Telangana High Court
M/S. Sri Laxmi Chemicals vs The Deputy Commissioner State Tax6 on 2 January, 2025
Author: G.Radha Rani
Bench: G.Radha Rani
*THE HON'BLE SRI JUSTICE SUJOY PAUL
AND
*THE HON'BLE Dr. JUSTICE G. RADHA RANI
+WRIT PETITION Nos.1154 OF 2024 & BATCH
% 02-01-2025
# M/s.Brunda Infra Pvt. Limited and Others.
...Petitioners
vs.
$ The Additional Commissioner of Central Tax,
O/o. The Principal Commissioner of Central Tax,
Hyderabad GST Commissionerate, GST Bhavan,
Basheerbagh, Hyderabad and Others
... Respondents
!Counsel for the Petitioners: Sri S.Ravi, learned Senior Counsel, assisted by
Sri P.Venkata Prasad
Sri V.Bhaskar Reddy, learned Senior Counsel,
assisted by Sri V.Siddarth Reddy
Sri V.Sridharan, learned Senior Counsel,
assisted by Sri Narendra Dave
Sri Singam Srinivasa Rao
Sri A.V.A. Siva Karthikeya
Sri Nishant Mishra, learned counsel assisted by
Sri Omer Farooq
Sri SRR Viswanath, learned counsel assisted by
Ms. S.N. Sreedevi
Sri P. Govind Reddy
Sri M. Ramachandra Murthy
Sri Karthik Ramana Puttamreddy
Dr. Avinash Poddar
^Counsel for Respondents: Sri B.Narasimha Sharma, learned Additional
Solicitor General of India, assisted by Sri Gadi
Praveen Kumar, learned Deputy Solicitor
General of India
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SP,J & Dr.GRR,J
Wp_1154_2024 & batch
Sri Dominic Fernandes, learned Senior
Standing Counsel for CBIC, assisted by
Ms.Pravalika Goud
Sri R.Sushanth Reddy, learned Standing Counsel
for CBIC
<Gist :
>Head Note :
? Cases referred
1. MANU/SC/0408/2017
2. (2024) 19 Centax 82 (Allahabad)
3. 2024(9) TMI 1398 Gauhati High Court
4. (2024) 25 Centax 55 (Pat.)
5. (2016) 12 SCC 613
6. (2022) 104 G S.T.R. 51 (Telangana)
7. 2023 SCC OnLine SC 1592
8. (1989) 3 SCC 132
9. (2021) 1 SCC 539
10. (2001) 4 SCC 215
11. AIR 1964 SC 1742
12. 1971 (2) SCC 564
13. (2016) 4 SCC 769
14. (2017) 8 SCC 307
15. (2004) 9 SCC 686
16. 2023 SCC OnLine Jhar 1188
17. (2008) 9 SCC 306
18. (1990) 2 SCC 378
19. (2001) 7 SCC 71
20. AIR 2012 SC 3791
21. 2017 (6) ADR 707
22. (1984) 4 SCC 27
23. (2024) 2 S.C.R. 194
24. 2024 (10) TMI 286
25. (2022) 10 SCC 700
26. O.M.P. (I) (COMM.) No.88/2020, dated 29.05.2020.
27. 1957 SCC OnLine SC 27
28. 2022 SCC OnLine SC 587
29. 2024 (10) TMI 1166
30. (1988) 2 SCC 351
31. W.P.A.No.11578 of 2021, dated 01.10.2021
32. 2015 (11) SCC 669
33. 2023 SCC Online SC 550
34. (2019) 9 SCC 1
35. (2023) 6 SCC 451
36. 2006(4) SCC 517
37. 2020 SCC OnLine Mad 1026
38. (2011) 1 SCC 236
39. (2022) 2 SCC 221
40. AIR 1977 SC 1302
41. AIR 1963 SC 274
42. (1869) LR 4 HL 100
43. (1921) 1 kb 64
3
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44. JT 1999 (2) SC 272
45. (1951) 2 All ER 473
46. 1936 SCC OnLine PC 41
47. (1999) 8 SCC 266
48. (1999) 3 SCC 422
49. (2015) 7 SCC 690
50. (2016) 9 SCC 20
51. (2019) 3 SCC 224
52. (2020) 13 SCC 234
53. (2021) 6 SCC 707
54. (2022) 8 SCC 713
55. (2023) 10 SCC 461
56. (1986) 1 SCC 264
57. (1977) 2 SCC 256
58. (1987) 1 SCC 424
59. (2013) 3 SCC 489
60. (2007) 8 SCC 338
61. (2010) 13 SCC 98
62. (2020) 9 SCC 121
63. AIR 1980 SC 286
64. (2008) 13 SCC 1
65. (2023) 2 SCC 597
66. (1985) 3 SCC 545
4
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IN THE HIGH COURT FOR THE STATE OF TELANGANA
HYDERABAD
****
WRIT PETITION Nos.1154 OF 2024 & BATCH
Between:
M/s.Brunda Infra Pvt. Limited and Others.
...Petitioners
vs.
The Additional Commissioner of Central Tax,
O/o. The Principal Commissioner of Central Tax,
Hyderabad GST Commissionerate, GST Bhavan,
Basheerbagh, Hyderabad and Others
... Respondents
JUDGMENT PRONOUNCED ON: 02.01.2025
THE HON'BLE SRI JUSTICE SUJOY PAUL
AND
THE HON'BLE Dr. JUSTICE G. RADHA RANI
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? :
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? :
3. Whether His Lordship wishes to
see the fair copy of the Judgment? :
___________________
SUJOY PAUL, J
_______________________
Dr. G.RADHA RANI, J
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SP,J & Dr.GRR,J
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THE HONOURABLE SRI JUSTICE SUJOY PAUL
AND
THE HON'BLE Dr. JUSTICE G. RADHA RANI
WRIT PETITION NOS. 1154, 2123 2851, 3624, 4680, 5238, 5485,
5567, 5617, 5911, 5917, 6692, 6856, 7140, 7208, 7596, 8015,
8022, 8133, 8196, 8273, 8530, 8569, 8768, 9177, 9435, 9490,
9790, 9947, 9979, 10322, 10331, 10565, 10591, 10725, 10733,
10766, 10790, 13212, 13291, 13737, 13746, 13756, 13767,
13777, 13779, 13786, 13795, 13799, 13804, 13818, 13819,
13821, 13822, 13823, 13841, 13842, 13853, 13859, 13917,
13934, 13940, 14100, 14179, 14182,
14268, 14281, 14289, 14437, 14476, 14496, 14729, 14843,
14896, 14947, 15013, 15150, 15201, 15332, 15381, 15439,
15452, 15479, 15483, 15492, 15510, 15569, 15648, 15855,
15863, 16038, 16118, 16281, 16350, 16374, 16656, 16875,
16920, 17012, 17015, 17224, 17294, 17682, 17684, 17766,
17916, 17967, 17990, 18097, 18115, 18117, 18126, 18172,
18176, 18198, 18310, 18425, 18438, 18486, 18613, 18618,
18684, 18894, 19008, 19205, 19594, 19757, 19992, 20150,
20164, 20232, 20233, 20234, 20235, 20355, 20371, 20429,
20671, 20676, 20680, 22410, 22472, 22524, 22535, 22552,
22588, 23087, 23282, 23538, 23962, 25177, 25272, 25742,
26603, 26606, 26621, 26646, 27082, 27228, 27725, 28511,
28653, 28657, 28757, 28808, 29363, 29507, 29516, 29531,
29539, 29544, 29554, 29560, 29806, 29881, 29915, 30025,
30047, 30113, 30133, 30142, 30194, 30471, 30474, 30621,
30638, 30657, 30784, 30815, 30858, 30896, 30945, 31071,
31125, 31178, 31199, 31210, 31229, 31286, 31348, 31363,
31463, 31479, 31498, 31650, 31666, 31704, 31716, 31792,
31807, 31864, 31885, 31967, 31984, 32008, 32080, 32113,
32116, 32118, 32131, 32133, 32180, 32183, 32185, 32243,
32270, 32333, 32393, 32431, 32433, 32453, 32466, 32472,
32484, 32487, 32502, 32509, 32573, 32585, 32606, 32665,
32685, 32690, 32693, 32716, 32722, 32755, 32790, 32821,
32826, 32883, 32888, 32988, 33023, 33026, 33032, 33046,
33048, 33050, 33071, 33075, 33138, 33212, 33219, 33220,
33286, 33355, 33361, 33375, 33385, 33390, 33402, 33448,
33506, 33513, 33552, 33584, 33631, 33651, 33710, 33717,
33732, 33747, 33889, 33896, 33935, 33954, 34002, 34006,
34010, 34031, 34035, 34065, 34069, 34077, 34094, 34117,
34135, 34174, 34177, 34208, 34273, 34468, 34482, 34486,
34533, 34550, 34584, 34625, 34628, 34677, 34706, 34712,
34737, 34887, 34927, 34988, 35008, 35034, 35040, 35073,
35126, 35167, 35191, 35201, 35211 35228, 35246, 35247,
35249, 35296, 35340, 35345, 35396, 35409, 35434, 35590,
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35628, 35828, 35835, 35968, 35974, 35976, 35994, 36027,
36065, 36102, 36103, 36112, 36129, 36251, 36288, 36324,
36383, 36602, 36626, 36808, 36811, 36812 and 36912 of 2024
COMMON ORDER (per Hon'ble SP,J):
In this batch of writ petitions, the petitioners have called in
question the legality, validity and propriety of notification
Nos.13/2022, dated 05.07.2022, 9 and 56/2023, dated
31.03.2023 and 28.12.2023, respectively. The pari materia/
corresponding notification Nos.118/2023, dated 25.08.2023 and
170/2023, dated 17.12.2023 issued by State of Telangana are
also subject matter of challenge. These notifications are admittedly
issued in purported exercise of power under Section 168A of The
Central Goods and Services Tax Act, 2017 (for short, ‘the GST
Act’).
Factual background and Contention of the petitioners:
2. The facts are taken from W.P. No. 33390 of 2024. Sri
S. Ravi, learned Senior Counsel representing Sri P. Venkata
Prasad, learned counsel for the petitioner, submits that this
matter relates to F.Y. 2019-2020. The show-cause notice was
issued on 31.05.2024. The Order-in-Original (‘OIO’) was passed
on 29.08.2024 after the maximum period of limitation prescribed
under Section 73(10) of the GST Act. Under the garb of extension
of limitation as per impugned notifications, said OIO came to be
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Wp_1154_2024 & batchpassed. Criticizing the impugned notification Nos. 9 and 56 of
2023, it is contended that on the date of issuance of these
notifications, no force majeure conditions were in existence.
Section 168A of the GST Act, in no uncertain terms makes it clear
that limitation can be extended on availability of ‘special
circumstances’. In absence of force majeure circumstance on the
date of issuance of notifications, these notifications cannot be said
to be passed based on enabling provision.
3. To buttress aforesaid contention, the letter written by
Secretary, Home Department to Chief Secretaries of all the States,
dated 22.03.2023 was highlighted to establish that there was no
need to invoke provisions of the Disaster Management Act, 2005.
Thus, COVID-19 period, admittedly, came to an end before
impugned notifications were issued. Paragraph Nos. 6(1), (6), (7)
and (8) of said letter were relied upon.
4. The next limb of argument is that COVID-19
relaxations/extensions are not available to the Government.
Notification Nos. 35/2020, dated 03.04.2020 and 14 of 2021,
dated 01.05.2021, were referred to show that time for completion
or compliance of any action was extended upto 30.06.2021.
Hence, only for compliance of Section 73 of the GST Act, the time
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limit was extended till 31.12.2023 or 30.04.2024/31.08.2024. For
any other compliance, time limit was extended only upto
30.06.2021. Thus, any extension of time beyond 30.06.2021 is
impermissible even by invoking Section 168A of the GST Act.
