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TMI Blog2024 (6) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Naveen Chandra Gupta, A.S.G.I., C.S.C., Gaurav Mahajan, Gopal Verma, A.S.G.I., C.S.C., Gaurav Mahajan, Naveen Chandra Gupta, A.S.G.I., Amit Mahajan, C.S.C., Naveen Chandra Gupta, C.S.C., Gopal Verma, Manoj Kumar Sinha, Rajneesh Tripathi, Sr. Advocate, A.S.G.I., C.S.C., Parv Agarwal ORDER HON'BLE DONADI RAMESH, J. 1. Heard Sri Rakesh Ranjan Agarwal learned Senior Counsel assisted by Sri Suyash Agarwal, Sri Divyanshu Agarwal and Sri Vinayak Mittal, Sri Shambhu Chopra learned Senior Counsel assisted by Sri Rajnish Tripathi, Sri Praveen Kumar, Sri Nishant Mishra, Sri Atul Gupta, Sri Abhinav Mehrotra, Sri Venkat Prasad Pasupaleti (through video conferencing) and Sri Ayush Mishra, learned counsel for the petitioner, Sri S.P. Singh, learned ASGI assisted by Sri N.C. Gupta and Sri Gopal Verma, Sri Anant Tiwari, Sri O.P. Mishra, Sri K.J. Shukla, Sri Chandra Prakash Yadav and Sri Arvind Kumar Goswami learned counsel for the Union of India and Goods & Service Tax Council, Sri Gaurav Mahajan learned Senior Standing Counsel, Sri Amit Mahajan learned Senior Standing Counsel, Sri Krishna Agarwal learned Senior Standing Counsel and Sri Parv Agarwal learned Senior Standing Counsel for the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-18 15. 597 of 2024 M/S Mani Electricals Vs. Goods And Service Tax Council And 4 Others 2017-18 16. 841 of 2024 M/S Neptune Suppliers Private Limited Vs. Goods And Service Tax Council And 4 Others 2017-18 17. 897 of 2024 M/S Subhash Infraengineers Pvt. Ltd. Vs. Union Of India And 4 Others 2017-18 18. 902 of 2024 M/S Subhash Infraengineers Pvt Ltd. Vs.Union Of India And 4 Others 2017-18 3. By earlier order, we had consolidated the above described and other petitions raising same and/or similar challenge. Since, only legal issues are involved, Counter Affidavits were required to be filed by the respondents in the lead case i.e. Writ Tax No. 1256 of 2023 (M/S Graziano Trasmissioni India Pvt. Ltd. Vs. Goods And Services Tax And 5 Others). Copy of those Counter Affidavits were directed to be circulated to all counsel for the petitioners, in individual petitions. Also, permission was granted to individual counsel for the petitioners-to serve their Rejoinder Affidavits, treating the Counter Affidavit circulated in the lead case to be the Counter Affidavit filed in their individual cases. Thus, pleadings have been exchanged between the parties, on deemed basis. 4. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the first year under the GST regime. It is a matter of common knowledge that the revenue authorities and the tax payers alike, faced numerous difficulties in complying the new law. Therefore, the time for making compliances was extended and relaxations were granted by the Government, from time to time. It is on record - vide Notification dated 03.2.2020 issued under Section 44 (as it then existed) read with Rule 80 of the Rules framed under the Central Act, the last date for filing Annual Return for the F.Y. 2017-18 was extended - for the State of Uttar Pradesh, till 07 February 2020. Similar Notification No. 509 dated 05.02.2020 was issued by the State Government under the State Act. Correspondingly by operation of law, the time limitation contemplated under Section 73(10) of the Central Act and the State Act stood extended upto 06 February 2023. Also, correspondingly the time period for issuance of notice, by the Proper Officer (for that F.Y.), stood extended upto 08 November 2022. It is also a fact, just after the expiry of the last date for filing return for F.Y. 2017-18 expired on 07.2.2020, the country was hit by the first wave of the pandemic COVID-19, resulting in comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 July 2022, issued by the Government of India, (acting through the CBIC) under Section 168A of the Central Act, extended the time limit specified under Section 73(10) of the Central Act for F.Y. 2017-18, upto 30 September 2023. Parallel notification was issued by the State Government being Notification No. 596, dated 21.7.20222 providing for similar extension of time. These notifications have not been challenged. 11. Last, vide Notification No. 9/2023 dated 31.03.2023 issued by the Government of India through the CBIC, the time limitation prescribed under Section 73(10) of the Central Act for F.Y. 2017-18, was extended upto 31.12.2023. A parallel notification came to be issued by the State Government Notification No. 515 of 2023 dated 24.04.2023, granting similar extension of time under the State Act. These notifications have also arisen under Section 168A of the Central Act and the State Act. Challenge has been laid only to this last set of Notifications dated 21.03.2023 (issued by the Central Government) and 24.04.2023 (issued by the State Government). 12. In the context of the above, Sri Rakesh Ranjan Agarwal, learned Senior Advocate has first pointed out that all petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endent exercise but only by way of partial modification of the first time extension granted. 