TaxTMI 
TaxTMI 
2025 (7) TMI 772
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....626, 35650, 35779, 35857, 35907, 36169, 36172, 36176, 36602, 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,....
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.... 3436, 3459, 3460, 3541, 3543, 3705, 3706, 3758, 3760, 3829, 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, 2203....
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....erred under Article 246A of the Constitution, Parliament enacted CGST Act and Integrated Goods & Services Tax Act, while the States enacted their respective State Goods and Service Tax Acts, including the State of Tamil Nadu, which introduced Tamil Nadu Goods and Service Tax Act (hereinafter referred to as "TNGST Act"). The above enactments were introduced with effect from 01.07.2017. Goods and Services Tax (GST) represents a pivotal shift in indirect taxation, subsuming various indirect taxes levied by the Union and States with a unified system. This transformation under the GST regime was intended to streamline the tax process, alleviate the complexity and multiplicity of previous taxes. 2.2. Goods and Services Tax (GST) consolidated numerous Central and State taxes into a single tax system. The indirect taxes that were absorbed into GST:- Central Taxes Subsumed: (a) Central Excise Duty (CENVAT) (b) Additional Excise Duties (c) Duties of Exercise (Medicinal and Toilet Preparations) (d) Additional Duties of Exercise (Goods of Special Importance) (e) Additional Duties of Exercise (Textiles and Textile Products) (f) A....
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.... 2017, whereby Section 168A was inserted. 3.4. Above ordinance became an Act of Parliament titled "THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ACT, 2020". Section 168A to CGST Act, 2017, was inserted vide Chapter VI to said Act, whereby Government was conferred power under special circumstances to extend time limit specified in, or prescribed or notified under the CGST Act in respect of actions which cannot be completed or complied with due to force majeure. 3.5. Impugned Notifications viz., Notification Nos.9/2023 and 56/2023 and G.O.(Ms).No.41 dated 05.04.2023 and G.O.(Ms).No.1 dated 02.01.2024 were issued by Central and State Government, in exercise of their power conferred under Section 168A of CGST Act. It is the validity of above notifications which are the subject matter of challenge in the present batch of writ petitions. 4. Provisions relating to limitation under GST Act: 4.1. Before proceeding further, it may be useful to have a broad overview of provisions relating to limitation under CGST Act, relating to determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised. 4.2. Section 73 ....
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....al 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." (emphasis supplied) 4.6. Sub-section (1) of Section 44 of CGST Act, stood amended as below, with effect from 01.08.2021: "44(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 persons, shall furnish an annual return, which may include a self-certified reconciliation statement, reconciling the value of supples declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed." 4.7. Simultaneously, Rule 80 of CGST Rules, 2017, had been amended, wherein the due date for filing annual return for a financial year is prescribed as, on or before 31st day of December following the end of such financial year. It may be relevant to note th....
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....order under Article 142 of the Constitution, vis-a-vis on the impugned notification. A. Common Submissions with regard to challenge to Notification Nos.9/2023 and 56/2023: a) (i) Section 168A of CGST Act enables exercise of power, which is in the nature of delegated legislation and not conditional legislation. (Hamdard Dawakhana vs. Union of India reported in AIR 1960 SC 554). Impugned Notifications must be understood and tested as a delegated legislation. (ii) Section 168A(1) of CGST Act empowers/delegates to Central/State Government, to exercise discretionary legislative powers. Therefore, impugned Notification Nos.9 and 56 of 2023 are a piece of delegated legislation issued under said provisions and open to be tested on all grounds available for a challenge of an administrative act (Indian Express Newspapers (Bombay) Pvt. Ltd vs. Union of India, AIR 1986 SC 515). (b) Section 73(10) of CGST and TNGST Acts reflects legislative policy with regard to limitation for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized. Section 168A of CGST Act, confers power on Government to issue notificatio....
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....ls thereby vitiating the notification which inter alia includes the following: (i) Office Memorandum of the Ministry of Personnel, Public Grievances and Pension, Government of India dated 06.02.2022. (ii) D.O.No.40-3/2020-DM-1(A) of the Home Secretary, Government of India, dated 22.03.2022 addressed to all Chief Secretaries of all States. (iii) CAG Report No.5 of 2022 for the period 01.04.2020 to 31.03.2021 dated 31.03.2022. (iv) Report of CAG for the period 2021-22 bearing No.7 of 2024 dated 21.06.2024. 6.2. That on a collective consideration of relevant materials placed before this Court, it would be clear that inability on the part of revenue to issue notices, complete adjudication within time limit stipulated under Section 73 of the CGST Act, was not in view of any extraneous factor much less force majeure but attributable wholly to inaction and delay on the part of revenue in setting up suitable system/infrastructure for effectively carrying out scrutiny and audit proceedings. Difficulty, if any, in complying with time limit for action under Section 73 of the CGST Act is self imposed and not attributable to any external factor much less "....