5. Furthermore, the extension was made vide Notification
No.13/2022-Central Tax, dated 05.07.2022, wherein time limit
under Section 73(10) of the CGST Act for F.Y. 2017-18 was
extended upto 30.09.2023 by excluding the intervening period
between 01.03.2020 to 20.08.2022 for recovery of erroneous
refund cases under Section 73(10) and refund claims under
Section 54. The above extension was issued on 05.07.2022
allowing the Department to issue notices on or before 30.09.2023.
Assuming that above extension was valid and is in consonance
with Section 168A, there was no requirement for any further
extension. Thus, it appears that the Department is using the
COVID-19 pandemic as an excuse and reason to undo their failure
of not completing assessments and raising demands under
Section 73 within stipulated time.
6. Heavy reliance is placed on CBIC Circular No.157/13/2021-
GST, dated 20.07.2021, to canvass the point that the
understanding of respondent-Department is that the orders
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passed by Supreme Court in suo motu jurisdiction extending
limitation period are not applicable to the Department. Similarly,
CBIC instructions No. 2/2021, dated 22.09.2021, expects strict
adherence to the time line provided under Section 73 of the GST
Act and does not take excuse of difficulties arising out of
COVID-19 pandemic.
7. The time limit can be extended only on availability of force
majeure conditions and not based on the administrative
difficulties faced by the Department.
8. In this era of technological advancement, exercise of
issuance of notice, filing or reply, hearing and passing orders is
being done through virtual/electronic mode. CBIC has mandated
to conduct the hearing through virtual mode. Thus, even
otherwise, there existed no practical difficulty for Revenue to
complete their exercise within the stipulated time. The judgment
of Supreme Court in Energy Watchdog v. Central Electricity
Regulatory Commission 1 was referred to show that necessary
ingredients to attract force majeure clause were absent in the
instant case.
1
MANU/SC/0408/2017
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9. It was common ground taken by learned counsel for the
parties that Section 168A of the GST Act provides that extension
notification can be issued on the recommendation of the GST
Council. So far as notification No. 56/2023 is concerned, there
was no prior notification of GST Council. The counter of the
Department filed in these cases shows that the notification No.
56/2023 was issued on the basis of decision taken by GST
Implementation Committee/Law Committee. Thus decision of
Implementation/Law Committee was ratified by GST Council after
six months from the date of issuance of notification No. 56/2023.
The meaning of words ‘recommendation’ and ‘ratification’ were
highlighted to show the difference between the two. The
‘recommendation’ is always prior in time which forms basis for
taking a decision, whereas, ‘ratification’ is a subsequent exercise
for a decision which has already been taken. In view of statutory
mandate ingrained in Section 168A of the GST Act, subsequent
‘ratification’ cannot satisfy the requirement of statute i.e., ‘on the
recommendation of the GST Council’.
10. The next submission is that repeated extensions given in
purported exercise of Section 168A of the GST Act are arbitrary
and violative of Article 14 of the Constitution. The impugned
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notifications are discriminatory to the extent they partly modify
the earlier notifications dated 01.05.2021 and 28.06.2021. The
Revenue has taken undue benefit of extension of limitation for
initiating and completing adjudicating proceedings.
11. The judgment of Allahabad High Court in Graziano
Transmissions v. Goods and Services Tax 2 was referred to
suggest that Division Bench, despite noting that the impugned
notification No. 56/2023 was issued pursuant to the decision of
GST Implementation Committee and not by GST Council, did not
deal with the difference between the ‘recommendation of
committee’ and ‘ratification by Council’. Thus, said judgment is
distinguishable. The Allahabad High Court has also opined that
orders of Supreme Court in suo motu jurisdiction relaxing
limitation are inapplicable for proceedings under the GST Act.
12. The judgment of Gauhati High Court in M/s. Barkataki
Print and Media Services, Dhrubajyoti Barkotoku v. Union of
India 3 was relied upon wherein the Court opined that
recommendation of GST Council is sine qua non for exercising
power under Section 168A of the Act. An attempt is made to
2
(2024) 19 Centax 82 (Allahabad)
3 2024(9) TMI 1398 Gauhati High Court
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distinguish the Division Bench judgment of Patna High Court in
Barhonia Engicon Private Limited v. State of Bihar4 by
contending that COVID-19 relaxations given by Supreme Court in
suo motu jurisdiction was treated to be a reasons for extending
limitation by the Revenue, but CBIC Circular dated 20.07.2021
speaks otherwise and this Circular has escaped notice of Patna
High Court. Thus, this judgment is also distinguishable.
13. Sri S. Ravi, learned Senior Counsel, submits that the
respondents may rely on certain judgments, including Bajaj
Hindustan Limited v. State of Uttar Pradesh 5 and other
judgments to support their stand that ‘ratification’ is permissible
and ‘ratification’ relates back to the original date of the decision.
However, it must be noticed that the said judgments are relating
to ‘ratification’ in exercise of executive/administrative power. It
does not deal with exercise of subordinate legislative power.
Counter of State Government (para No. 33) filed in W.P. No. 21851
of 2024 was pointed out where State itself treated the power of
issuing impugned notifications as ‘legislative power’. The
judgment of Allahabad High Court in Graziano Transmissions
(supra) was also referred to support the same point. Since
4
(2024) 25 Centax 55 (Pat.)
5 (2016) 12 SCC 613
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impugned notifications are issued in exercise of legislative power
therefore, ‘ratification’ aspect dealt with in certain judgments of
Supreme Court while exercising executive/administrative power
cannot be pressed into service. Putting it differently, it is urged
that subordinate legislative and administrative actions cannot be
judged on the same parameters. Since statute envisages the
requirement of recommendation of council before taking decision
of extension of limitation, no other method can be adopted.
14. The meaning of words ‘approval’ and ‘recommendation’ as
used in Black’s Law dictionary and considered by Gauhati High
Court in M/s. Barkataki Print and Media Services, Dhrubajyoti
Barkotoku (supra) was also referred.
15. The alternative submission of learned Senior Counsel is that
by the time notification No. 56/2023 was issued, the original
period of limitation for F.Y. 2018-2019 which was upto
31.03.2024 was over. The notification No.56/2023 was issued
after 31.03.2024 and therefore, it cannot revive or extend the
limitation which already stood exhausted.
16. Paragraph 138 of judgment of this Court in Sri Sri
Engineering Works and Ors. v. The Deputy Commissioner
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(CT), Begumpet Division, Hyderabad and Others 6 which got
stamp of approval by Supreme Court is relied upon to show that
limitation cannot be extended after previous period of limitation is
over. The judgment of Dr.Premchandran Keezhoth v.
Chancellor, Kannur University 7 was relied upon to submit that
in the matter of these notifications, no ‘ratification’ will serve the
purpose and improve the case of Revenue.
17. Article 279A of the Constitution on which reliance may be
placed by the Revenue is of no assistance because provision saves
the irregularity committed by GST Council. In the instant case,
the impugned notification No. 56/2023 is issued by Government
and irregularity of Government cannot be ignored by taking
shelter of aforesaid Article.
18. The first suo motu order of Supreme Court relating to
COVID-19 was passed on 23.03.2020. The ordinance whereby
Section 168A of the GST Act was brought into existence was
issued on 31.03.2020. Thus, respondents were conscious that
order of Supreme Court in suo motu matter will not extend the
limitation in the matter of this nature. Otherwise, there was no
6
(2022) 104 G S.T.R. 51 (Telangana)
7
2023 SCC OnLine SC 1592
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occasion to issue the said notification. There exists no pleading in
the counter to show that suo motu extensions given by Supreme
Court are applicable to the present Department.
19. Sri V. Sridharan, learned Senior Counsel representing M/s.
Lakshmi Sukumaran Sridharan, learned counsel for the
petitioners in W.P.Nos.15855, 15863 and 18117 of 2024, placed
reliance on the judgment of Supreme Court in the case of
Marathwada University v. Seshrao Balwant Rao Chavan8 and
urged that when the Act provides a function for a particular body
to exercise power, it must be exercised only by that body. The
exercise of power by different body de hors the statutory provision
is impermissible and unsustainable in law. In this case,
ratification by the GST Council had taken place after six months
from the date of issuance of notification No.56/2023, dated
28.12.2023. Rakesh Kumar Agarwalla v. National Law School
of India University 9 and V.M. Kurian v. State of Kerala 10 were
relied upon to show difference between the words ‘consultation’
and ‘recommendation’.
8
(1989) 3 SCC 132
9
(2021) 1 SCC 539
10
(2001) 4 SCC 215
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20. Banarsi Debi v. Income-Tax Officer 11 was referred to
submit that in view of the principle laid down therein, a conjoint
reading of Sections 73(10) and 168A of the GST Act shows that the
provisions are substantive in nature. Such provisions deserve
strict interpretation. Section 168A talks about extension of time
limit ‘specified’, ‘prescribed’ or ‘notified’ in the GST Act. This
power can be once exercised and the law does not permit
extension by issuing subsequent notification whereby the time
limit originally specified under Section 73(10) can be extended.
21. Section 73(2) of the GST Act envisages issuances of notice
and for this, time limit is specified. This time limit is regarding
initiation of proceedings, whereas Section 75(10) prescribes expiry
date by putting a deeming clause.
22. The bone of contention of the learned Senior Counsel is that
Section 168A of the GST Act permits extension of limitation
prescribed as per Section 73(10). This original limitation
prescribed in Section 73(10) can be extended, but Section 168A
does not give power to extend the limitation which was extended
by issuing different notification. In other words, the power of
extension can be exercised in relation to the limitation provided
11
AIR 1964 SC 1742
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under Section 73(10) and not relating to limitation provided under
the notification issued under Section 168A of the GST Act.
23. The judgment of Supreme Court in Atlas Cycle Industries
Ltd. v. State of Haryana 12 was cited wherein it was held that if
language of statute is clear, nothing can be added through
interpretative process.
24. In total, on five occasions, the limitation was extended. The
2nd notification was issued on 31.03.2023. It was argued that
notification No.3/2022 could not have been further extended. As
per Section 73(10) of the GST Act, the limitation for F.Y.2017-18
was up to 31.12.2021. By notification dated 31.03.2023, the time
limit was extended for F.Y. 2017-18, which runs contrary to
Section 73(10) and Section 75(10). To support this contention,
judgment of Supreme Court in the cases of State of Punjab v.
Shreyans Industries Ltd., 13 and Union of India v. Kumho
Petrochemicals Co. Ltd., 14 were referred. Once period of
limitation expires, the right to assessment gets extinguished.
25. Furthermore, the words ‘due date’ mentioned in Section
73(10) of the GST Act must be read in the context of Section 44.
12
1971 (2) SCC 564
13
(2016) 4 SCC 769
14
(2017) 8 SCC 307
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Prakash Nath Khanna v. Commissioner of Income Tax 15 is
relied upon to submit the meaning of ‘due time’ used in taxation
statutes.
26. The extension of limitation by impugned notification is also
criticised on the ground that Section 168A of the GST Act only
permits extension of period and does not permit the extension of
time financial year wise or extension by prescribing future dates
and months showing as to when limitation will expire. Since
statute prescribes about extension of time, it should be
understood in the same sense and method adopted by the
respondents is impermissible.
27. The different last dates prescribed in the impugned
notifications for different financial years was also criticised by the
learned Senior Counsel. Learned Senior Counsel borrowed the
argument of Sri S. Ravi, learned Senior Counsel, for distinguishing
the judgment in Barhonia Engicon Private Limited (supra) and
relied on the judgment of Division Bench of Jharkhand High Court
in Rungta Mines Limited v. State of Jharkhand 16 to show that
aforesaid circular of CBIC dated 20.07.2021 was considered by
15
(2004) 9 SCC 686
16
2023 SCC OnLine Jhar 1188
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the High Court in relation to Value Added Tax and it was made
clear that COVID-19 relaxation is not applicable for extending
limitation in such matters.
28. Sri V. Sridharan, learned Senior Counsel relied upon the
judgment of Privy Council, which was followed in T. Kaliamurthi
v. Five Gori Thaikkal Wakf 17 to submit that such limitation
cannot be extended with retrospective effect. The exercise of
extension of limitation is an exercise of substitutive nature. The
judgment of P.K. Unni v. Nirmala Industries 18 was relied upon to
submit that such extension of limitation is impermissible.