16. Second, it has been asserted that on 31.03.2023, there did not exist any COVID-19 circumstance at the time of issuance of the impugned notifications. The staff attendance at government and non-government offices stood regularised. Pre-existing office working restrictions were done away. Referring to the impugned time extension clause in Section 168-A of the Central Act and the State Act, it has been submitted that there did not exist any 'force majeure' circumstance. Referring to the order of the Supreme Court passed in Re: Cognizance for Extension of Limitation (Miscellaneous Application No. 408 of 2022 and connected matter), the Supreme Court itself granted exemption/relaxation of limitation for a limited period 15.03.2020 to 28.02.2022 only. Thus, according to him, in absence of any 'force majeure' circumstance existing on 31.03.2023, the exercise of power by the Central Government and the State Government to extend the limitation to frame the adjudication order for F.Y. 2017-18 upto 31.12.2023, did not exist. The exercise of power is patently ultra vires the Act. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another limb of this submission, it has been further asserted that the Central Government and the State Government should have acted independent of the opinion or advise of the Council. Power to issue the time extension notifications being delegated to the Government, no blind or mute compliance may have been offered by the delegate to the opinion of the Council. Reference has been made to the impugned notifications and also to the resolution of the Law Committee considered by the Council, to submit that both are silent to the existence of 'force majeure' circumstance relevant to the impugned notifications. 20. To clarify, he would submit, unless such circumstance was shown to exist on the date of issuance of time extension notifications and unless due application of mind had been made by the Central Government to that effect, inconceivable situation may arise where the Council may continue to resolve to extend the limitation of time to frame adjudication orders, indefinitely. The Central Government and the State Government may continue to offer blind compliance to such opinions and resolutions of the Council as may remain wholly contrary to the spirit of the Central and the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the cut-off date 30.6.2023. Merely because there may have existed certain difficulties, those may not have been cited as an impossibility. Thus, it has been contended, the issuance of the impugned notifications falls foul with the power vested with the Central Government and the State Government under Section 168A of the Central Act and the State Act. 22. Next, it has been submitted, limitation is a substantive right. It impacts the right of the tax-payers. Referring to the marginal note to TOLA, emphasis has been laid to the words "special circumstance" appearing in the marginal note. Thus, it has been emphasized, the power vested under Section 168A of the Act is not a general power to be exercised for completion of certain actions but an exceptional power vested in the delegate to be exercised, in special circumstances. 23. Referring to Eastern Coalfields Limited Vs. Sanjay Transport Agency & Anr., (2009) 7 SCC 345 and Satyendra Kumar Mehra alias Satendera Kumar Mehra Vs. State of Jharkhand, (2018) 15 SCC 139, it has been submitted, any doubt or ambiguity in the interpretation of the legislative clause may always be cleared by looking at the marginal note. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is essential for the purpose of issuance of proceedings in the nature of reassessment and/or adjudication. Wherever extension of time is required, the primary legislation provides for the same. In the present case, that function has been circumscribed by the conditions enumerated under Section 168A of the Act. Therefore, unless the 'force majeure' circumstance (of continuance of COVID-19) was a fact in existence, the primary legislative function cannot be seen to be validly exercised by the delegate - either the Central Government or the State Government. Reliance has been placed on Independent Schools' Association, Chandigarh (Regd.) & Ors. Vs. Union of India & Ors., (2022) 14 SCC 387 to submit that a notification requiring substantive change to be made may neither be described as peripheral nor that power may be lightly exercised by the delegate. In the present case, the delegate having acted outside the scope of the delegation made, the impugned notifications are acts of excess. Essential legislative function was not and could not be delegated to the Central Government, or the State Government. 28. Referring to Lachmi Narain & Ors. Vs. Union of India & Ors., (197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in consonance with the Constitutional and/or statutory law, would remain unenforceable. 32. Next, Sri Praveen Kumar offered a clarification at the very beginning. He would submit, Section 168-A is a piece of conditional legislation. The conditions on which delegate may act are specifically prescribed therein. There can be no doubt or imagination as to that. Thus, only when an 'action' for which time limit may have been prescribed, specified or notified, cannot be completed or complied within that time, only then, the Central Government and/or the State Government may act, to provide for time extension. Having laid that premise, he would proceed to submit, therefore, the recommendation of the Council must be seen to have considered and identified actions that were not complied or which could not be complied within the pre-existing prescription of time, that too for 'force majeure' circumstance existing. In the present facts, according to him, that consideration is completely lacking rather, it is absent. 