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....gre" i.e., a delegate cannot delegate. f) That the recital in the impugned notification that "the Government, on the recommendation of the Council, hereby, extends the time limit specified under sub section 10 of section 73 for issuance of order ...." is wholly false inasmuch as admittedly the impugned notification has been issued not on the basis of the recommendation of the GST Council instead on the basis of recommendation of GIC. The impugned notification thus suffers from malice in law. C. Submissions relating to the effect of Order of the Hon'ble Supreme Court under Article 142 of Constitution of India extending the limitation and excluding certain period for the purpose of limitation in respect of judicial/quasi judicial proceedings vis-a-vis impugned notifications: 6.5. That power under Article 142 of the Constitution, cannot be used to supplant substantive law applicable to the case or cause under consideration (Supreme Court Bar Association vs. Union of India and another reported in (1998) 4 SCC 409). Power under Article 142 of the Constitution, cannot be exercised in a manner where it would be in direct conflict with what has been expressly provided fo....
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....20 to the 28th day of Febraury, 2022 for computation of period of limitation under sub section (10) of Section 73 of the said Act for issuance of order under sub section (9) of Section 73 of the CGST Act, for recovery of erroneous refund; and iii) Excludes the period from the 1st day of March, 2020 to the 28th day of February, 2022 for computation of period of limitation for filing refund application under Section 54 or Section 55 of the CGST Act. b) Notification No.9 of 2023 extended the time limit specified under sub-section (10) of section 73 for issuance of order under subsection (9) of Section 73 of the CGST Act, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilised, relating to the period as specified below, namely: (i) for the FY 2017-18, up to the 31st day of December, 2023; (ii) for the FY 2018-19, up to the 31st day of March, 2024; (iii) for the FY 2019-20, up to the 30th day of June, 2024. c) That Notification No.9/2023 ought to be read in conjunction with the principal Notification Nos.35/2020-CT, 14/2021-CT and 13/2022-CT inasmuch as Notification No.9 of 2023, is issued in partial modific....
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.... That examination of availability or non-availability of materials and adequacy thereof for the Council, to make its recommendation under Section 168A of CGST Act, in view of force majeure is beyond the scope of judicial review. Reliance was placed on the judgments of Telengana and Allahabad High Court judgments referred to supra in support thereof. B) Submission relating to validity of Notification No.56/2023: a) That Article 279A(8) of Constitution vests the Council with power to decide and adopt procedures to discharge its function. That GST Council had approved constitution of GST implementation Committee and other Standing Committees in its 14th GST Council Meeting. Importantly, in 17th GST Council Meeting it was resolved that GST Council may delegate power to GST Implementation Committee to decide on urgent matters and also prescribe the procedure for obtaining views/comments and approval of Council. During Covid Pandemic in view of difficulties in convening meetings as and when required at short notices, GIC was required to suggest recommendation which was thereafter circulated to the Members of Council and approved by the Chairperson. It was submitted that contention ....
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....account relevant factors and if so, whether factors relevant for determining existence of circumstances warranting recommendation for exercise of power under Section 168A of CGST Act, were left out by the Council, thereby vitiating the recommendation and impugned notifications issued thereon such recommendation. D) Whether recommendation by GST Council for issuance of notifications under Section 168A of CGST Act, is mandatory and non compliance would render the legislative exercise by the delegate a nullity. E) Whether ratification of recommendation by GIC by the GST Council post issuance of Notification No. 56 of 2023, would constitute sufficient compliance with the mandate on recommendation contained in Section 168A of CGST Act or there was any abdication of authority by GST Council or arrogation/usurping of powers vested with the Council by GIC. F) Whether the suo muto orders of the Hon'ble Supreme Court under Article 142 of the Constitution, would continue to remain binding even after introduction of Section 168A of CGST Act and issuance of notifications by the Government in exercise of its power thereon. 9. I shall proceed to answer above ques....
