2024 (6) TMI 233 - HC - GST

Extension of time granted to the Adjudicating Authorities to pass adjudication orders with reference to proceedings for the F.Y. 2017-18 - Challenge to N/N. 09/2023-Central Tax (CGST) dated 31.3.2023 issued by the Government of India and N/N. 515/XI-2-23-9 (47)/17-T.C.215-U.P.Act-1-2017-Order-(273)-2023 dated 24.4.2023 issued by the State Government under Section 168A of the Central Goods and Service Tax Act, 2017 and the U.P. Goods and Service Tax Act, 2017 - Interpretation of force majeure in the context of legislative action. The submission advanced by learned Senior counsel and other counsel for the petitioners that since adjudication notices were not issued, the period of limitation never started running and that there was no requirement to conduct scrutiny or audit/before issuance of those and therefore, the revenue authorities were not disabled from conducting that exercise, requires serious consideration. HELD THAT - The powers under Section 168A of the Act is legislative and not an administrative power. While submissions have been advanced by some of learned counsel for the petitioners suggesting, the power under Section 168A of the Act was an administrative or executive power, at the same time, as submitted by Sri Mahajan, there can be no doubt as to the true nature of that power. Prescription of limitation to perform an action is a pure legislative function. In absence of any doubt thereto, the extension of limitation prescribed by law also remains legislative. The power to condone delay may be granted both to the executive and the judicial bodies, at the same time, the prescription in law, as to limitation remains exclusively, a legislative function. The discretion existed with the principal legislature to prescribe such limitation as it may have considered proper. In fact, it is the submission advanced by some of the learned counsel for the petitioners that if the prescription of limitation is provided by the impugned notification had been made by the principal legislature, there may not have arisen any valid challenge thereto. Occurrence of the pandemic COVID-19 - HELD THAT - The occurrence of the pandemic COVID-19 is an admitted fact. Further, arising therefrom, Re Cognizance for Extension of Limitation 2022 (1) TMI 385 - SC ORDER , the Supreme Court took cognizance of that occurrence and relaxed the period of limitation (in all), beginning 15.03.2020 to 28.02.2022. Besides, consideration of the same also exists in the minutes of meeting of the Council at its 47th meeting dated 28-29.06.2022 and at its 49th meeting dated 18.02.2023. The agenda item at those meeting has also been relied by all learned counsel. In the minutes of the 47th meeting of the Council, it had been clearly noted that the scrutiny and audit of Annual Returns for F.Ys. 2017-18, 2018-19 and 2019-20 was delayed because of COVID-19 pandemic . Once it is that issuance of the time extension application was a legislative function and there existed material and due deliberation/ consideration over/of to that material, before the legislative function was performed, the first condition of existence of circumstances for exercise of the said power described as conditional legislation, stood fulfilled - By way of principle it may not be doubted that the recommendations of the Council remained persuasive. The Central Government and the State Government were not duty bound to conform thereto. However, in absence of any fact shown to exist, the Central Government and the State Government have exercised their conditional legislative function in accordance with law. No palpable illegality or arbitrariness has been shown to exist as may warrant any deeper examination by the Court. Thus, the consideration offered by the Council in its 47th and 49th meetings, as has been extracted and discussed above was relevant to the exercise of power under Section 168A of the Central Act and the State Act. Neither the existence of material on which the discussion had arisen nor the discussion itself may be described as extraneous or irrelevant to the statutory requirement of Section 168A of the Act. Interpretation of force majeure in the context of legislative action - HELD THAT - The legislative wisdom must remain insulated from that judicial query. Under the Constitutional scheme of division of powers, Courts may never be enthusiastic and may remain disinclined to test the subjective satisfaction of legislatures in enacting laws. In fact, the Courts are neither equipped nor they are expected to undertake that exercise - By its very nature of force majeure circumstance as advanced by learned Senior Counsel for the petitioners and other learned counsel for the petitioners, remains unpredictable. Both as to its occurrence, duration of its continuance and the impact that it may leave, a force majeure event remains a mystery or atleast unpredictable to the human mind and perception, in real time. Only hindsight wisdom, that is so unique to a humans may give rise to a discussion or discourse as to what may have been done and what could have been done and what should have been done in the past. In the context of enacted laws, neither the petitioners nor the Courts may have a say. It would remain a subject best preserved to the legislature, to deal with in real time. The submission that the issuance of the impugned notifications are pre-judicial to the rights and interest of the tax payers does not find our acceptance in the context of the discussion made above. A legislative action cannot be complained of as being prejudicial on account of extension of limitation. Limitation, though statutory, is not a pre-existing vested right of any party. It gets created and extinguished in accordance with the statutory law. Insofar as the statutory law prescribes a limitation, no argument may arise against such prescription made. Further, in the case of conditional legislation, the 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. 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. The writ petition is dismissed.

Summary

Issues Involved:
1. Validity of Notification No. 09/2023-Central Tax (CGST) dated 31.3.2023 and Notification No. 515 dated 24.4.2023 issued u/s 168A of the Central Goods and Service Tax Act, 2017 and the U.P. Goods and Service Tax Act, 2017.
2. Whether the extension of time granted by these notifications for adjudication orders for F.Y. 2017-18 is valid.
3. Whether the exercise of power u/s 168A was justified due to "force majeure" circumstances.

Summary:

1. Validity of Notifications:
The petitions challenged the validity of Notification No. 09/2023-Central Tax (CGST) dated 31.3.2023 and Notification No. 515 dated 24.4.2023 issued by the Central and State Governments u/s 168A of the Central Goods and Service Tax Act, 2017 (Central Act) and the U.P. Goods and Service Tax Act, 2017 (State Act). The notifications extended the time for adjudication orders for F.Y. 2017-18. The Court noted that the power under Section 168A is a legislative function, not administrative, and is conditional legislation exercised based on the recommendation of the GST Council.

2. Extension of Time:
The Court examined whether the power was exercised in respect of actions that could not be "completed or complied" due to "force majeure." The Court found that the recommendations of the GST Council and the occurrence of the "force majeure" circumstance (COVID-19 pandemic) were undisputed. The Court concluded that the scrutiny and audit of Annual Returns for F.Y. 2017-18 were delayed due to the pandemic, justifying the extension of time for adjudication orders.

3. Justification of Exercise of Power:
The Court held that the legislative function exercised by the Central and State Governments was based on relevant material and due deliberation. The Court rejected the argument that the extension was prejudicial to taxpayers' rights, noting that limitation is a statutory prescription and not a vested right. The Court further held that the power u/s 168A was exercised within the confines of the legislative conditions and was justified due to the disruption caused by the COVID-19 pandemic.

Conclusion:
The Court dismissed the writ petitions challenging the notifications and upheld the validity of the time extensions granted for adjudication orders for F.Y. 2017-18. The Court directed that hearings of pending adjudication proceedings may recommence and be concluded after excluding the duration of the stay of the extended limitation. Petitioners with stayed recovery orders were given 45 days to file appropriate appeals.