33. Relying on the Hamdard Dawakhana (Wakf) Lal Kuan, Delhi & Anr. Vs. Union of India & Ors., AIR 1960 SC 554, he would submit, there can be no doubt that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion orders could not be completed or complied. 36. Referring to P. Ramanatha Aiyar's, The Law Lexicon, Second Edition 1997, he would elaborate that word 'cannot' includes a legal inability, as well as a physical impossibility. (The Newbattle, 54 LJPD & A 16). Further, referring to the said law lexicon, he would elaborate that the word 'complete' may only mean to finish; accomplish that which one starts out to do. (Black's Law Dictionary). He has also referred to and relied on Article 356 (1) of the Constitution of India and the decision of the Supreme Court in S.R. Bommai v. Union of India, AIR 1994 SC 1918, to submit that strict meaning of the word 'cannot' must arise to the words used by the legislature in Section 168A of the Central and the State Act. Thus, it has thus been stressed that the period of actual national lockdown - from 25.3.2020 to 31.5.2020, alone offered a circumstance when no action may have been completed or complied. Even then, it is a fact that during that period as well, notices came to be issued; proceedings were conducted and completed. Since, no action had been initiated at the relevant time, the legal basis to invoke the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of that conditional legislation after expiry of the 'force majeure' circumstance, is ultra vires the Central Act and the State Act. 39. Shri Atul Gupta has offered another hue to the submissions advanced in these proceedings. He would submit, the impugned notifications are discriminatory. By virtue of the language used in Section 73 and Section 74 of the Central and the State Act, a clear demarcation exists between a registered person from whom tax may have remained to be collected, for reasons other than the fraud and those from whom due tax may remain to be collected for reason of fraud. Legislative wisdom remains, to treat the two categories of persons differently, inasmuch as lesser period of limitation of three years (from the last date of filing of return) exists for the first category of persons and a longer period of limitation of five years exists for persons who may be alleged to have committed fraud. By seeking to enlarge the limitation for the first category of persons without valid reasons, that legislative distinction has been destroyed. To that extent, the impugned notifications are wholly discriminatory, besides being in violation of the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delegated power to arise or to be exercised, the unjust and arbitrary result growing from it, clearly establishes its invalidity. 43. Shri Nishant Mishra would first submit, repeated extensions granted in a routine way are contrary to the legislative intent and object expressed in the language of Section 168A of the Central Act and the State Act. That provision contemplates a limited intervention to be made by the Central or the State Government for reason of 'force majeure' circumstance having obstructed any action that was required to be completed or complied during the existence of continuance of 'force majeure' circumstance. Referring to UP Goods and Services Tax (Second Amendment) Act, 2020 and the statement on objections and reasons thereto, it has been submitted, Section 168-A of the State Act was incorporated only to overcome the difficulties faced by the tax-payers arising from lockdown declared due to COVID-19. Thus, the provision of Section 168-A may have been utilised only for that special circumstance, arising from that eventuality. 44. The non obstante clause appearing by way the opening words used in Section 168-A of the Central Act and the State Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason given in the minutes of the 49th meeting of the GST Council only establish difficulty. They do not refer to existence or continuance of a 'force majeure' circumstance. To that extent, those recommendations are contrary to the express provisions of Section 168A of the Central Act and the State Act. Further, it has been submitted, the consideration of reasons in the 49th Meeting of the Council do not constitute or give rise to appreciation of any 'force majeure' circumstance. At best, the Council discussed the difficulties faced by some of the "tax administrations". 49. Even in the agenda considered by the Council, the discussion exists only with respect to delays observed in issuance of show cause notice for F.Ys. 2017-18, 2018-19 and 2019-20, for reason of COVID-19 pandemic. It has been further noted, the Law Committee considered the delay in scrutiny and audit due to COVID-19 restrictions and had thus recommended extension of time. Merely because the revenue authorities may have faced certain difficulties in performing certain actions preceding issuance of adjudication notices, may never be described as an impossibility to complete and comply any action. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 134 and State of Mysore Vs. P.R. Kulkarni & Ors., AIR 1972 SC 2170 to submit, it is not possible to cull out with any certainty, which reason prevailed with the Council and which part of the recommendation made by the Council prevailed with the Central Government or the State Government, especially because the reasons contained in the minutes of 48th Meeting of the Council refer to extraneous circumstance i.e. facts and measures falling outside twin test of 'force majeure' circumstance existing and impossibility to perform due action, for that reason. 