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....ng its legislation into effect as also the determination of the area to which it is to extend; (Queen v. Burah [(1878) 3 App Cas 889] ; Russell v. Queen [(1882) 7 App Cas 829, 835] ; King- Emperor v. Benoarilal Sarma [(1944) LR 72 IA 57] ; Sardar Indar Singh v. State of Rajasthan [(1957) SCR 604] ) Thus when the delegate is given the power of making rules and regulations in order to fill in the details to carry out and subserve the purposes of the legislation the manner in which the requirements of the statute are to be met and the rights therein created to be enjoyed it is an exercise of delegated legislation. But when the legislation is complete in itself and the legislature has itself made the law and the only function left to the delegate is to apply the law to an area or to determine the time and manner of carrying it into effect, it is conditional legislation... 29. In an Australian case relied upon by the learned Solicitor-General the prohibition by proclamation of goods under Section 52 of the Customs Act, 1901 was held to be conditional legislation : Baxter v. Ah Way [8 Com LR 626, 634, 637, 638] According to that case the legislature has to project its mind into ....
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....ed legislation and applying the above principle to Section 168A of the CGST Act, it appears that after laying down the policy, legislature has left to the discretion of the delegate i.e., the Government to extend time limit in special circumstances in terms of Section 168A of CGST Act, viz., where actions cannot be complied or completed within the time limit specified or prescribed or notified due to force majeure. 9.6. It would appear that the discretion conferred under Section 168A of CGST Act, to issue a notification to extend time limit in special circumstances is more in the nature of a delegated legislation than conditional legislation, inasmuch as it results in modifying the limitation provided under the Act. The above conclusion stands fortified if one bears in mind as observed supra that limitation is founded on public policy and its prescription is primarily legislative in nature. B) Whether Section 168A read with impugned notifications is an exception to the legislative policy under the GST Act with regard to limitation for issuing notices/passing orders under Section 73 of CGST Act and thus ought to be construed strictly. 9.7. To answer the above question....
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....uity and justice by long enjoyment or what may have been lost by a party's own inaction, negligence or laches." ..... 29. It needs no restatement at our hands that the object for fixing time-limit for litigation is based on public policy fixing a lifespan for legal remedy for the purpose of general welfare. They are meant to see that the parties do not resort to dilatory tactics but avail their legal remedies promptly. Salmond in his Jurisprudence states that the laws come to the assistance of the vigilant and not of the sleepy." 9.9. The above view stands reiterated on more than one occasion including in the case of Prahlad Raut vs. All India Institute of Medical Sciences reported in (2021) 14 SCC 472 9.10. Limitation prescribed under sub sections (2) and (10) to Section 73 of CGST Act, for issuance of notice and passing of orders reflects the legislative will/policy on the aspect of limitation for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts. Section 168A of CGST Act, confers power on the Government i....
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....A of CGST Act. 9.13. To appreciate the above submission, it may be necessary to examine the condition precedent for exercise of power under Section 168A of CGST Act and materials relevant to determine the existence of such condition precedent contended as having been left out while examining the existence or otherwise of such condition precedents before recommendations made by the GST Council and issuance of impugned notifications. 9.14. Before proceeding further it is necessary to note that it is trite that a delegated/subordinate legislation can be challenged on the ground that it has failed to take into account relevant/vital facts in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India reported in (1985) 1 SCC 641 is extracted as under: "78. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur [(1980) 2 SCC 295 : AIR 1980 SC 882 : (1980) 2 SCR 1111], Rameshchandra Kachardas Porwal v. State of Maharashtra [(1981) 2 SCC 722 : AIR 1981 SC 1127 : (1981) 2 SCR 866]....
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....ntioned in the Explanation to Section 168A of CGST Act, which includes epidemic. It is not in dispute that Covid-19 would constitute a "force majeure" for the purposes of Section 168A of CGST Act. 9.18. Secondly, Section 168A of CGST Act, would require that actions under the GST Act cannot be completed or complied with due to "force majeure". It may therefore be necessary to examine the scope of the expression "due to" and "cannot" employed in Section 168A of CGST Act. "Due to: Expressions "sustained by", "caused by", "due to", "resulting from", "sustained by means of", "sustained in consequence of", and "sustained through" have been held to be synonymous. (Black's Law Dictionary-6th Edition) Cannot: Denotes that one is not able (to do some act). But the term is often equivalent to "shall not". (Black's Law Dictionary-6th Edition) Cannot: "Cannot" includes a legal inability, as well as a physical impossibility (The Newbattle, 10 P.D.33). Vesting Order "where a trustee cannot be found" (Trustee Act 1893 (c.53) s.35(1)(ii)(c) - see Trustee Act 1925 (c.19) s.51(1)(ii)(c)); see Re General Accident Insurance [1904] 1 Ch.147, not followed by....