Although, the judgment of P.K.Unni (supra) was overruled by the
Constitution Bench in Dadi Jagannadham v. Jammulu
Ramulu 19, it is not overruled on the point in question (paragraph
No.15 of the judgment of P.K.Unni).
29. Lastly, learned Senior Counsel submits that GST
Implementation Committee was established as in-house
mechanism to take care of ‘urgent procedural’ matters. It was
decided that the said committee awaiting meeting of GST Council
can take decision in such matters and get ratified the decisions
17
(2008) 9 SCC 306
18
(1990) 2 SCC 378
19
(2001) 7 SCC 71
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subsequently. Clause 10.8 of minutes of 14th GST Council
meeting and Clause 8.10 of 17th GST Council meeting were relied
upon for this purpose. This goes to show that GST General
Implementation Committee/Law Committee is different than GST
Council. The ratification of a decision taken by Law Committee
does not satisfy the requirement of Section 168A of the Act. The
COVID-19 related difficulties were not falling within ambit of
‘urgent and procedural matters’, which were looked upon under
administrative arrangement by the Implementation Committee.
30. Sri V.Bhaskar Reddy, learned Senior Counsel, submits that
Section 166 of the GST Act makes it obligatory for the Revenue to
place notification before both the houses of the Parliament. This
mechanism provides a check and eschews the possibility of
arbitrariness and unreasonableness. Although, this procedure is
not prescribed in Section 168A, similar procedure could have been
followed to ensure purity and transparency. For this purpose, he
also placed reliance on Section 172 of the GST Act.
31. Sri SRR Viswanath, learned counsel representing Ms. SN
Sreedevi, learned counsel for the petitioners in W.P.Nos.17967,
30621 and 33513 of 2024, placed reliance on an Article i.e., ‘GST
Saga’. It is submitted that GST Council is a constitutional body,
21
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the purpose of bringing GST Act is to provide nationwide uniform
taxation mechanism.
32. He relied upon para No.23 of the judgment of the Supreme
Court in Union of India v. S.Srinivasan 20 to submit that the
recommendation of GST Council is sine quo non and in absence
thereof the notification becomes vulnerable. He has also relied
upon para No.26 of the judgment of the Delhi High Court in
Vishal Puri v. Union of India 21 to submit that the delegated
legislation must ensure that purpose of enactment is satisfied.
The judgment in Maharashtra State Board of Secondary and
Higher Secondary Education v. Paritosh Bhupesh Kumar
Sheth 22 is cited to show that essential conditions for fulfilling a
provision must be satisfied.
33. By taking this Court to Minutes of 53rd GST Council
Meeting, it is urged that COVID-19 pandemic was not only
considered for recommending extension of limitation. The other
administrative bottlenecks were also cited as reasons which
cannot form part of force majeure clause. The ratification of
20
AIR 2012 SC 3791
21
2017 (6) ADR 707
22
(1984) 4 SCC 27
22
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notification No.56/23 took place only on 22.06.2024. Such
ratification is unknown to GST Act.
34. Sri P. Govind Reddy, learned counsel appearing in
W.P.No.2851 of 2024, relied upon Section 168A of the GST Act
and urged that the purpose of insertion of this provision is for
empowering and enabling the primary legislation. Such provisions
must be strictly construed. The power under Section 168A can be
used for the purpose of cases ‘not complied’ or ‘completed’. It
cannot be used for the purpose of initiation of proceedings. A
judgment of United States of America distinguishing between
’cause of action’ and ‘action’ is also relied upon. Why the benefit of
extension of limitation was extended only in favour of department
and not for tax payers is another limb of argument. The force
majeure period at best covers five months that is equal to the
duration of COVID-19 pandemic period.
35. Sri M. Ramachandra Murthy, learned counsel for petitioners
in W.P.No.14729 of 2024 and other matters, submits that the
Apex Court in Naresh Chandra Agrawal v. The Institute of
Chartered Accountants of India 23 culled out the principle on
which a provision can be declared as ultra vires. The present
23
(2024) 2 S.C.R. 194
23
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matter falls within Clause B of the example. The impugned
notification Nos.9, 13 and 56 are ultra vires to the parent Act.
Lastly, by placing reliance para 25 of the judgment in Chief
Commissioner of Central Goods and Service Tax v. M/s.Safari
Retreats Private Ltd. 24, it is submitted that since language of
Section 168A of the GST Act is unambiguous, it has to be given
effect to.
36. Article 279A (4) of the Constitution envisages that GST
Council ‘shall’ make recommendation. The language used is in
mandatory form. Thus, reading this Article with Section 168A
leaves no room for any doubt that existence of recommendation of
GST Council is a condition precedent for exercising power under
Section 168A.
37. It is further urged that the 1st notification No.35/2020, dated
03.04.2020, was issued when first wave of COVID-19 Pandemic
came into being, Notification No.14/2021, dated 01.05.2021,
relates to the 2nd wave of COVID-19 Pandemic and Notification
No.13/2022, dated 05.07.2022, extends the limitation from
01.03.2022 to 06.02.2023, whereas, COVID-19 relaxation period
as per suo motu order of Supreme Court was related to a period
24
2024 (10) TMI 286
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between March, 2021 to February, 2022. The Notification
No.9/2023 and 56/2023 were issued, when COVID-19 Pandemic
was over. No ingredient of ‘force majeure’ clause was available.
Thus, it is a simple exercise showing abuse of power and is ultra
vires to the enabling provision.
38. In W.P.No.5238 of 2024, Sri Karthik Ramana Puttamreddy,
learned counsel, also urged that the impugned Notification
Nos.9/2023 and 56/2023 were examples of misuse of power. So
far, Notification No.9/2023 is concerned, it has backing of
recommendation of 49th Meeting of GST Council. But, Notification
No.56/2023 is admittedly issued without there being any
recommendation of GST council. A subsequent ratification on the
decision of the Law Committee became a reason to justify
Notification No.56/2023. For this reason, the Gauhati High Court
has already disapproved Notification No.56/2023. Furthermore, it
is submitted that an attempt is being made to make un-equals as
equals, which hits Article 14 of the Constitution. In the
Notification No.13/2022, the benefit was granted to the Tax
payers as well, whereas, no such benefit was extended in the
impugned Notification Nos.9/2023 and 56/2023. If COVID-19
was a global Pandemic, the Revenue was not the only sufferer.
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Tax payers were also sufferers. Thus, extending limitation only for
Department by Notification Nos.9/2023 and 56/2023 hits Article
14 of the Constitution. However, on a specific query from the
Bench, learned counsel for the petitioner, fairly, admitted that
there is no pleading regarding discrimination in the body of the
writ affidavit. It is strenuously contended by Sri Karthik Ramana
Puttam Reddy, learned counsel, that the period for which
limitation could have been extended is only between 05.07.2022 to
31.07.2023. While issuing Notification No.13/2022, dated
05.07.2022, it is presumed that the Revenue was aware of the
hardship, which took place in interregnum period and therefore,
there was no occasion to extend it any further in subsequent
meeting. The hardship period can be between May 2021 and
05.07.2022 only. The minutes of the 49th Meeting of GST Council
and Clause 5.7 shows that there was no force majeure ingredient
available with them.
39. Dr.Avinash Poddar, learned counsel for the petitioner(s) in
W.P.No.10591 of 2024 and other matters, urged that the
Notification No.9 of 2023 is impugned in this petition. In order to
exercise power under Section 168A of the GST Act, there must be
a nexus between the force majeure condition and difficulty being
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faced by the department. The instruction dated 21.08.2020 was
referred to show that in the proceedings flowing from Section 73,
Video Conferencing was made mandatory. Thus, issuance of
notice, receiving reply, personal hearing, passing and uploading
orders were smoothly going on during COVID-19 period as well.
Thus, there was no difficulty for smoothly running the system.
Thus, force majeure conditions are not satisfied. For same
purpose, the instructions dated 20.07.2021 and 22.09.2021, were
referred.
40. The Judgment of Supreme Court in Energy Watchdog
(supra) is referred to show that COVID-19 order of the Supreme
Court does not cover the situation like present one. Emphasis is
laid on interpretation of force majeure as well. The Judgment of
Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. 25
was relied upon to submit that the recommendation of GST
Council is not binding on the Government. Lastly, the Judgment
of Delhi High Court in M/s.Halliburton Offshore Services Inc. v.
Vedanta Limited 26 is referred to strengthen the aforesaid
arguments.
25
(2022) 10 SCC 700
26
O.M.P. (I) (COMM.) No.88/2020, dated 29.05.2020.
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41. Sri Nishant Mishra, learned counsel, through video
conference represented Sri Mohammed Omer Farooq, learned
counsel for the petitioner(s) in W.P.No.2123 and 8196 of 2024 and
submitted that in his matters, Notification No.9 of 2023 issued by
Central Government and corresponding pari materia Notification
No.118 of 2023 is subject matter of challenge. It is contended that
Section 168A does not provide any power to ‘modify’ the previous
notification, whereby, the limitation has already been extended.
Thus, only source of power can be traced from Section 21 of the
General Clauses Act. In order to exercise power under Section 21
of the said Act, twin conditions are required to be satisfied. First
is that it has to be passed in like manner and on like condition.
When impugned notifications were issued, the COVID-19 situation
was not there. Interestingly, for Notification No.56, there existed
no condition of existence of recommendation of the Council. In
support of this submission, the judgment in Kamla Prasad
Khetan v. Union of India 27 was relied upon. It is further
supported by para No.24 of the judgment in Gomantak Mazdoor
Sangh v. State of Goa 28.
27
1957 SCC OnLine SC 27
28
2022 SCC OnLine SC 587
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42. The judgment of Allahabad High Court in Graziano
Transmissions (supra) is highlighted to show that High Court
clearly held that the recommendation of Council is sine qua non
for issuing the notification. The Gauhati High Court in M/s.
Barkataki Print and Media Services (supra) rightly held that
Notification No.56 is assailable, because it is not issued pursuant
to any recommendation of GST Council. The judgment of the
Patna High Court in Barhonia Engicon Private Limited (supra)
is sought to be distinguished on the ground that difference of
‘recommendation’ and ‘ratification’ was not considered. The
Circular dated 20.07.2021 was not considered and erroneously
the force majeure order of the Supreme Court was treated to be a
reason justifying extension of limitation whereas even Revenue
cannot raise that point in view of their own Circular.
43. The Karnataka High Court’s judgment in M/s. Sahaj
Construction v. Union of India 29 is cited wherein the Court held
that suo motu extension order of the Supreme Court is not
applicable in the proceeding like present one.
29
2024 (10) TMI 1166
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44. It is further urged that impugned ratification runs contrary
to the findings of GST Council’s 49th meeting. The
recommendation of Law Committee was to extend the limitation
only for one time, but, it was further extended. The Circulars of
Department i.e., G.O.Ms.No.45, dated 22.03.2020,
G.O.Ms.No.102, dated 11.05.2021, G.O.Ms.No.116, dated
30.05.2021 and G.O.Ms.No.119, dated 08.05.2021 were relied
upon to submit that the Departments were fully functional during
COVID-19 period. There was no impact of COVID-19 during this
period and therefore, condition of force majeure was not available.
Lastly, it is submitted that for issuing Notification Nos.118 and
170 by Telangana State, there exists no independent
recommendation by the GST Council. In absence thereof, these
notifications are liable to be set aside.
45. Sri V.Bhaskar Reddy, learned Senior Counsel, further urged
that in W.P.Nos.8569, 14268, 14281, 14289, 15483, 15492,
17015, 17684, 17766, 29881, 31864, 33026, 33048, 34035,
34069 & 34077 of 2024, Sri Bhaskar Reddy Vemireddy, learned
Senior Counsel representing Sri V. Siddharth Reddy, learned
counsel for the petitioners, submits that initially two notifications
extending period of limitation were issued on 03.04.2020 and
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01.05.2021 respectively. Both the notifications, except the dates
mentioned therein are almost identical. In these notifications, the
reason for extending time i.e. COVID-19 pandemic was specifically
mentioned. However, in the third notification No.13 of 2022,
dated 05.07.2022, there was no mention of COVID-19 pandemic.