55. In his submission, by lapse of time especially after the second/Delta Wave of the pandemic COVID-19 got over, no 'force majeure' circumstance existed as may have prompted or persuaded the Central or the State Government to act on such recommendations. To the extent, the action to issue the impugned notifications is based on extraneous considerations, those would fall within the scope of judicial review. 56. Relying on D.C. Wadhwa & others v. State of Bihar & others, (1987) 1 SCC 378, he would submit that power exercised by the executive was a colourable exercise to achieve a different object than that contemplated by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have been initiated. However, admittedly the order dated 8.12.2023 passed in this case travels beyond the issue raised in the Show Cause Notice. To that extent, the order is wholly unsustainable. 60. Next, Shri Ayush Mishra, learned counsel appearing for the petitioner in Writ-Tax No. 437 of 2023 has also adopted the submissions advanced by the other counsel of the petitioner. In addition, he has laid emphasis on the letter written by the Secretary to Chief Secretaries of all the States dated 22.03.2022 wherein it was informed, considering the overall improvement in the situation and preparedness of the government in dealing with the pandemic, the National Disaster Management Authority had decided that there was no need to invoke the provisions of the Disaster Management Act (to contain COVID-19), any further. Accordingly, it was provided, after expiry of the then existing order dated 25.2.2022, no further order may be issued by the Ministry of Home. 61. Second, referring to another letter written by the Union Home Secretary dated 25.2.2022, he has emphasised that by virtue of contents of paragraph-6(i), (vi), (vii) and (viii) thereof, all restrictions that had been created dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, TOLO/TOLA made special mention by incorporating Section 168A to the Central Act. Relying on the same, he would submit, there is a clear legislative understanding discernible from a plain reading of the said provision to deal with and provide differently all taxation and other laws in one way and the Central Act in another. In the Central Act, a separate section 168A, was incorporated. 65. Referring to the Explanation thereto, it has been submitted, the provisions of Constitution of India, he would submit, the Central Act and the State Act would take effect from the date to be recommended by the Council. Thus, in his submission, Constitution has given primacy to the Council in matters of Central Act and the State Act. Referring to the Resolution recorded in the 49th Meeting of the Council, a requirement was felt to further extend the limitation for reason of reduced staff, staggered timing and exemption to certain categories of employees from attending offices. This occurrence though referable to the period prior to the date of issuance of the impugned notifications., yet, that had led to much delays in processing of Annual Returns involving procedures of scrutiny and au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e test of reasonableness stands satisfied. 68. Here, he has referred to State of Tamil Nadu Vs. P. Krishnamurthy & Ors., (2006) 4 SCC 517 to submit that there exists a presumption in favour of constitutionality and validity of a subordinate legislation and the burden to prove otherwise remains on the challenger i.e. the petitioners before this Court. Further, as to the grounds on which subordinate legislation may be struck down, amongst others, it may be either for lack of legislative competence or violation of fundamental rights or violation of another statute or failure to conform to the statute or repugnancy to other laws of the land or manifest arbitrariness. In considering the challenge raised to the subordinate legislation, the Court may consider if the impugned subordinate legislation is directly consistent with the mandatory provisions of the statute under which it had been issued. But where the inconsistency or non-conformity is not with respect to any specific provision but the object and scheme of the parent Act, the Court would proceed with caution before reaching the conclusion of invalidity. 69. Therefore, in his submission, the action by the Central Government and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of power delegated. Then, relying on Reckitt Benckiser India Private Limited Vs. UOI (2024) GSTL 113 (Del), it has been submitted, the words - "with respect to" are similar to the words "in respect of" used under Section 168A of the Central Act and the State Act. Those are words of wide amplitude and thus the power delegated to the Central Government and the State Government under that provision of law must be interpreted to include ancillary, incidental and necessary matters. It may not be confined to the direct actions as propounded by learned counsel for the petitioners. Therefore, the words "in respect of" though used in conjunction with the words "actions" do not restrict the exercise of power under Section 168A of the Central Act and the State Act to pending adjudication proceedings, only. The circumstances would have to be looked at holistically i.e. in the scheme of the Act in which the adjudication proceedings may arise. 