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....provided under Section 73(2) and (10) of CGST Act. 9.21. The expression "cannot" employed in the Explanation to Section 168A of CGST Act, I would think connote if not impossibility, impracticalities (or) statutory mandate unachievable and not mere inconvenience or an element of disadvantage. 9.22. It may therefore be necessary to examine if covid was the sole or proximate cause for authorities under CGST Act, not being able to complete or comply with actions within the time limit stipulated under Section 73 of the CGST Act. 9.23. With this background, I shall now proceed to examine the material relied upon by the petitioner as being relevant, but left out of consideration by the GST Council, while making recommendation to the Government for issuance of impugned notifications under Section 168A of CGST Act. 9.24. It was contended by the learned counsel for the petitioners that materials which would show the impact of Covid-19, or rather lack of it on the inability of the authorities under the GST Act, to issue notice/pass orders within the time limit provided under sub-section (2) and (10) to Section 73 of the CGST Act, was not placed for consideration before GST Council....
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....tional response to the pandemic. ..... 5. I would, therefore, advise all the States/UTs to consider appropriately discontinuing issue of orders and guidelines under the DM Act, 2005 for COVID containment measures. The States/UTs may continue to follow the SoPs/advisories that have been or are being issued by the MoHFW from time to time for COVID containment measures, vaccination and other related aspects, including observing COVID Appropriate Behaviour." c) The Systemic problems admitted by Ministry and captured in CAG Report No.5 of 2022, for the period 01.04.2020 to 31.03.2021 dated 31.03.2022. The relevant portion is extracted hereunder: "3.2 Scrutiny of Returns under GST ................ In the Audit Report No. 1 of 2021 on Goods and Services Tax, Audit had observed that CBIC was yet to put in place an effective system of scrutiny of returns based on detailed instructions/standard operating procedure/manual for the tax officers. Therefore, an important compliance function of the department, as mandated by law, was yet to be effectively rolled out even after three years of GST implementation. Ministry informed (August 2021) t....
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....andardised system of returns' scrutiny (with detailed instructions/standard operating procedure) should be implemented at the earliest and certainly within the period of six months indicated by the Ministry so that the Department has sufficient time to take action against noncompliant taxpayers before time-barring of cases as per law. Such a scrutiny should involve risk-based selection of returns for scrutiny, and the results of the scrutiny (similar to scrutiny assessment in respect of income tax) should also be captured in real-time through the CBIC-GST System to ensure transparency and minimize arbitrariness. When Audit pointed this out (December 2021), Ministry, while accepting the audit recommendation, stated (February 2022) that scrutiny of returns based on detailed instructions/standard operating procedure is under active consideration and the proposed scrutiny process is envisaged to have risk-based selection of returns and is proposed to include a robust monitoring system to ensure transparency and fairness." ..... When pointed out (January 2022), Ministry stated (March 2022) that due to the extension of due date of filing of annual returns, ....
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....General of Analytics and Risk Management (DGARM) reports and audit findings in earlier Audit Reports, may be implemented at the earliest to ensure full transparency and for robust oversight and monitoring of the scrutiny function of the Department. When pointed out (February 2023), Ministry stated (June 2023) that the Part-I of the Risk based Selectivity System (RSS), which provides for Risk factor Creation, Risk Rule Creation and Risk based selection of Returns for scrutiny is under process and would be deployed to production shortly. The Part-II of the RSS, which provides for a Dashboard and Workflow for the field officers to perform scrutiny of returns by interacting with the taxpayers, i.e. Issuance of notice to the taxpayers in ASMT-10, receipt of taxpayer's reply in ASMT-11 and order of acceptance of reply in ASMT-12, had been deployed. Therefore, risk-based Scrutiny Module was yet to be implemented fully as the important functionality related to Risk factor Creation, Risk Rule Creation and Risk based selection of Returns for scrutiny was yet to be implemented (June 2023). ...... 3.3.1.2. ..... The total recovery effected was 20 per cen....