Similar are the notifications dated 31.03.2023 and 28.12.2023.
Section 73 of the GST Act was read out to submit that this is a
simpliciter provision and does not deal with element of
suppression, fraud or misrepresentation. Section 74 is pregnant
with such aspects of misrepresentation, misstatement,
suppression or fraud. Section 74 provides limitation of five years,
wherein assessee has committed misrepresentation, fraud or
misstatement etc. By extending limitation by impugned
notification confined to the cases relating to Section 73, a common
assessee covered under Section 73 is brought at par with the
assessee covered under Section 74 who is differently situated.
Thus, un-equals are treated to be equals which hits Article 14 of
the Constitution. No data is considered as to how many cases
were pending during COVID-19 period which could not be decided
and without undertaking aforesaid necessary exercise, as a matter
of course, the limitation was extended which is bad in law.
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46. Section 172 of the GST Act envisages the power of removal of
difficulties. When such power is exercised, the order is required to
be placed before the Parliament. Whereas, under Section 168A,
there exists no such requirement to place the notification before
the Parliament. Thus, there is always a possibility of abuse of
power in issuing notification in purported exercise of power under
Section 168A. Learned Senior Counsel also placed reliance on
the minutes of the GST Council and pointed out that ratification
had taken place without application of mind. The judgment in
S.Srinivasan (supra) is cited to show that any such order which
shows colorable exercise of power is bad in law. The judgment in
General Officer Commanding-in-Chief v. Subhash Chandra
Yadav 30 is referred to show that force majeure requirement is also
not satisfied. For this purpose, the judgment in Energy
Watchdog (supra) is also referred. The judgment of Calcutta High
Court in Gobindo Das v. Union of India 31 was cited to show that
COVID-19 relaxation by order of the Supreme Court cannot be
pressed into service in the present matter.
30
(1988) 2 SCC 351
31
W.P.A.No.11578 of 2021, dated 01.10.2021
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47. The aforesaid Notification No.13 of 2022 was issued after
expiry of limitation as extended in the previous notification. For
this reason also, the said notification is bad in law.
48. Sri SRR Vishwanath, learned counsel representing Ms. S.N.
Sreedevi, learned counsel for the petitioners in W.P.Nos.17967,
30621 and 33513 of 2024, urged that GST Council was
constituted under Article 279A of the Constitution of India. The
nature of function of the Council is prescribed in this Article. The
source of power of GST Council can be traced from these clauses.
The extension of limitation is not one of the function/power given
to the GST Council. Thus, in exercise of power under Section
168A of the CGST Act, the limitation cannot be extended because
it is not in consonance with Article 279A of the Constitution.
Reference is made to Mohit Minerals Pvt. Ltd. (supra).
Contentions of Respondents:
49. Sri Dominic Fernandes, learned Senior Standing Counsel for
CBIC, submits by petitioners much emphasis is laid on Section
168A of the GST Act. However, Section 168A must be read in the
context of Section 44. Section 44 talks about filing of ‘annual
returns’. Thus, the due date is the date as flowing from Section
44 of the Act and Rule 80 of the GST Rules. By highlighting a
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‘table’, which reflects last dates for different financial years, it is
submitted that the time was extended for tax payers as well. The
petitioners were not correct in contending that a step-motherly
treatment was given to the tax payers and limitation was extended
in various installments only in favour of Revenue.
50. Section 73 of the GST Act was relied upon to contend that
one of the reason to invoke power relating to the amount
‘erroneously refunded’. This ‘amount’ has a nexus with Section 54
and for this reason, the impugned notifications do not relate to
‘erroneously refunded’ amount.
51. While reading Section 168A of the GST Act, it is urged that it
begins with a non-obstante/overriding clause notification can be
given retrospective effect. It gives power to extend limitation
relating to any provision under the GST Act.
52. Sri Dominic Fernandes placed reliance on different
notifications issued from time to time. He relied on the first
notification i.e., notification No.35 of 2020, dated 03.04.2020, to
highlight that there is a specific mention about force majeure
reason i.e., ‘COVID-19 pandemic’. The second notification i.e.
notification No.14/2021, dated 01.05.2021, also talks about
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pandemic. The third notification i.e., Notification No.13/2022,
dated 05.07.2022 was issued by referring both the previous
notifications and it partially modified the previous notifications.
Thus, only modification done is relating to limitation portion
which stood substituted. Hence, contents of both the said
notification Nos.35/2020 and 14/2021 must be read into
notification No.13/2022. If it is read conjointly in the said
manner, there will be no doubt that the reason of ‘pandemic’ must
be read into the subsequent notifications.
53. The above notifications show that benefits were given to tax
payers also. Section 54 of the GST Act contains limitation of two
years. After exemption for the purpose of this Section, the
limitation became four years.
54. The fourth notification i.e., notification No.9/2023, dated
13.03.2023, was affirmed by the Allahabad High Court in the case
of M/s.Graziano Trasmissioni (supra). It is submitted that this
notification is outcome of recommendation of 49th meeting of GST
Council. This notification is also issued in partial modification of
previous notifications and therefore, force majeure reason namely
COVID-19 pandemic must be read into this notification.
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55. The minutes of 49th meeting and deliberations shows that a
conscious decision was taken by the GST Council. By elaborately
reading the minutes and recommendations, Sri Dominic
Fernandes, learned Senior Standing Counsel for CBIC has taken
pains to contend that the tax administration pointed out during
the discussion in 49th meeting of GST Council about difficulties
being faced by them in proceeding and completing the relevant
exercise because of administrative problems arising out of impact
of COVID-19 pandemic.
56. The notification No.56/2023, dated 28.12.2023, was referred
and it was fairly contended that this notification is not outcome of
any previous meeting of GST Council. He fairly admitted that
notification No.56/2023 was issued on 28.12.2023 and there
exists no prior recommendation of GST Council for issuance of
this notification. However, on 22.06.2024 the 53rd meeting of GST
Council ‘ratified’ the decision of ‘law committee’.
57. A draft note was prepared by the ‘law committee’ for
extending limitation for financial year 2018-19 and 2019-20. The
same was proposed to be extended till 30.04.2024 and 31.08.2024
respectively. However, there was no further extension of limitation
for financial year 2017-18.
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58. Referring to the item Nos.6, 7, 11, 12 and 13 of discussion
recorded in minutes dated 20.12.2023 (53rd GST Council meeting),
it is submitted that the difficulties being faced by tax
administration were highlighted before the GST Council. Item
No.4 and other items of the minutes show that benefit was
extended to the tax payers in Tamil Nadu and other states.
59. Noticing the words ‘deemed ratification’ used in GST Council
Meeting, Sri Dominic Fernandes, learned Senior Standing Counsel
for CBIC, fairly submits that there appears to be no statutory
backing for recording any such ‘deemed ratification’. The
ratification is broadly referred as ‘deemed ratification’. The
learned Standing Counsel further urged that five High Courts have
considered the impugned notifications. The Kerala High Court in
Faizal Traders Private Limited v. Deputy Commissioner,
considered the Notification Nos.9/2023 and 13/2022 and
dismissed the petition. Likewise, the Division Bench of Allahabad
High Court in M/s.Graziano Trasmissioni (supra) considered the
challenge to Notification Nos.9/2023 and 13/2022 and did not
interfere in the said notifications.
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60. He further urged that the Karnataka High Court in M/s.
Sahaj Construction (supra) considered the challenge to
Notification No.9/2023 and declined interference. The Patna High
Court in M/s. Barhonia Engicon Private Limited (supra)
considered the Division Bench judgment of Allahabad High Court
and refused to interfere in the Notifications Nos.9/2023, 56/2023
and 13/2022. The singular judgment in which Notification
No.56/2023 was interfered with, is a Single Bench Judgment of
Guwahati High Court in M/s. Barkataki Print and Media
Services (supra). In M/s. Barhonia Engicon Private Limited
(supra), the Patna High Court did not agree with this Single Bench
judgment of Gauhati High Court. By taking this Court to different
orders passed by Supreme Court in suo motu proceeding relating
to COVID-19 Pandemic, learned Standing Counsel submits that
the first order was passed on 23.03.2020, granting exemption for
limitation w.e.f., 15.03.2020, till further orders. Subsequently, on
06.05.2020, the limitation periods were extended in relation to
Section 29(A) of the Arbitration and Conciliation Act, 1996 and
under relevant provisions of the Negotiable Instruments Act, 1881.
It is urged that Section 29(A) aforesaid provides a time limit for
taking a decision, which in that respect is similar to Section
73(10) of the GST Act. However, in the order dated 06.05.2020,
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the Supreme Court only considered aforesaid Acts namely:- the
Arbitration and Conciliation Act, 1996 and the Negotiable
Instruments Act, 1881.
61. Furthermore, it is pointed out that on 10.07.2020, the
Supreme Court included the Commercial Courts Act, 2015 for the
purpose of extending limitation and opined that the limitation
shall remain extended upto forty five (45) days from the date,
ban/lockdown is lifted by the Government. The order of Supreme
Court dated 27.04.2021 in aforesaid COVID-19 period was
referred to establish that the Supreme Court made it clear that the
time limit was extended not only in relation to the aforesaid
enactment, but, for other laws as well. Similar orders were passed
on 23.09.2021 and 10.01.2022. The order dated 10.01.2022
refers to the previous order dated 23.03.2020. It was made clear
by order dated 10.01.2020 by the Supreme Court that time
between 15.03.2020 to 28.02.2022 shall stand excluded in
relation to any general or special law. Adverting to the circular of
department dated 20.07.2021, it is urged that although, circular
of department is binding, it must be noticed that the Supreme
Court passed aforesaid suo motu orders in exercise of power under
Articles 141 and 142 of the Constitution.
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62. It is strenuously contended that this aspect has been dealt
with by Patna High Court in M/s. Barhonia Engicon Private
Limtied (supra) and it was held that the Supreme Court’s orders
extending limitation in suo motu jurisdiction are applicable to
quasi judicial proceedings under the GST Act. The impugned
notifications were issued by the department as an abundant
caution.
63. It is the subjective satisfaction of the Law makers to decide
the period of limitation and this Court is under no obligation to
examine the period of extension of limitation on any mathematical
scale. Heavy reliance is placed on the expression ”in respect of”
used in Section 168A and its consideration by Allahabad High
Court. The Allahabad High Court made it clear that the extension
of limitation cannot be treated to be a one-time exercise. Repelling
the challenge to the notification, liberty was reserved to the
petitioners to avail the remedy of appeal by giving them forty five
(45) days’ time to prefer the appeal.
64. The judgment of Karnataka High Court in M/s.Garej
Constructions (supra) was highlighted to show that challenge to
Notification No.9/2023 has failed. Heavy reliance is placed on the
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judgment of Patna High Court in M/s.Barhonia Engicon Private
Limited (supra) to buttress the submission that the general
orders of Supreme Court issued in suo motu jurisdiction relating
to COVID-19 Pandemic are indeed applicable to the proceedings
under the GST Act. The Patna High Court is in agreement with the
Allahabad High Court. The Circular of the Department dated
20.07.2021, on which heavy reliance is placed by the petitioners,
was considered by Allahabad High Court and the judgment of
Allahabad High Court was considered in extenso by Patna High
Court. Therefore, Circular of the Department, dated 20.07.2024 is
deemed to have been considered by Patna High Court.