73. Thus, in the first place the legislature and its delegate were conscious of the fact that arising from COVID-19 circumstances, resulting in reduced staff at government offices with restricted timings and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain class of employees. Only minimum/necessary works were being performed at government offices, including by the revenue authorities. Therefore, the action taken by the Central and the State Governments/delegates is in conformity to the provisions of Section 168A of the Central Act and the State Act. Sri Mahajan would submit, neither the Council nor the Government have acted mechanically. 75. Besides the discussion offered to the circumstances and the 'force majeure circumstance' and their consequences resulting in non-initiation/completion of the preliminary steps that were required to be undertaken before any valid adjudication may have arisen i.e. steps involving scrutiny and audit, both, the Council as well as the Central Government were mindful of the fact that such circumstance may only affect proceedings that may arise under Section 73 of the Act not involving allegations of fraud etc. Thus, contrary to the request of certain tax administrations to extend the time limits to initiate proceedings under Section 74 of the Central Act, the recommendation made by the Council and the action taken by the Central Government were to deny that request. Extension of limitation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isen for F.Y. 2017-18, began on 08.2.2022. Barely a month thereafter it got disabled, on 15.3.2020. It remained disabled till 28.2.2022. He has also referred to and relied on the decision of the Supreme Court in Dhanrajamal (supra) and Super Agrotech Ltd. Vs. State of U.P. and Others, (2006) 9 SCC 203. Also, he has relied on the decision of the Supreme Court in Vivek Narayan Sharma and Others Vs. Union of India and Others (2023) 3 SCC 1 to rely on the principle that a judicial review being claimed may not extend to test the fairness of the decision but only to the manner in which it may have been taken. Decisions that arise on consideration of numerous factors may never be tested on the merits of the decision made. 77. Last, it has been submitted that the impugned notifications are not original. Those are notifications to modify the principal notification being Notification Nos. 35/2020 dated 03.4.2020 and 445 dated 11.5.2020. Only because the time extension granted by the original notifications required revision/enhancement, the impugned notifications came to be issued. The petitioners having failed to raise any challenge to the original notifications, they may never be heard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances arising therefrom continued to exist till May 2023. 80. As to the submission advanced by Sri Nishant Mishra that the impugned notification (by the State Government), was not issued on the strength of the recommendation made by the Council, that has been objected. In his submission, that Notification was also issued on the strength of the recommendation of the Council. 81. Then referring to the period of disruption recognised by the Supreme Court being 15.3.2020-28.2.2022 which is 01 year 11 months and 15 days, it has been submitted, if that period is to be excluded from the period of limitation that was otherwise available to the revenue authorities to pass adjudication orders for the F.Y. 2017-18 and that period were to be added to the normal period of limitation that existed from the date 07.2.2020 (last date of filing of return) for F.Y. 2017-18, the time limitation to make adjudication order for the F.Y. 2017-18 would exist practically upto 22.1.2025. The impugned notifications only seek to extend that limitation upto 31.12.2023 i.e. the extended period of limitation is short by one year than may otherwise be availed on the principle recognised by the Supreme Court. 82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed persons as may be specified therein: Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to be notified by the Commissioner. 84. Notification No.6 of 2020 dated 03.02.2020 issued by CBIC and Notification No.509 dated 05.02.2020 issued by the Commissioner Commercial Tax, extended the last date of filing of Annual Return for FY 2017-18 for the State of U.P., to 07.02.2020. Then, Section 73 of the Central Act and the State Act (1), (2) (9) (10) reads as below: Section 73 - Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilfulmisstatement or suppression of facts (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything contained in this Act, the Government may, on the recommendations of Council, by notification, extend the time limit specified in, or prescribed or notified under, this Act in respect of actions which cannot be completed of complied with due to force majeure. (2) The power to issue notification under sub-section (1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act. Explanation-For the purposes of this section, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act. 87. The final order passed by the Supreme Court in Re: Cognizance for Extension of Limitation (supra) (paragraph nos.1, 2 5 and 6) reads as below. (1). In March, 2020, this Court took Suo Motu cognizance of the difficulties that might be faced by the litigants in filing petitions/ applications/suits/ appeals/all other quasi proceedings within the period of