law of limitation is procedural and would normally have retrospective effect and would govern pending proceedings. There are two exception to the above rule viz., a) A new law of limitation providing a longer period cannot revive or dead claim. b) A shorter period of limitation cannot extinguish vested right of action. In this regard, it may be refer to the following judgments: (i) B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates reported in (2019) 11 SCC 633: "22.(i)55. In answering a question which arose under Section 110-A of the Motor Vehicles Act, this Court held: (Shanti Misra case [New India Insurance Co. Ltd. v. Shanti Misra, (1975) 2 SCC 840], SCC p. 846, para 7) '7. ... (1) Time for the purpose of filing the application under Section 110-A did not start running before the constitution of the tribunal. Time had started running for the filing of the suit but before it had exp....
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....on the Government to extend time limit in special circumstances. If notification under Section 168A of CGST Act, were to diminish/curtail the limitation otherwise available to the authorities to take action it would fall foul of the object and purpose of Section 168A of CGST Act. The exercise of power which diminishes limitation available under the CGST Act would not be in conformity with Section 168A of CGST Act and thus invalid. It is trite law that the delegate ought to act in conformity with the object and purpose of the Act. In this regard, it may be relevant to refer to the following judgment: (i) Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India reported in (1985) 1 SCC 641: "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 conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legisla....