65. Learned Standing Counsel relied on the judgment of
Supreme Court in National Institute of Technology v. Pannalal
Choudhury 32 to submit that the ratification is permissible. The
ratification could very well be retrospective in nature. For the
same purpose, he relied on the judgment of Municipal
Commissioner, Jamnagar v. R.M.Doshi 33. Clause 10(c) of Article
279A of the Constitution was referred to highlight that any
procedural flaw or irregularity is immaterial and will not cause
any dent on the decision of GST Council. To elaborate, it is
32
2015 (11) SCC 669
33
2023 SCC Online SC 550
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submitted that, although, before issuing Notification No.56/2023,
there existed no prior recommendation of GST council, the fact
remains that while undertaking the exercise of “ratification”, the
GST Council could have retrospectively recommended for the
extension of limitation covering the same period, for which,
ratification exercise was undertaken. In that event, no fault could
have been found against such decision making and issuance of
notification. Thus, it is a simple procedural infirmity/irregularity,
which does not cause dent on the decision. Thus, in the teeth of
Clause (10)(c) of Article 279A of the Constitution, said irregularity
deserves to be ignored.
66. Sri R. Sushanth Reddy, learned counsel appeared for
Revenue and relied on Article 279A (7) of the Constitution to show
the nature of quorum and sub Article (9) regarding decision
making. He submits that the word ‘may’ is used in Section 168A
before the expression ‘on the recommendation’ of the Council. This
expression ‘on the recommendation’ of the Council is used in
various sections of the GST Act. However, in many sections, this
expression was used with the word ‘shall’. In those provisions
only where ‘shall’ is used, it can be said to be mandatory in
nature, otherwise, it will not be inconsonance with Cooperative
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Federalism Doctrine. He placed reliance on the judgment of
Supreme Court in Mohit Minerals Pvt. Ltd. (supra) to submit
that the recommendations of GST Council are not binding on the
Government/legislature.
67. Learned Special Government Pleader for State Tax and Sri
Dominic Fernandes, learned Senior Standing Counsel for CBIC
relied upon the judgment of Supreme Court in Safari Retreat
Private Limited (supra) and urged that if language of taxation
statute is plain and unambiguous, it should be given effect to and
there is no question to search for the intention of the law makers.
Equitable considerations are out of question while interpreting
taxing statute. Reliance is placed on Satish Ukey v. Devendra
Gangadharrao Fadnavis 34 and Checkmate Services (P) Ltd. v.
CIT, 35.
Stand of Union Government:-
68. Sri B. Narsimha Sharma, learned Additional Solicitor
General, while borrowing the argument of Sri Dominic Fernandes,
learned Standing Counsel for CBIC, urged that the jurisprudence
relating to limitation shows that no one has any vested right in
34
(2019) 9 SCC 1
35
(2023) 6 SCC 451
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relation to the limitation. Before insertion of Section 168A in the
GST Act, Section 172 was the only enabling provision to remove
the difficulty. This provision also could be invoked only on the
recommendation of the Council. Section 168A was introduced
during COVID-19 Pandemic to take care of ‘special
circumstances’. Thus, language of this provision and each word
used must be given full meaning. It is urged that first principle of
interpretation of statute is that each word must be considered in
its context and if language is plain and unambiguous, it has to be
implemented irrespective of consequences. The words ‘in respect
of’ used in Section 168A were highlighted to submit that it is not
necessary to confine the extension of limitation during the
currency of COVID-19 Pandemic.
69. The next contention is that the word ‘recommendation’ is on
a lower pedestal than the word ‘approval’. A plain reading of
language of Section 168A shows that there was no condition put
for ‘prior’ recommendation of the GST Council. COVID-19 created
a rarest condition and in that peculiar situation, the limitations
were required to be extended. No pre-existing vested right of
petitioners have been infringed. The constitutionality of enabling
provision i.e., Section 168A is not under challenge. Only
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consequential notifications are called in question. Since
impugned notifications are in conformity with Section 168A of the
Act, no interference is warranted. So far, the expression ‘deemed
ratification’ used in GST meeting is concerned, learned counsel
fairly submitted that it may not be grammatically correct, but, it
was used to show that once ratification takes place, the decision
dates back to the original date of the notification. In this sense,
the expression ‘deemed ratification’ is used. It is further
submitted that notification No.9/2023 and other impugned
notifications are conditional legislations. The scope of judicial
review of sub-ordinate legislation is limited to examine: i) lack of
competence ii) breach of fundamental rights iii) breach of
constitutional rights iv) whether notification has travelled beyond
the scope of enabling provision and v) whether, it is manifestly
arbitrary/unreasonable. Reference is made to judgment in the
case of State of Tamil Nadu v. P. Krishnamurthy 36.
70. Since “special circumstances” were existing to invoke Section
168A of the Act, no fault can be found in the impugned
notifications. The notifications satisfied all the conditions laid
down by Supreme Court in the case of P. Krishnamurthy (supra).
36
2006(4) SCC 517
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In the light of argument of learned Senior Standing Counsel for
CBIC, the learned Additional Solicitor General submits that the
impugned notifications were issued in ‘modification’ of previous
notifications. Thus, force majeure reasons given in the previous
notifications must be read into the impugned notifications. The
impugned notifications cannot be interfered with, merely, because
in these notifications, the reason for force majeure is not spelled
out separately.
71. It is submitted that the Law Committee requested for
providing larger period of limitation, but GST Council provided
lesser period. It shows that Council has applied its independent
mind. Clause 2.8.1 of GST Implementation Committee minute
was read out to show the march of events. It was done to
highlight the circumstances in which the ratification exercise had
been undertaken. Bajaj Hindustan Limited (supra) was relied
upon to show that the word ‘approval’ can be at a later stage and
once ‘approval’ or ‘ratification’ takes place it will date back to the
date of original decision.
72. Learned Additional Solicitor General further submitted that
in view of various circumstances prevailing, in the fitness of
things, it was thought proper to extend the limitation and
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accordingly, impugned notifications have been issued. The
inconvenience in holding the meeting of GST Council is evident by
reading clause 2.8.1 mentioned above. All the States are the
members of Council and it was not easy to bring them on one
platform during Pandemic. Thus, compelling circumstance
became reason to ‘ratify’ the decision of ‘Law Committee’ at a later
point of time. But, ratification relates back to the original date.
REJOINDER SUBMISSIONS:-
73. Learned Senior Counsel Sri S.Ravi, Sri Sridharan, Sri
V.Bhaskar Reddy and learned counsel Sri Karthik Ramana
Puttamreddy, reiterated their stand and urged that the time limit
can be extended, provided, notifications extending limitation are
issued during the period of extended limitation.
74. Sri Karthik Ramana Puttamreddy, learned counsel, urged
that the first notification extending time limit shows that the
reasons assigned for extension is ‘spread of COVID’. There was no
spread of COVID-19 when impugned notification Nos.13/2022,
9/2023 and 56/2023 were issued. Thus, the argument of Sri
Dominic Fernandes, learned Senior Standing Counsel for CBIC,
that in the impugned notifications the reason mentioned in the
previous notifications must be read cannot be of any help. The
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judgment of Madras High Court in Settu v. State, represented
by Inspector of Police 37 is cited to submit that a question
cropped up, whether limitation arising out of a provision of
Cr.P.C., can be extended, the Court made it clear that suo motu
COVID-19 related orders of the Supreme Court have no
application in such cases.
75. Sri Nishanth Mishra, learned counsel for petitioners,
submitted that notification No.13/2022 was under challenge
before the Allahabad High Court. The impugned notifications are
in fact conditional legislation. Thus, conditions for issuance of
such legislations must be satisfied and subsequent ratification
has no role to play. He placed reliance on the judgment in
Commissioner of Central Excise, New Delhi v. Hari Chand Shri
Gopal 38.
76. The word ‘may’ used in Section 168A of the GST Act is for
the Government and not for the GST Council. The interpretation
advanced by Revenue must fail.
77. Lastly, it is submitted that in suo motu exercise of power the
Supreme Court extended the limitation on 10.01.2022.
37
2020 SCC OnLine Mad 1026
38
(2011) 1 SCC 236
48
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Thereafter, the respondents issued notification Nos.13/2022,
9/2023 and 56/2023. Hence, they have waived their right to take
benefit of extension of limitation as per the said order of Supreme
Court dated 10.01.2022. For this purpose, Arce Polymers (P)
Ltd. v. Alphine Pharmaceuticals (P) Ltd., 39 is pressed into
service.
78. The parties confined their arguments to the extent indicated
above.
79. We have bestowed our anxious consideration on rival
contentions and perused the record.
FINDINGS:-
80. Taxation fundamentally operates as a legal principle,
structured by a comprehensive set of laws, regulations, and
statutory provisions that establish the processes for calculating,
levying, and allocating taxes. These legal instruments, enacted by
legislative bodies, aim to ensure fairness, equity and the effective
financing of public services. They are crafted to prevent tax
evasion, stimulate economic progress, and equitably distribute the
tax obligation. However, the application of tax law is not a mere
39
(2022) 2 SCC 221
49
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application of set rules. The determination of taxes involves a
deep dive into the factual background.
81. In order to gather the extension of time limit under various
notifications at a glance, it is apposite to mention the same in a
table, which reads thus:-
Year Last date Notf.No. Notf. Notf. Notf. Notf.
of filing 35/2020 No.14/2021 No.13/2022 No.9/2023 No.56/2023
Annual dated 03- dated 01-05- dated 05-07- dated 31-03- dated 28-
Returns 04-2020 2021 2022 2023 12-2023 2017-18 07-02- N/A N/A 30-09-2023 31-12-2023 - 2020 2018-19 31-12- N/A N/A - 31-03-2024 30-04-2024 2020 2019-20 31-03- N/A N/A - 30-06-2024 31-08-2024 2021
82. In the instant case, notification Nos.9/2023, 13/2022 and
56/2023 are subject matter of challenge. Section 168A of the Act
reads thus:-
“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.
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Explanation.–For the purposes of this section, the expression
“force majeure” means a case of war, epidemic, flood,
drought, fire, cyclone, earthquake or any other calamity
caused by nature or otherwise affecting the implementation
of any of the provisions of this Act.”
(Emphasis Supplied)
83. A plain reading of this provision makes it clear that it gives
power to the Government to the extend time limit in ‘special
circumstances’. The provision begins with a non-obstante clause
and provides that on the recommendation of the Council, the time
limit ‘specified in’ or ‘prescribed’ or ‘notified’ under this Act can be
extended. It is noteworthy that the time limit can be extended ‘in
respect of actions’ which cannot be completed or complied with
due to ‘force majeure’. Sub-section (2) of Section 168A enables the
Government to issue notification with retrospective effect. The
‘explanation’ defines the expression ‘force majeure’. In the instant
case, it is not in dispute that COVID-19 Pandemic falls within the
ambit of ‘force majeure’.
84. The contention of the petitioners is that the letter of the
Home Department to Chief Secretaries issued on 22.03.2022
shows that COVID-19 Pandemic came to an end on 23.02.2022
and therefore restrictions imposed under the Disaster
Management Act, 2005 were decided to be lifted. Thus, when
impugned notifications were issued, the Pandemic was no more
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there and therefore ‘force majeure’ conditions are not satisfied.
The argument on the first blush appears to be attractive, but, lost
much of its shine when minutely examined in the light of language
employed in Section 168A of the GST Act. Section 168A in no
uncertain terms makes it clear that the time limit can be extended
‘in respect of actions’ which could not be completed or complied
with, due to force majeure. The words ‘in respect of’ were
considered by the Supreme Court in the context of Section
23(1)(B) and it means that ‘being connected with’ (see Union of
India and another v. Vijay Chand Jain 40).
85. The Allahabad High Court considered the words ‘in respect
of’ in the case of Graziano Transmissioni (supra) and opined as
under:
“126. As submitted by Sri Mahajan, the words “due to force
majeure” are preceded with a general expression “in respect
of”. Thus, besides intrinsic evidence existing in the
Explanation to Section 168-A of the Act (as discussed above),
there is equally convincing evidence available in the use of the
words “in respect of”. The legislature clearly did not intend to
provide for additional limitation only to complete actions that
had been already undertaken. The words “in respect of” are
clearly used to enlarge the scope of exercise of the conditional
legislation function. Thus, anything directly linked to the
performance of action for which time-limitation may have been
specified, prescribed or notified under the Central Act and the
State Act and which action is perceived “cannot be completed
or complied”,the delegated/conditional legislation in the shape
of Section 168-A, may arise.