limitation prescribed under the general law of limitation or under any special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral power to remove difficulties, enacted under Section 172 of the Central Act and the State Act. However, those extensions were granted arising from different circumstances namely, teething problems faced by all stake holders upon introduction of Central Act and the State Act. We find those are not relevant. Therefore, no reference is being made to the same. 89. Acting under the new provision - Section 168A of the Act, the first action emerged by issuance of Notification No. 35 of 2020 dated 03.04.2020 by the Central Government and a parallel/pari materia Notification No. 445 dated 11.05.2020 issued by the State Government. For ready reference, we extract the relevant portion of the Notification No. 35 of 2020. It reads as below : "Notification-GST-Central GST (CGST) MINISTRY OF FINANCY (Department of Revenue) (CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS) NOTIFICATION No. 35/2020-Central Tax "New Delhi, the 3rd April, 2020 G.S.R. 235(E). In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), read with section 20 of the integrated Goods and Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppression of facts to evade tax, 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. 2.1 Some of the members of the Law Committee highlighted the problem being faced by the taxpayers as well as tax administration in respect of demands and refunds getting time barred due to long period of lockdown/restrictions on account of Covid-19 pandemic. A request was made to consider extension of timelines in respect of proceedings under: i. Section 73 and 74 ii. Section 54 and 55 2.2 The issue was deliberated by the Law Committee in its meeting held on 11.04.2022 and 07.05.2022. The Law Committee observed that centre as well as state governments were working with reduced staff, along with staggered timings and exemption to certain categories of employees from attending offices, from time to time during COVID period. Further, it was a conscious policy decision not to do enforcement actions in the initial period of implementation of GST law, thereby no action for scrutiny, audit etc. could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) and section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) and in partial modification of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), No. 35/2020-Central Tax, dated the 3rd April, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 235(E), dated the 3rd April, 2020 and No. 14/2021-Central Tax, dated the 1st May, 2021, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 310(E), dated the 1st May, 2021, the Government, on the recommendations of the Council, hereby,- (i) extends the time limit specified under sub-section (10) of section 73 for issuance of order under subsection (9) of section 73 of the said Act, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, up to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and various courts against any quasi-judicial order or where a proceeding for revision or rectification of any order is required to be undertaken, the time line for the same would stand extended as per the Hon'ble Supreme Court's order. 5. In other words, the extension of timelines granted by Hon'ble Supreme Court vide its Order dated 27.04.2021 is applicable in respect of any appeal which is required to be filed before Joint/Additional Commissioner (Appeals), Commissioner (Appeals), Appellate Authority for Advance Ruling, Tribunal and various courts against any quasi-judicial order or where proceeding for revision or rectification of any order is required to be undertaken, and is not applicable to any other proceedings under Central Act and the State Act." 94. The fourth action witnessed upon enforcement of Section 168A and the one which is impugned in these proceedings arose pursuant to the 49th Meeting of the Council held on 29.02.2023. In that at agenda item 4(vii), the following discussion emerged: "5.7 Principal Commissioner: (GSTPW) informed that there have been requests from tax administrations for further extension of time limit under Section 73 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(vii), along with the proposed notification." 95. Consequently, the Central Government issued the impugned Notification No. 9 of 2023 dated 31.3.2023 and the State Government issued impugned Notification No. 519 dated 24.4.2023. They are pari materia. In material part, Notification No. 9 of 2023 reads as below: "GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS New Delhi: 31.03.2023 Notification No. 09/2023 - Central Tax S.0.1564(E). In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), and section 21 of the Union territory Goods and Services Tax Act, 2017 (14 of 2017) and in partial modification of the notifications of the Government of India, Ministry of Finance (Department of Revenue), No. 35/2020-Central Tax, dated the 3rd April, 2020 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 235(E), dated the 3rd April, 2020 and No. 14/2021-Central Tax, dated the 1st May, 2021 publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section offers an inclusive definition namely - war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by the nature. The words "otherwise affected" take colour from the terms and expressions appearing earlier. 