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....tee, accordingly, recommended that limitation under section 73 for FY 2017-18 for issuance of order in respect of demand linked with due date of annual return, may be extended till 30th September, 2023 under the powers available under section 168A of CGST Act. Law Committee further took a view that no such extension is required for timelines under section 74 of the Act,as the Act provides for sufficient limitation time of 5 years in respect of such cases, i.e. much beyond the period affected by COVID-19." f. Agenda Item 4(vii): Extension of time limit under sub-section (10) of Section 73 of CGST Act for FY 2017-18, 2018-19 and 2019-20. "..... 3.Representations have been received from some tax administration to further extend the timelines under section 73 of the CGST Act for FY 2017-18, 2018-19 and 2019-20 to 31.12.2024 or to extend the timelines were faced by government departments during the COVID period due to reduced staff; with staggered timings and exemption to certain categories of employees from attending offices during COVID period. This led to delay in process of scrutiny and audit which could be started properly only after COVID restrictions we....
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....ries were advised to discontinue the issue of Orders and Guidelines under the Disaster Management Act, 2005, because of the decline in the total case load in the country, standing at 23,913 cases with daily positivity rate of 0.28%. c) Proceeding of the Home Secretary dated 22.03.2022 clearly proves that impact of COVID-19 had declined to a level that there was no requirement for issue of any orders or guidelines under the Disaster Management Act, 2005. All of this had taken place by March, 2022. d) Admission of the Ministry regarding absence of a Risk-based Selectivity System i.e., an operational CBIC back-end application (inherent systemic deficiencies) for effectively carrying out scrutiny of returns under the CGST Act. That there was shortage of Officers in the Audit Commissionerate, especially in the grade of Inspectors, whose working strength was less than 50% of the sanctioned strength in most of the Audit Commissionerates. e) It also appears that materials considered in the 47th Meeting of GST Council, while making recommendation to the Government to issue notification in exercise of its power under Section 168A of CGST Act, for extending time lim....
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....otices/passing of orders under Section 73 of the CGST Act was in view of systemic deficiencies and lack of adequate resources/personnel, the inability to take action within the time limit specified under Section 73 of CGST Act, cannot be attributed to covid-19 the inability rather was self inflicted by the department. It thus seems that the Government was not justified in invoking power under Section 168A of CGST Act. 9.28. Importantly, the genuineness/correctness of the above material remains uncontroverted by the Revenue. Instead Revenue in response would submit that Explanation to Section 168A of CGST Act, which defines "force majeure" is very wide and would submit the expression "otherwise", employed in the said Explanation would cover any event including systematic inefficiency/deficiency, lack of adequate personnel which affects implementation of the provisions of the Act. 9.29. To appreciate the above contention, it may be useful to refer to the Explanation to Section 168A of the CGST Act which reads as under: "Explanation.--For the purposes of this section, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake....
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....ualifies the cause of force majeure covered under the said Explanation. Judgements relied upon by respondent for supporting the position that "otherwise" will have independent operation were based on the particular context in which they were found. Therefore, no reliance can be placed upon the same. Importantly reading the words "or otherwise" in Explanation to Section 168A of CGST Act, independent of what has preceded it by respondents will result in a non-force majeure event / condition becoming sufficient for exercise of power under Section 168A(1) of the Act. The above construction sought to be placed by respondents defeats the object as well as plain language of the said provision. 9.32.Yet another reason which would suggest that the expression "otherwise", cannot be a complete departure from the preceding expressions or wide enough to include any event/calamity which would affect implementation of any of the provision of the Act, is that it would render the enumeration of various events such as war, flood etc., redundant. It is trite that any construction that imputes redundancy/ superfluity to legislation must be avoided. I would thus think that the construction placed by....
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....loyees from attending offices, from time to time during the COVID period. A conscious policy decision was taken not to do enforcement actions in the initial period of implementation of the GST law. Therefore, no action for scrutiny, audit, etc., could be undertaken during the initial period of GST implementation. As thedue date for filing the annual return for Financial Year 2017-18 was 07.02.2020 based on which limitations for demand under the Act are linked As Covid happened immediately after that, thereby the audit and scrutiny for the Financial Year 2017-18 were impeded due to the various restrictions during the Covid period Therefore, the decision was taken to extend the limitation under Section 73 for the Financial Year 2017-18 for issuance of the order in respect of demand linked with due date of annual return till 30.09.2023 under the powers available under Section 168A of the GST Act. 19. How much time could have been extended considering the pandemic is the discretion of the Executive, which has been taken based on the recommendation of the GST Council. I do not find that the notifications impugned in the writ petition in Exts. P7 and P8 are ultra vires the provi....