40
AIR 1977 SC 1302
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127. As discussed above, scrutiny and audit of returns was
directly linked to framing of adjudication orders. To the extent
that scrutiny and audit work was obstructed directly for
reason of spread of the pandemic COVID-19, as was judicially
noted in the order passed by the Supreme Court Cognizance
for Extension of Limitation, In re [Cognizance for Extension of
Limitation, In re, 2022 SCC OnLine SC 2391] for the duration
15-3-2020 to 28-2-2022, it is not for this Court to reach
another conclusion in that regard. Thus, the decision of the
Supreme Court in Energy Watchdog case [Energy
Watchdog v. CERC, (2017) 14 SCC 80 : (2018) 1 SCC (Civ)
133] and Dhanrajamal Gobindram case [Dhanrajamal
Gobindram v. Shamji Kalidas & Co., 1961 SCC OnLine SC
28 : AIR 1961 SC 1285] are therefore not decisive of the issue
involved in the present case. In view of judicial notice taken as
to existence of “force majeure” circumstance up to 28-2-2022,
there is no reason to conduct any further/deeper enquiry —
as to its exact duration, in the context of challenge laid to a
legislative action.
128.xxx
129. The submission that the issuance of the impugned
notifications are prejudicial to the rights and interest of the
taxpayers does not find our acceptance in the context of the
discussion made above. A legislative action cannot be
complained of as being prejudicial on account of extension of
limitation. Limitation, though statutory, is not a pre-existing
vested right of any party. It gets created and extinguished in
accordance with the statutory law. Insofar as the statutory
law prescribes a limitation, no argument may arise against
such prescription made. Further, in the case of conditional
legislation, the submission that it is not peripheral but
substantive also looses its relevance in face of conditions seen
fulfilled. Once the conditions for exercise of delegated
legislative function stood fulfilled, no further test or scrutiny
may arise, in that regard. Therefore, the decision of the
Supreme Court in Sudhir Kumar Singh case [State of
U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : AIR 2020 SC
5215] and Independent Schools’ Association, Chandigarh
(Registered) case [Independent Schools’ Assn. v. Union of
India, (2022) 14 SCC 387] are also of no avail. Here,
conditional legislation arose in accordance with law.
Therefore, no fault is found therein. Accordingly, the decision
in Lachmi Narain case [Lachmi Narain v. Union of India, (1976)
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SP,J & Dr.GRR,J
Wp_1154_2024 & batch2 SCC 953 : 1976 SCC (Tax) 213 : (1976) 37 STC 267] is also
not applicable to the present facts.”
(Emphasis Supplied)
86. We are in agreement with the view taken by the Allahabad
High Court that the words ‘in respect of actions’ are very wide and
brings within its ambit the previous actions of COVID-19 period,
which could not be completed or complied with, due to force
majeure. Thus, we are unable to persuade ourselves with the line
of argument of learned counsel for the petitioners that the time
limit could have been extended only in relation to the period
during which COVID-19 was subsisting. In the manner statute
i.e., Section 168A is worded, there is no cavil of doubt that the
Law makers intended to give it a broader umbrella to bring within
its shadow, such actions which could not be completed or
complied with, due to force majeure. The deliberations in the GST
Council Meeting on which heavy reliance is placed by learned
Senior Standing Counsel for CBIC and learned Additional Solicitor
General, shows that there were continuous deliberations in this
regard and GST Council was aware that due to COVID, the
Revenue administration was facing difficulties and is not in a
position to complete the relevant exercise within the stipulated
time.
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87. So far, argument of Sri V.Bhaskar Reddy, learned Senior
Counsel, regarding non-availability of data to show the number of
cases and nature of handicap faced by Revenue administration is
concerned, we are only inclined to observe that, as rightly held by
Allahabad High Court, the same is beyond the scope of judicial
review. The existence of force majeure conditions is one of the
condition precedents. The magnitude of the difficulty based on
quantifiable data cannot be subject matter of adjudication. This
Court is under no obligation to examine the said data as an
appellate Court to give a finding whether such a decision was
warranted or not. No such exercise with mathematical accuracy
and precession can be undertaken in exercise of jurisdiction
under Article 226 of the Constitution of India.
88. Another argument forcefully canvassed was based on
conjoint reading of Sections 44, 73(1) and Section 168A of the GST
Act. Section 44 and relevant portion of Section 73(10) are
reproduced for ready reference:
“Section 44. Annual return:
(1) Every registered person, other than an Input
Service Distributor, a person paying tax under section 51
or section 52, a casual taxable person and a non-resident
taxable person shall furnish an annual return which may
include a self-certified reconciliation statement,
reconciling the value of supplies declared in the return
furnished for the financial year, with the audited
annual financial statement for every financial year
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SP,J & Dr.GRR,J
Wp_1154_2024 & batchelectronically, within such time and in such form and in
such manner as may be prescribed:
Section 73(10): The proper officer shall issue the order
under sub-section (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.”
(Emphasis Supplied)
89. The contention of Sri Sridharan, learned Senior Counsel, is
that the limitation is to be gathered from a conjoint reading of
Sections 44 and 73(10) of the GST Act. By invoking Section 168A,
the notification can be issued to extend the limitation provided in
the aforesaid sections. In other words, the power to extend the
limitation is relating to the limitation prescribed in Section 73(10).
Thus, such limitation could have been extended by issuing
notification under Section 168A, whereas, respondents have
issued multiple notifications including the impugned notifications,
whereby they extended the time limit extended by notifications
and not the time limit mentioned in Section 73(10). This
argument deserves serious consideration. No doubt, Section 73
(10) provides that the Proper Officer must issue order under Sub-
Section 9 of Section 73 within three years from the due date of
issuing annual return. The interesting conundrum is, whether,
extension notification issued under Section 168A can be confined
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to this limitation only and cannot be issued to extend the
limitation extended by notifications.
90. A microscopic reading of Sub-Section 1 of Section 168A of
the GST Act shows that it enables the Government to issue
notification on the recommendations of the Council and extend
the time limit ‘specified in’ or ‘prescribed’ or ‘notified’ under the
Act. It is noteworthy that the Law makers have not chosen the
words ‘in/by the Act’. Instead, they employed the expression
‘under the Act’. The expression ‘under the Act’ is wider than the
words ‘in the Act’. The Apex Court had an occasion to consider
this expression in Indramani Pyarelal Gupta v. W.R.Natu 41 and
held as under:
“15. A more serious argument was advanced by learned
counsel based upon the submission that a power conferred by
a bye-law framed under Section 11 or 12 was not one that was
conferred “by or under the Act or as may be prescribed”.
Learned counsel is undoubtedly right in his submission that a
power conferred by a bye-law is not one conferred “by the Act”,
for in the context the expression “conferred by the Act” would
mean “conferred expressly or by necessary implication by the
Act itself”. It is also common ground that a bye-law framed
under Section 11 or 12 could not fall within the phraseology
“as may be prescribed”, for the expression “prescribed” has
been defined to mean “by rules under the Act” i.e. those
framed under Section 28 and a bye-law is certainly not within
that description. The question therefore is whether a power
conferred by a bye-law could be held to be a power
“conferred under the Act”. The meaning of the word “under the
Act” is well known. “By” an Act would mean by a provision
directly enacted in the statute in question and which is
41
AIR 1963 SC 274
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gatherable from its express language or by necessary
implication therefrom. The words “under the Act” would, in
that context, signify what is not directly to be found in the
statute itself but is conferred or imposed by virtue of powers
enabling this to be done; in other words, bye-laws made by a
subordinate law-making authority which is empowered to do
so by the parent Act. The distinction is thus between what is
directly done by the enactment and what is done indirectly by
rule-making authorities which are vested with powers in that
behalf by the Act. (Vide Hubli Electricity Company
Ltd. v. Province of Bombay [76 IA 57 at p. 66]
and Narayanaswamy Naidu v. Krishnamurthi [ILR 1958 Mad
513 at p. 547]…”
(Emphasis Supplied)
91. Thus, the expression “under the Act” is wide enough to
include the notifications issued as per Section 168A of the GST
Act and time limit extended under these notifications can very
well be further extended, while exercising power “under the Act”.
Putting it differently, the time limit can be extended in three
situations namely:- i) ‘specified’ in ii) ‘prescribed’ in or iii) ‘notified’
under the Act. The impugned notifications extending time limit
fall within the ambit of ‘notified’ under the Act and such time limit
can be extended by invoking power under Section 168A. It is
equally important to note that the opening words of
Sub-Section 1 of Section 168A. It opens with an overriding
clause, which makes it clear that notwithstanding anything
contained in the GST Act, such notifications extending time limit
can be issued. In view of this analysis, this argument must fail.
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92. The next limb of argument is based on the words “on the
recommendation” of the Council. As noticed, the parties have
taken diametrically opposite stand on the interpretation of this
provision.
93. Before dealing further, it is apposite to remind ourselves
about general principles of construction in taxing statutes. In a
classic passage LORD CAIRNS stated the principle thus: ‘If the
person sought to be taxed comes within the letter of the law he
must be taxed, however great the hardship may appear to the
judicial mind to be. On the other hand, if the Crown seeking to
recover the tax, cannot bring the subject within the letter of the
law, the subject is free, however apparently within the spirit of law
the case might otherwise appear to be. In other words, if there be
admissible in any statute, what is called an equitable,
construction, certainly, such a construction is not admissible in a
taxing statute where you can simply adhere to the words of the
statute (see Partington v.A.G. 42). VISCOUNT SIMSON quoted
with approval a passage from ROWLATT, J., expressing the
principle in the following words: ‘In a taxing Act one has to look
merely at what is clearly said. There is no room for any
42
(1869) LR 4 HL 100
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intendment. There is no equity about a tax. There is no
presumption as to tax. Nothing is to be read in, nothing is to be
implied. One can only look fairly at the language used (see Cape
Brandy Syndicate v. IRC 43). The above principle of strict
construction of taxing statutes was quoted with approval in
Commissioner of Income-tax, Madras v. Kasturi & Sons 44
where the word ‘moneys’ in the expression ‘moneys payable’ in
Section 41(2) of the Income-tax Act, 1961 was not construed to
include ‘money’s worth’. In interpreting a section in a taxing
statute, according to LORD SIMONDS, ‘the question is not at what
transaction the section is according to some alleged general
purpose aimed, but what transaction its language according to its
natural meaning fairly and squarely hits (see St. Aubyn (LM) v.
A.G. 45. LORD SIMONDS call this ‘the one and only proper test’.”
94. The expression on the recommendation of Council leaves no
room for any doubt that this is a condition precedent or sine qua
non for the Government for taking a decision regarding issuance
of notification. During the course of hearing, learned counsel for
the parties relied on the judgment of Mohit Minerals Pvt. Ltd.
(supra) to canvass that the recommendation of the GST Council is
43
(1921) 1 kb 64
44
JT 1999 (2) SC 272
45
(1951) 2 All ER 473
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not binding on the Government. In our view, this is not the point
involved in the present case. This is nobody’s case that the GST
Council passed any recommendation, which became foundation of
Notification No.56/2023. The Government, in its wisdom may
take a decision to modify or not to accept the recommendation of
GST Council. Thus, the judgment of Mohit Minerals Pvt. Ltd.
(supra) is of no assistance to Revenue. We are in respectful
agreement with the findings given in this regard by Allahabad
High Court in Graziano Transmissioni (supra) and Patna High
Court in M/s. Barhonia Engicon Private Limited (supra).