99. In addition to the four conditions noted in the preceding paragraph, the Explanation also suggests that the power may be exercised in a situation where in the presence of a "force majeure" circumstance, the implementation of any of the provisions of Central Act and the State Act may have been impaired, to the extent it may necessitate extension of time limits, referred to Section 168A(1) of the Act. 100. Tested on the above principle, as a fact, the recommendation of the Council to issue the impugned notifications - to extend the time limit, exist. Also, the occurrence of the "force majeure" circumstance i.e. epidemic COVID-19 is undisputed. Therefore, it is required to be considered is whether: (i) that power was exercised in respect of actions which could not be "completed or complied" and, (ii) due to "force majeure". 101. The action with respect to which the challenge has arisen is is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be examined is: if the delegation made is uncanalised and/or if the delegate had acted contrary to the conditions and stipulations of the principal legislation. On the first issue, there is no doubt. In fact, it is the submission of Shri Praveen Kumar and learned Senior counsel and the other counsel for the petitioners that the principal legislature has laid down strict conditions for exercise of special powers to extend the limitation. As to the second issue, we need to examine the manner in which such extension may have been granted. 106. The occurrence of the pandemic COVID-19 is an admitted fact. Further, arising therefrom, Re:Cognizance for Extension of Limitation (supra), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 73 of the Act. At the same time, the Law Committee formed an opinion favourable to grant a limited extension of time. Accordingly, time extensions were granted for F.Y. 2017-18 up to 31.12.2023, for F.Y. 2018-19 up to 31.03.2024 and for F.Y. 2019-20 up to 30.06.20204. 109. Thus, in the context of a conditional legislative function exercised by the Central Government and the State Government on the recommendation made by its expert i.e., Council, we find it difficult to hold that there was no application of mind by the delegate in issuing the impugned Notifications. The material existed as has been discussed above. The application of mind is writ large on the face of the agenda and minutes relied by learned counsel for the petitioners and admitted to the respondents. 110. Once we have held that issuance of the time extension application was a legislative function and there existed material and due deliberation/ consideration over/of to that material, before the legislative function was performed, the first condition of existence of circumstances for exercise of the said power described as conditional legislation, stood fulfilled. Therefore, the ratio of the decision of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that day. That function may have arisen only within a reasonable time thereafter. 113. As to the construction of reasonable time, in the context of the legislative policy providing for a three year time (to frame an adjudication order), from the last date of filing of Annual Return and further keeping in mind the legislative policy providing for issuance of Show Cause Notice up to two years and nine months from the last date of filing of Annual Return, that reasonable period of time extended up to November, 2022. 114. While the order of the Supreme Court in Re : Cognizance for Extension of Limitation (supra) may not per se apply to an adjudication proceeding and it is not the case of the respondents that they claim direct benefit of that relaxation of limitation granted for the period 15.03.2020 to 28.02.2022, at the same time, we must remember that judicial notice was taken of the disabling events triggered by the spread of the pandemic COVID-19, by the highest Court of the land. That judicial recognition of that fact, was commonly known to all, itself is irrebuttable evidence of both - the extent of disablement and the length of time for which such disablement continued to exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or prior scrutiny and audit, at the same time Section 61 of Central Act and the State Act provides that a Proper Officer may scrutinise the return, verify its correctness and, inform the registered person of the discrepancies noticed. If the explanation thereto is found acceptable, no further action is contemplated. Failure to comply with those conditions may invite action under Section 65, 66, 67 and even Section 73 of the Act. In that regard, provisions of Section 61 of the Central Act and the State Act read as below: "Scrutiny of returns 61(1) The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto. (2) In case the explanation is found acceptable, the registered person shall be informed accordingly and no further action shall be taken in this regard. (3) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive action. To the extent any legislature may have acted to provide for a law having nexus to the circumstance or the mischief sought to be addressed, to the extent it may be authorised to act in the manner it did, no fault may be found with the same. In exercise of judicial review, we may remain ever reluctant to explore the validity of that action beyond this point. 