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....abled officers from taking action within the prescribed time. It also found that recommendation of the council is a sine qua non for exercise of power under Section 168A of CGST Act. However, due to pandemic a subsequent ratification would satisfy the mandate of recommendation by the GST Council contemplated under Section 168A of CGST Act. The Court also found in view of the orders of the Hon'ble Supreme Court under Article 142 of the Constitution, the impugned notifications is more by way of abundant caution. The relevant portion is extracted hereunder: "32. In fact, the Hon'ble Supreme Court directions apply to all judicial and quasi-judicial proceedings under all laws and special laws and hence, the exclusion of the period from 15.03.2020 to 28.02.2022 applies equally to assessee's and the statutory authorities. The suspension of limitation was on account of disruption of every human activity, the incapacity visited on the community; equally affecting the assessee's and the governmental machinery, which machinery also functions through its officers, who were also disabled during the period. The recommendation made by the GST Council and the notification brought ....
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....68A of CGST Act, is mandatory and non compliance would render the legislative exercise by the delegate a nullity. 9.41. The requirement of recommendation by GST Council under Section 168A of CGST Act, is a mandate by Parliament. It is trite that when law requires a particular act to be done in a particular manner the act ought to be done in that manner and no other (Competent Authority v. Barangore Jute Factory, (2005) 13 SCC 477). The Revenue would submit that recommendation by GST Council is not mandatory and would place reliance on decision of the Hon'ble Supreme Court in the case of Union of India & Anr. v. M/s.Mohit Minerals Pvt. Ltd., reported in (2022) 10 SCC 700. It appears to me that the above submission is on the basis of a mis-reading of the judgment of the Hon'ble Supreme Court in Mohit Minerals by the Revenue, wherein a distinction is made as to the binding nature of recommendation of GST Council in relation to secondary legislation vis-a-vis primary legislation. While it was held that recommendation of GST Council may not be binding when a competent legislative body is exercising its legislative power however, it was made clear that the recommendation of GS....
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....g with a recommendation mandated under CGST Act as a pre-requisite/condition precedent for exercise of power under Section 168A of CGST Act. The recommendation of GST Council under Article 279A of the Constitution cannot obviously be mandatory when it comes to legislative action in view of the fact that the power to legislate on Goods and Service Tax flows from Article 246A of Constitution of India, any attempt to suggest that the above legislative power would be subject to recommendation of an executive body albeit constitutional body i.e., GST Council may well strike an imbalance rather offend the doctrine of separation of powers between the three organs viz., legislature, judiciary and executive. It is important to remind ourselves that separation of powers is part of basic structure of Constitution and thus ought to be preserved, any construction which offends/infracts, the above rule ought to be eschewed. 9.43. Now on the question as to whether the recommendation of GST Council is mandatory for the purpose of exercise of power under Section 168A of the CGST Act and whether such recommendation is binding or not. It appears that while the recommendation is mandatory it may st....
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.... issuance of Notification No. 56 of 2023, would constitute sufficient compliance with the mandate on recommendation contained in Section 168A of CGST Act or there was any abdication of authority by GST Council or arrogation/usurping of powers vested with the Council by GIC. 9.45. Admittedly, there was no recommendation by GST Council prior to issuance of impugned notification No.56 of 2023. Admittedly, Government issued the notification No.56/2023 in exercise of its power under Section 168A of CGST Act, even prior to any recommendation by the GST Council. There is no quarrel that GIC is not GST Council, instead it is a Committee constituted by the GST Council. GST Council is a Constitutional body. Article 279A of Constitution of India provides for its constitution under sub-clause (2) which reads as under: "(2) The Goods and Service Tax Council shall consist of the following members, namely:- (a) the Union Finance Minister ----- Chairperson; (b) the Union Minister of State in charge of Revenue or Finance ----- Member; (c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government. -----Members." 9....