95. The plain and unambiguous language of the statute in
Section 168A leaves no room for any doubt that on the
recommendation of the Council alone, Government can issue the
notification. Thus, the argument and judgments relating to
‘ratification’ and giving stamp of approval to the decision of
implementation committee/law committee with retrospective effect
of GST Council fades into insignificance. We find substance in the
argument of learned Senior Counsel Sri S. Ravi and V. Sridharan
based on the judgment of Martwada University (supra) that when
the statute gives power to a particular statutory body to act in a
particular way, the said decision cannot be taken by any other
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body. This is trite that when the statute prescribes thing to be
done in a particular manner, it has to be done in the same
manner and other methods are forbidden. This was held to be
cardinal principle of interpretation way back in 1875, 1 Ch.D.426
p.431) in Taylor v. Taylor. The Privy Council and Supreme Court
consistently followed said ratio in Nazir Ahmad v. King-
Emperor 46, Chandra Kishore Jha v. Mahavir Prasad 47, Babu
Verghese v. Bar Council of Kerala 48, Zuari Cement Ltd. v. ESI
Corpn 49, Brajendra Singh Yambem v. Union of India 50, Public
Interest Foundation v. Union of India 51, Muncipal Corpn.of
Greater Mumbai v. Abhilash Lal 52, OPTO Circuits (India) Ltd. v.
Axix Bank 53, Krishna Rai v. Banaras Hindu University 54 and
Dharmin Bai Kashyap v. Babli Sahu 55.
96. As analyzed above, we are unable to follow the line of
argument of learned Senior Standing Counsel for CBIC and
learned Additional Solicitor General that ‘ratification’ can be a
substitute of ‘recommendation’. The judgments cited by the
46
1936 SCC OnLine PC 41
47
(1999) 8 SCC 266
48
(1999) 3 SCC 422
49
(2015) 7 SCC 690
50
(2016) 9 SCC 20
51
(2019) 3 SCC 224
52
(2020) 13 SCC 234
53
(2021) 6 SCC 707
54
(2022) 8 SCC 713
55
(2023) 10 SCC 461
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Revenue about ‘ratification’ and ‘approval’ are based on different
statutes and cannot be pressed into service in the instant case
considering the plain language of Section 168A of the GST Act. In
the case of Bajaj Hindustan Ltd. (supra), the Apex Court
considered its previous judgment in LIC v. Escorts 56 laid
emphasis on ‘contextual situation’ and ‘design of legislation
demand’. The textual and contextual interpretation of
unambiguous language of Section 168A does not permit any
‘ratification’ exercise.
97. Article 279A of the Constitution of India deals with the
constitution and role of GST Council. Learned Senior Standing
Counsel for CBIC placed reliance on Clause 10 (c) of Article 279A
of the Constitution to establish that procedural irregularity of
Council, which does not affect the merits of the case, will not
make the decision or proceeding of Council as invalid. We do not
see any merit in this contention, because, the petitioners have not
challenged any act or proceeding of the GST Council, which could
have been saved under Clause 10 (c) of Article 279A. Instead, the
notification of the Government No. 56/23 which is admittedly
issued without there being any recommendation of Council is
56
(1986) 1 SCC 264
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subject matter of challenge. Thus aforesaid provision of
Constitution does not insulate the notification issued by the
Government on the basis of any irregularity of the Council. Even
otherwise, the irregularity cannot be said to be a ‘procedural
irregularity’. The Implementation Committee/Law Committee is
neither a constitutional nor a statutory body. It is an in-house
creation of GST Council for convenience to run the
administration. The decision taken by Implementation
Committee/Law Committee, on which Notification No.56/2023 is
based, cannot be said to be the decision of GST Council. The
ratification of such legislative action is unknown to law. The
judgments cited by Revenue were related to the executive action
and were not dealing with legislative action, whereas, the
judgment of Maratwada University (supra) deals with such
subordinate legislative action. Thus, ‘ratification’ done after
issuance of Notification No.56/2023 will not provide life to
Notification No.56/2023.
98. Sri R. Sushanth Reddy, learned counsel appeared for
Revenue, submits that the word “may” is used in Section 168A of
the GST Act, whereas, in certain other sections before the words
‘on the recommendation of the Council’, the Law makers used the
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word “shall”. Thus, existence of recommendation is not a sine qua
non or a precondition for issuing notification under Section 168A.
99. This is trite that as a rule of thumb, it cannot be said that
the use of word ‘may’ makes the provision directory and
conversely, use of word ‘shall’ makes it imperative or mandatory.
The interpretation depends on ‘text’ and context both. ‘Deha’ and
‘Dehi’ both are important (see Board of Mining Examination and
Chief Inspector of Mines v. Ramjee 57, RBI v. Peerless General
Finance & Investment Co. Ltd., 58 and Ajay Maken v. Adesh
Kumar Gupta 59)
100. Thus, the scheme of provision, purpose for bringing it in the
statute book and serious or general inconvenience or injustice to
persons likely to be effected are relevant factors for the purpose of
interpretation of a provision. The Apex Court in Dhampur Sugar
Mills Ltd. v. State of U.P., 60 opined thus:
“35. Reading the substantive provisions in the Act as also
subordinate legislation by way of the Rules, there is no
doubt in our minds that the submission of the learned
counsel for the writ petitioner that such a Committee ought
to have been constituted by the State is well founded and
must be upheld. The High Court dealt with the submission
of the writ petitioner but did not accept it observing that the57
(1977) 2 SCC 256
58
(1987) 1 SCC 424
59
(2013) 3 SCC 489
60
(2007) 8 SCC 338
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Section 3 of the Act. The Court ruled that the provision was
merely directory and not mandatory.
36. We are unable to subscribe to the above view. In our
judgment, mere use of word “may” or “shall” is not
conclusive. The question whether a particular provision of a
statute is directory or mandatory cannot be resolved by
laying down any general rule of universal application. Such
controversy has to be decided by ascertaining the intention
of the legislature and not by looking at the language in
which the provision is clothed. And for finding out the
legislative intent, the court must examine the scheme of the
Act, purpose and object underlying the provision,
consequences likely to ensue or inconvenience likely to
result if the provision is read one way or the other and
many more considerations relevant to the issue.”
(Emphasis Supplied)
101. The Apex Court in May George v. Tahsildar 61, at paragraph
Nos.15 and 25 held as under:
“15. While determining whether a provision is mandatory or
directory, in addition to the language used therein, the
Court has to examine the context in which the provision
is used and the purpose it seeks to achieve. It may also be
necessary to find out the intent of the legislature for
enacting it and the serious and general inconveniences or
injustice to persons relating thereto from its application.
The provision is mandatory if it is passed for the purpose of
enabling the doing of something and prescribes the formalities
for doing certain things.
25. The law on this issue can be summarised to the effect that
in order to declare a provision mandatory, the test to be
applied is as to whether non-compliance with the
provision could render the entire proceedings invalid or
not. Whether the provision is mandatory or directory,
depends upon the intent of the legislature and not upon
the language for which the intent is clothed. The issue is
to be examined having regard to the context, subject-
matter and object of the statutory provisions in question.
61
(2010) 13 SCC 98
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Wp_1154_2024 & batchThe Court may find out as to what would be the
consequence which would flow from construing it in one
way or the other and as to whether the statute provides
for a contingency of the non-compliance with the
provisions and as to whether the non-compliance is
visited by small penalty or serious consequence would
flow therefrom and as to whether a particular
interpretation would defeat or frustrate the legislation
and if the provision is mandatory, the act done in breach
thereof will be invalid.”
(Emphasis Supplied)
102. The purpose behind using the phrase ‘on the
recommendation of Council’ is to equip the Government with the
expert opinion of an expert constitutional body i.e., GST Council.
This enables the Government to take an informed decision based
on such opinion of Council. Since all the States have
participation in the Council, the recommendation of Council will
certainly be in consonance with doctrine of cooperative federalism.
The decision of Government on such recommendation in the
shape of notification will certainly has serious impact on
taxpayers. Section 73(10) prescribes period of three years from
due date for issuing order and Section 75(10) is pregnant with a
deeming clause that if order is not passed within three years as
per Section 73(10) the proceeding shall be deemed to be
concluded. Hence, notification extending time limit issued under
Section 168A can impact the tax payer for the purpose of
conclusion of proceedings as per conjoint reading of Section
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73(10) and 75(10) of the GST Act. Therefore, in our judgment, the
word ‘may’ does not make the provision i.e., Section 168A as
directory.
Suo motu orders of Supreme Court relating to extension of
COVID-19 pandemic:
103. The parties are at logger heads on the aspect whether the
orders of Supreme Court in suo motu jurisdiction can be pressed
into service.
104. Sri S. Ravi, learned Senior Counsel and Sri Sreedharan,
learned Senior Counsel, have taken pains to submit that as per
the CBIC Circular No.157/13/2021-GST, dated 20.07.2021, the
Department itself understood that said COVID-19 related
extensions granted by Supreme Court cannot be made applicable
in the proceedings under Section 73/quasi judicial proceedings
under the GST Act. Interestingly, Sri Nishant Mishra, learned
counsel for the petitioners submitted that despite directions of
Supreme Court in suo motu jurisdiction extending limitation, the
Department issued impugned notifications. Thus, they have
waived their right to take benefit of extension of limitation as per
the order of Supreme Court. He placed reliance on the judgment
of Supreme Court in Arce Polymers (P) Ltd. (supra).
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105. Before dealing with this argument, it is apposite to consider
the orders of Supreme Court, passed time to time, in suo motu
Writ Petition (C) No.3 of 2020. On 23.03.2020, as rightly pointed
out by Sri Dominic Fernandes this first order was related to
Section 29A of the Arbitration and Conciliation Act, 1996 and the
Negotiable Instruments Act. However, on 8th March, 2021, in the
said suo motu jurisdiction, the following directions were passed:
“2. We have considered the suggestions of the learned
Attorney General for India regarding the future course of
action. We deem it appropriate to issue the following
directions: –
1. In computing the period of limitation for any suit, appeal,
application or proceeding, the period from 15.03.2020 till
14.03.2021 shall stand excluded. Consequently, the balance
period of limitation remaining as on 15.03.2020, if any, shall
become available with effect from 15.03.2021.
2. In cases where the limitation would have expired during
the period between 15.03.2020 till 14.03.2021,
notwithstanding the actual balance period of limitation
remaining, all persons shall have a limitation period of 90
days from 15.03.2021. In the event the actual balance period
of limitation remaining, with effect from 15.03.2021, is greater
than 90 days, that longer period shall apply.
3. The period from 15.03.2020 till 14.03.2021 shall also
stand excluded in computing the periods prescribed under
Sections 23 (4) and 29A of the Arbitration and Conciliation
Act, 1996, Section 12A of the Commercial Courts Act, 2015
and provisos (b) and (c) of Section 138 of the Negotiable
Instruments Act, 1881 and any other laws, which prescribe
period(s) of limitation for instituting proceedings, outer
limits (within which the court or tribunal can condone delay)
and termination of proceedings.”
(Emphasis Supplied)
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106. Likewise, on 27.04.2021, the Supreme Court directed as
under:
“We also take judicial notice of the fact that the steep rise in
COVID-19 Virus cases is not limited to Delhi alone but it has
engulfed the entire nation. The extraordinary situation caused
by the sudden and second outburst of COVID-19 Virus, thus,
requires extraordinary measures to minimize the hardship of
litigant- public in all the states. We, therefore restore the
order dated 23rd March, 2020 and in continuation of the
order dated 8th March, 2021 direct that the period(s) of
limitation, as prescribed under any general or special laws
in respect of all judicial or quasi-judicial proceedings,
whether condonable or not, shall stand extended till
further orders.
It is further clarified that the period from 14th March, 2021
till further orders shall also stand excluded in computing the
periods prescribed under Sections 23 (4) and 29A of the
Arbitration and Conciliation Act, 1996, Section 12A of the
Commercial Courts Act, 2015 and provisos (b) and (c) of
Section 138 of the Negotiable Instruments Act, 1881 and any
other laws, which prescribe period(s) of limitation for
instituting proceedings, outer limits (within which the court or
tribunal can condone delay) and termination of proceedings.
We have passed this order in exercise of our powers under
Article 142 read with Article 141 of the Constitution of
India. Hence it shall be a binding order within the meaning of
Article 141 on all Courts/Tribunals and Authorities.”