122. The decision in S.R. Bommai (supra) is not found applicable. In the first place, the issue arose in completely different law context of emergency provision under the Constitution of India. Even otherwise for reasons noted above, we find that the action that could not be completed or complied was adjudication function. The impossibility arose for reason of obstruction caused by the 'force majeure' circumstance to the preparatory action of scrutiny and audit. Once that obstruction had been caused and time lost to COVID-19, the legal and factual impossibility to conduct and conclude adjudication proceedings within the normal period of limitation of three years from the last date of filing of Annual Return, arose by way of a necessary consequence. 123. In the context of legislative action taken, upon a holistic co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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. 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 168A 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 legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 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 (supra) and Independent Schools' Association (supra) 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 (supra) is also not applicable to the present facts. 130. The submission based on doctrine of public trust is found to be wholly foreign to the scope of specific challenge raised to an act of conditional legislation. In face of conditions fulfilled we find no merit in that submission. Therefore, the decision in Tata Housing Development Company Ltd. (supra) is also inapplicable. 131. Reference to Article 279A (4)(h) of the Constitution of India is equally mis-placed. In absence of any fact circumstance or legal compulsion shown to exist, no defect is found in the conduct of the Central Government and the State Government in having acted on the recommendation of the Council. In the context of the conditional legislation that Section 168A is, in our opinion the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforced by it under the Disaster Management Act in the year 2022, lead us to nowhere. They do not militate and they may not ever militate against the judicial notice taken to the effect of the spread of the pandemic COVID-19, remained constant during the period 15 March 2020 to 28th February 2022. 134. The other principle submission advanced by Shri Mehrotra that the entire action taken by the respondents was a colourable exercise of power also cannot be accepted in view of the discussion made above. The power to issue the impugned notifications existed. It is undisputed. In view of our discussion, that power was exercised both within the confines of the legislative conditions and occasioned by circumstances confronted by the legislature. The extent to which the power may have been exercised i.e. the length of time extension granted would also remain outside the scope of judicial review. Suffice to note, no excessive extension of time is seen to have been granted. If the period beginning 15th March 2020 to 28th February 2022 were to be excluded, a similar result would have arisen in terms of limitation extension. However we make it clear that the above has been noted only to dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity. 17. In Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India [(1985) 1 SCC 641 : 1985 SCC (Tax) 121] this Court referred to several grounds on which a subordinate legislation can be challenged as follows: (SCC p. 689, para 75) "75. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d minuteness when the statutory authority making the rule, after coming into force of the Act, is in a better position to adapt the Act to special circumstances. Delegated legislation permits utilisation of experience and consultation with interests affected by the practical operation of statutes." (emphasis supplied) 137. Also, in Vivek Narayan Sharma (supra), it has been observed as below : 227. This Court in Small Scale Industrial Manufactures Assn. [Small Scale Industrial Manufactures Assn. v. Union of India, (2021) 8 SCC 511] observed that the Court would not interfere with any opinion formed by the Government if it is based on the relevant facts and circumstances or based on expert's advice. The Court would be entitled to interfere only when it is found that the action of the executive is arbitrary and violative of any constitutional, statutory or other provisions of law. It has been held that when the Government forms its policy, it is based on a number of circumstances and it is also based on expert's opinion, which must not be interfered with, except on the ground of palpable arbitrariness. It is more than settled that the Court gives a large leeway to the exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the Court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn v. Illinois [Munn v. Illinois, 1876 SCC OnLine US SC 4 : 24 L Ed 77 : 94 US 13 (1877)] , namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies". The Court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary." (emphasis supplied) 254. The Constitution Bench in R.K. Garg [R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30] holds that the Court would not have the necessary competence and expertise to adjudicate upon such an economic issue. The Court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not. It has been held that it would be wise for the Court not to hazard an opinion where even economists may differ. It has been held that while exami ..... X X X X Extracts X X X X X X X X Extracts X X X X
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