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....designated body should address its own mind." 9.49. Now, let us turn to the question of the impact of ratification by GST Council of recommendation of GIC post issuance of notification. The learned Additional Solicitor General would place reliance upon the judgment of the Hon'ble Supreme Court in the case of Vivek Narayan Sharma (Demonetisation Case-5 J.) v. Union of India, reported in (2023) 3 SCC 1, wherein in the context of Notification issued under Section 26(2) of the RBI Act, 1934 for effecting demonetisation which required the Central Government to take a decision on demonetisation on the recommendation of the Central Board, it was found that a discussion/proposal was in fact initiated by the Central Government and it was advised / suggested to the Central Board by the Central Government to consider recommending demonetisation. The Central Board pursuant to the above advise/suggestion of the Central Government in turn recommended demonetization of certain currency notes in exercise of its power under Section 26 of the RBI Act. Pursuant to the above recommendation, the Central Government demonetized certain currency. It was submitted before the Apex Court that inasmuch....
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....complied with. Recommendation by the GST Council was only by way of ratification of a decision of GIC and subsequent to the issuance of notification No.56 of 2023, this may not constitute compliance with the mandate of Section 168A of CGST Act. While in the demonetisation case relied by the Revenue, the Central Board which is the appropriate body to recommend in fact made a recommendation prior to the exercise of power by the Central Government under sub section (2) of Section 26 of RBI Act, 1934, though the Central Government may have possibly initiated the entire proposal. In the circumstance reliance on the judgment of the Supreme Court in the demonetization case appears to be wholly misplaced. 9.51. It may also be relevant to note the judgment of the Hon'ble Supreme Court in the case of Marathwada University vs. Seshrao Balwant Rao Chavan reported in (1989) 3 SCC 132, wherein while dealing with the effect of ratification with regard to exercise of statutory power it was held that the principle of ratification is alien to exercise of power under statutory provision. The relevant portion is extracted hereunder: "24. This takes us to the second contention urged for....
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....on 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 body it acts ultra vires". Such an interference by a person or body extraneous to the power would plainly be contrary to the nature of the power conferred upon the authority. De Smith sums up the position thus: "The relevant principles formulated by the courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it: it must not act under the dictation of another body or disable itself from exercising a discretion in each individual case. In the purported exercise of its discretion it must not do what it has been forbidden to do, nor must it do what it has not been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be swayed by irrelevant considerations, must n....
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....he 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 of calculating limitation in respect of any judicial/quasi judicial proceedings would cease to have effect with the introduction of Section 168A to the CGST Act/SGST Act and in any view with the issuance of notification No.13 of 2022, do not appear to have merit for the following reasons. 9.58. Before I deal with the reasons, it may be relevant rather necessary to have a look at the orders of the Hon'ble Supreme Court and the notifications issued under Section 168A of CGST Act. 9.59. I shall set out briefly orders under Article 142 of Constitution of India, passed by the Hon'ble Supreme Court periodically and the Notifications issued in exercise of power under Section 168A of CGST Act. 9.60. Due to outbreak/onset of Covid-19 pandemic in the country, lawyers and litigants faced difficulties in filing application/ petition within the limitation stipulated under General and Special Laws. Apex Court took suo moto cognizance of the difficulties faced and passed a series of o....
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....omputing 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 and u/s. 138 NI Act, 1881. 8 August 30, 2022 SC dismissed multiple MAs in the limitation extension case as withdrawn - MA 469/2022 was withdrawn with liberty to pursue other legal remedies. 9.61. Order dated 10.01.2022, provided 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. What may require consideration is the scope of the order dated 10.02.2022 under Article 142 of the Constitution and its impact on the limitation of issuing notices/ passing orders under Section 73 of CGST Act which requires to be considered. It may be relevant to refer to the following portions of the said order and the same is extracted hereunder: "Cognizance for Extension of Limitation, In re, (2022) 3 SCC 117 "5.1. The order dated 23-3-2020 [Cognizance for Extension of Limitation, ....
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....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 2017), and section 21 of the Union territory Goods and Services Tax Act, 2017 (14 of 2017) and in partial modification of the notifications of the Government of India, Ministry of Finance (Department of Revenue), No. 35/2020-Central Tax, dated the 3 rd April, 2020 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 235(E), dated the 3rd April, 2020 and No. 14/2021-Central Tax, dated the 1st May, 2021 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 310(E), dated the 1st May, 2021 and No. 13/2022-Central Tax, dated the 5th July, 2022, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 516(E), dated the 5th July, 2022, the Government, on the recommendations of the Council, hereby, extends the time limit ....