(Emphasis Supplied)
107. On 23.09.2021, the Supreme Court again ordered as under:
“8. Therefore, we dispose of the M.A. No.665 of 2021 with the
following directions: –
I. In computing the period of limitation for any suit, appeal,
application or proceeding, the period from 15.03.2020 till
02.10.2021 shall stand excluded. Consequently, the balance
period of limitation remaining as on 15.03.2021, if any, shall
become available with effect from 03.10.2021.
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II. In cases where the limitation would have expired during the
period between 15.03.2020 till 02.10.2021, notwithstanding
the actual balance period of limitation remaining, all persons
shall have a limitation period of 90 days from 03.10.2021. In
the event the actual balance period of limitation remaining,
with effect from 03.10.2021, is greater than 90 days, that
longer period shall apply.
III. The period from 15.03.2020 till 02.10.2021 shall also
stand excluded in computing the periods prescribed under
Sections 23 (4) and 29A of the Arbitration and Conciliation
Act, 1996, Section 12A of the Commercial Courts Act, 2015
and provisos (b) and (c) of Section 138 of the Negotiable
Instruments Act, 1881 and any other laws, which prescribe
period(s) of limitation for instituting proceedings, outer
limits (within which the court or tribunal can condone delay)
and termination of proceedings.”
(Emphasis Supplied)
108. Lastly, on 10.01.2022, the Supreme Court directed as
under:
“III. In cases where the limitation would have expired during
the period between 15.03.2020 till 28.02.2022,
notwithstanding the actual balance period of limitation
remaining, all persons shall have a limitation period of 90
days from 01.03.2022. In the event the actual balance period
of limitation remaining, with effect from 01.03.2022 is greater
than 90 days, that longer period shall apply.
IV. It is further clarified that the period from 15.03.2020 till
28.02.2022 shall also stand excluded in computing the
periods prescribed under Sections 23 (4) and 29A of the
Arbitration and Conciliation Act, 1996, Section 12A of the
Commercial Courts Act, 2015 and provisos (b) and (c) of
Section 138 of the Negotiable Instruments Act, 1881 and any
other laws, which prescribe period(s) of limitation for
instituting proceedings, outer limits (within which the court
or tribunal can condone delay) and termination of
proceedings.”
(Emphasis Supplied)
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109. A conjoint reading of these orders, make it clear that the
direction of Supreme Court for excluding the period of limitation is
not confined to only Arbitration and Conciliation Act, Commercial
Courts Act and Negotiable Instruments Act. The directions were
extended in relation to “any other laws which prescribe period(s) of
limitation for instituting proceedings”. It cannot be doubted that
Section 73 is one of such provision whereby proceeding can be
instituted.
110. We will be failing in our duty if argument of Sri V. Bhaskar
Reddy, learned Senior Counsel, is not considered based on the
portion which is within bracket in para IV of order of Supreme
Court dated 10.01.2022. The contention of learned Senior
Counsel was that it relates to such limitation for instituting
proceedings where outer limit is prescribed in relation to any
proceeding of Court or Tribunal. The superficial reading of this
direction No.IV can certainly lead to such confusion. However, a
microscopic reading of para IV shows that there exists a “comma”
between the expression ….. ‘and any other laws, which prescribe
period(s) of limitation for instituting proceeding’ and ‘outer limits
(within which the Court or Tribunal can condone the delay)’. The
punctuation has great significance in this paragraph. The
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“comma” is also used in similar manner by Supreme Court when
direction was issued on 23.09.2021.
111. Justice G.P. Singh in Principle of Statutory Interpretation
(12th Edition) recorded thus:
6. Punctuation
“…….When a statute is carefully punctuated and there is
doubt about its meaning, a weight should undoubtedly be
given to punctuation….”
“…..But it would appear, at any rate, with respect to modern
statutes. State that if the statute in question is found to be
careful punctuated, punctuation, though a minor element,
may be resorted to for purposes of construction. An
illustration of the aid derived from punctuation may be
furnished from the case of Mohd. Shabbir v. State of
Maharashtra (AIR 1979 SC 564) where section 27 of the
Drugs and Cosmetics Act, 1940 came up for construction. By
this section whoever ‘manufactures for sale, sells, stocks or
exhibits for sale or distributes a drug without a licence is
liable for punishment. In holding that mere stocking is not an
offence within the section, the Supreme Court pointed out the
presence of comma after ‘manufactures for sale’ and ‘sells’ and
absence of any comma after ‘stocks’. It was, therefore, held
that only stocking for sale could amount to offence and not
mere stocking. For another example of the use of punctuation,
reference may be made to M.K. Salpekar (Dr.) Sunil Kumar
Shamsunder Chaudhari (AIR 1988 SC 1841) where the court
construed clause 13(3)(v) of the C.P. and Berar Letting of
Houses and Rent Control Order. This provision permits
ejectment of a tenant on the ground that “the tenant has
secured alternative accommodation, or has left the area for a
continuous period of four months and does not reasonably
need the house”. In holding that the requirement that the
tenant ‘does not reasonably need the house’ has no
application when he ‘has secured alternative accommodation’
the court referred and relied upon the punctuation comma
after the words alternative accommodation….”
(Pages 173-174)
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112. The Apex Court in Kantaru Rajeevaru v. Indian Young
Lawyers Assn. 62 held as under:
“18. When a statute is carefully punctuated and there is doubt
about its meaning, weight should undoubtedly be given to the
punctuation. [See: Crawford: Interpretation of Law (Statutory
Construction).]…”
(Emphasis Supplied)
113. The order of Supreme Court is carefully punctuated by
providing a ‘comma’ as highlighted above and therefore weight
must be given to such punctuation. In this view of the matter, we
are unable to hold that the order of Supreme Court was confined
to such proceedings alone which were pending in the Court or
Tribunal.
114. The aforesaid orders of the Supreme Court leave no room for
any doubt that the power was exercised under Article 141/142 of
the Constitution. In peculiar situation like COVID-19, the
Supreme Court exercised its extraordinary power and declared the
law for the nation. This is trite that while a judgment of a Court
binds only the parties to the litigation before it, a judgment of
Supreme Court is something more, by virtue of Article 141/142, it
declares the law for the nation (see Ganga Sugar Corporation
Limited v. State of Uttar Pradesh 63). The directions issued by
62
(2020) 9 SCC 121
63
AIR 1980 SC 286
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Supreme Court in suo motu jurisdiction binds the entire nation
and it cannot be said that the same are inapplicable in the present
proceedings. A Constitution Bench of Apex Court in CCE v.
Ratan Melting & Wire Industries 64 has drawn the curtains and
held as under:
“7. Circulars and instructions issued by the Board are no
doubt binding in law on the authorities under the respective
statutes, but when the Supreme Court or the High Court
declares the law on the question arising for consideration, it
would not be appropriate for the court to direct that the
circular should be given effect to and not the view expressed
in a decision of this Court or the High Court. So far as the
clarifications/circulars issued by the Central Government and
of the State Government are concerned they represent merely
their understanding of the statutory provisions. They are not
binding upon the court. It is for the court to declare what the
particular provision of statute says and it is not for the
executive. Looked at from another angle, a circular which is
contrary to the statutory provisions has really no existence in
law.”
(Emphasis Supplied)
This view is recently followed by the Supreme Court in
Commissioner of Central Excise and Service Tax, Rohtak v.
Merino Panel Product Limited 65.
115. We concur with the view taken by the Patna High Court.
The High Court, in our respectful view, rightly opined that
issuance of impugned notifications may be an exercise in
abundant caution. Relevant portion reads as under:
64
(2008) 13 SCC 1
65
(2023) 2 SCC 597
75
SP,J & Dr.GRR,J
Wp_1154_2024 & batch“40. We emphasize that insofar as the three-year period;
relatable to the statutory limitation, there is substantial
exclusion, as provided for by the Hon’ble Supreme Court in
Para-1 of the directions in its decision. Hence, it is paragraph-
5(I) which is applicable to the instant case, and not
paragraph-5(III) and there can be no ground raised that the
issuance of orders should have been within three months from
28.02.2022, especially since, as per the extension of time for
filing final returns, the limitation for the years of 2017-2018,
2018-2019 and 2019-2020 would have fallen only on
07.02.2023, 31.12.2023 and 31.03.2024; all of which fall after
28.02.2022. The entire period or portions of the period
excluded by the Hon’ble Supreme Court, fall within the three
year limitation period in each of the subject years, as we have
already detailed. The limitation hence stand extended to the
extent of the periods exempted by the Hon’ble Supreme Court.
However, since notifications are issued by the respective
Governments extending the period of limitation, necessarily
the limitation for the three subject years would stand
extended only to that notified.
41. We find absolutely no reason to interfere with the orders
passed, on the ground of limitation.”
(Emphasis Supplied)
116. In Olga Tellis v. Bombay Municipal Corporation 66, the
Supreme Court held that there can be no estoppel against the
constitution. It was further held that plea of estoppel is closely
connected with the plea of waiver. The object of both being is to
ensure bona fides in day to day transactions. In view of foregoing
analysis, we are constrained to hold that order of Supreme Court
dated 10.01.2022 passed in suo motu Writ Petition (Civil) No.3 of
2020, is indeed, applicable to the proceeding under the GST Act.
Thus, the question of validity of notifications pales into
66
(1985) 3 SCC 545
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insignificance. Since the period between 15.03.2020 to
28.02.2022 stood excluded for the purpose of counting limitation
by an order which became law of the land, the remaining
argument relating to validity of notifications became academic in
nature. After excluding limitation from 15.03.2020 to 28.02.2022,
it cannot be said that action of respondents in proceeding against
the petitioners is barred by limitation.
117. The COVID-19 Pandemic created extraordinary difficulties
which could not have been anticipated, measured and solved with
mathematical precision. COVID-19 was not a creation of
Government. Thus, hair-splitting in many aspects must be
eschewed. For example, the argument of Sri Karthik Ramana
Puttamreddy that in the initial notification extending limitation,
‘spread of COVID’ was shown as a reason which cannot be a
justification for issuance of impugned notifications issued after
COVID-19 was over. While dealing with such an extraordinary
crisis, Government’s action must be viewed in a broad perspective.
118. In view of our finding that period between 15.03.2020 to
28.02.2022 stood excluded for limitation as per Supreme Court’s
order, remaining points raised by the petitioners relating to
legality of impugned notifications need not be dealt with.
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119. In this batch of matters, admittedly, the petitioners have a
statutory efficacious alternative remedy of appeal. These matters
were entertained despite availability of above remedy because the
petitioners assailed the impugned notifications Nos.13 of 2022, 9
and 56 of 2023. In view of order of Supreme Court dated
10.01.2022, since we find no reason and justification to interfere
with those notifications. The petitioners may avail the statutory
remedy of appeal.
120. The Allahabad High Court in Graziano Transmissions
(supra), in this regard held as under:
“138. Seen in that light the decisions cited by learned counsel
for the petitioners are found to be distinguished. The writ
petitions challenging the issuance of the impugned
notifications must fail. Hearing of all cases where adjudication
proceedings are pending may recommence and be concluded,
after excluding the duration of stay of the extended limitation
to frame the adjudication order. Wherever adjudication orders
have been passed and recovery stayed by this Court, the
petitioners shall have 45 days from today to file appropriate
appeals.
139. The writ petitions are thus dismissed. No order as to
costs.”
(Emphasis Supplied)
121. These Writ Petitions are accordingly disposed of by
reserving liberty to the petitioners to avail the remedy of statutory
appeal. If the appeal is preferred by the petitioners within 45 days
before the appellate authority, the said authority shall consider
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and decide the appeal on merits and it shall not be thrown
overboard on the ground of limitation. It is made clear that this
Court has not expressed any opinion on merits of the cases.
There shall be no order as to costs. Miscellaneous petitions
pending, if any, shall stand closed.
_________________
SUJOY PAUL, J
______________________
Dr. G. RADHARANI, J
02nd January, 2025.
Note: L.R. copy be marked.
B/o. TJMR