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....024." 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 reckoning limitation with regard to any judicial/quasi judicial proceedings. On the other hand, impugned notification viz., Notification No.09/2023 and 56/2023 issued under Section 168A of CGST Act provided for extension of time for issuance of notice/order under sub-sections (2) and (10) to Section 73 of the CGST Act, for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized as under: a) for the financial year 2017-18, the time limit for passing orders under sub section (10) to Section 73 was extended upto 31.12.2023 b) for the financial year 2018-19, the time limit for passing orders under sub section (10) to Section 73 was extended upto 30.04.2024 c) for the financial year 2019-20, the time limit for passing orders under sub section (10) to Section ....
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.... 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 application to set aside an award, which was 3 months with the proviso providing for extension of such period not exceeding one month, and while considering the applicability of Section 14 of Limitation Act which provides for exclusion of time spent before a wrong Court, the distinction between extension and exclusion of limitation was explained as under: "Re: Question (ii) 46. The learned counsel for the appellant next contended that even if the Limitation Act applied, Section 14 is excluded by reason of the proviso to Section 34(3) and at best, prosecution before a wrong forum can be considered as a sufficient cause for explaining the delay, in which event condonation cannot be for a period in excess of 30 days. He submitted that sub-se....
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....ications 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 limitation period continues to be three months and not more, but in computing the limitation period of three months for the application under Section 34(1) of the AC Act, the time during which the applicant was prosecuting such application before the wrong court is excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. Western Builders [(2006) 6 SCC 239] therefore lays down the correct legal position." iii) Ketan V. Parekh v. Enforcement Directorate, reported in, (2011) 15 SCC 30: "28. In his concurring judgment, Raveendran, J. referred to the judgment in State of Goa v. Western Builders [(2006) 6 SCC 239] and observed: (Consolidated Engg. Enterprises case [Co....
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....(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 Section 34 of the Arbitration Act, the period provided in Section 128 of the Customs Act did not lay down a long period for preferring an appeal. As such, it would be unduly harsh to exclude the principles contained in Section 14 of the Limitation Act. Relying on Consolidated Engg. Enterprises [Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169] it was observed, that there is a difference between exclusion of a certain period altogether under principles of Section 14 and condoning the delay. It has been observed, that when a certain period is excluded by applying the principles contained in Section 14, there is no delay to be attributed to the appellant and t....
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....eme 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 is no overlap. 9.68. Yet another reason to find that even the Government recognized rather maintained the distinction between extension of time limit and exclusion of period, one would only need to look at Notification No.13 of 2022, wherein while exercising the power under Section 168A of CGST Act, it provided for extension and exclusion of time limit for passing order under Section 73(10) of CGST Act. The relevant portion of Notification No.13 of 2022 is extracted hereunder: "NOTIFICATION No.13/2022-Central Tax New Delhi, the 5thJuly 2022 ..... (i) extends the time limit specified under sub-section (10) of section 73 for issuance of....
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....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 Extended time limit u/s 73(10) for issuance of order u/s.73(9) in exercise of power u/s.168A of CGST Act (upto) Limitation u/s 73(10) after exclusion of period 15.03.2020 to 28.02.2022 as per order dated 10.01.2022 of SC 1. 2017-18 31.12.2018 05.02.2020 07.02.2020 (Notification 06/2020) 05.02.2023 31.12.2023 (Not.9/2023) 20.01.2025 ADDING 715 DAYS 2. 2018-19 31.12.2019 31.12.2020 (Not.80/2020) 31.12.2023 30.04.2024 (Not.56/2023) 27.02.2025 ADDING 424 DAYS 3. 2019-20 31.12.2020 31.03.2021 (Not.04/2021) 31.03.2024 31.08.2024 (Not.56/2023....
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....ttled 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 change the law". "The beliefs or assumptions of those who frame Acts of Parliament cannot make the law" and a mere erroneous assumption exhibited in a statute as to the state of the existing law is ineffective to express an 'intention' to change the law; if, by such a statute, the idea is to change the law, it will be said that "the legislature has plainly misfired". The "legislation founded on a mistaken or erroneous assumption has not the effect of making the law which the legislature had erroneously assumed to be so". The court will disregard such a bel....
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....r 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 expired the forum was changed. And for the purpose of the changed forum, time could not be deemed to have started running before a remedy of going to the new forum is made available. (2) Even though by and large the law of limitation has been held to be a procedural law, there are exceptions to this principle. Generally the law of limitation which is in vogue on the date of the commencement of the action governs it. But there are certain exceptions to this principle. The ....
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.... 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 legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". (ii) State of U.P. v. Renusagar Power Co., (1988) 4 SCC 59 The....