9911796707
TMI Blog2024 (9) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... d or complied with due to force majeure. The challenge to the Notification No.56/2023-CT is on account of absence of recommendation by the GST Council and existence of force majeure as defined in the Explanation to Section 168A of the Central Act. In the case of V.M. Kurian Vs. State of Kerala [ 2001 (3) TMI 1091 - SUPREME COURT ], the Supreme Court was dealing with Rule 5 of Kerala Building Rules and the question which arose was whether without the recommendation of Greater Cochin Development Authority and the Chief Town Planner, the State Government could have granted exemption from the operation of the Kerala Building Rules for construction of an eight storey building. The Supreme Court in the said judgment observed that the word recommendation is a statement expressing commendation or a message of this nature . However, taking into account that the word recommendation was not defined in the Kerala Building Rules, it was observed that the meaning of the word recommendation has to be understood in the context of the provisions of the Kerala Building Rules and the object behind the Rules. In the instant case, it would be seen that both the Central Act as well as the State Act do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Assam (SGST) PREFACE : 2. In the instant batch of writ petitions, the Petitioners herein have challenged their respective Order-in-Original passed under Section 73(9) of the Central Goods and Service Tax Act, 2017 (for short the Central Act ) as well as Assam Goods and Services Tax Act, 2017 (for short the State Act ) on the ground that the Notification No.9/2023-CT dated 31.03.2023 and the Notification No.56/2023-CT dated 28.12.2023 by which the period for passing of the order under Section 73(10) of the Central Act was extended in exercise of the powers under Section 168A of the Central Act was ultra vires the Central Act. In addition to that, the Petitioners have assailed the imposition under the State Act on the ground that there is no Notification issued under Section 168A of the State Act extending the period for passing order under Section 73(10) of the State Act. 3. The Notification No.09/2023-CT and Notification No.56/2023-CT are challenged on the grounds that the condition precedent for issuance of the Notifications in exercise of powers under Section 168A of the Central Act were not fulfilled. To elaborate, the Notification No.9/2023-CT is challenged on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution as the said Article forms the basis of empowering the Parliament as well as the State Legislatures to make laws with respect to goods and service tax by the Union or by the State. Article 246A of the Constitution is reproduced here in below. 246 A. Special provision with respect to goods and services tax. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation. The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council. 7. From a perusal of the above quoted Article, it would be seen that it provides the Parliament and the State Legislature the concurrent power to legislate on Goods and Service Tax. Article 246A starts with a non-obstinate clause thereby ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices Tax Council shall make recommendations to the Union and the States on (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from, the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and (h) any other matter relating to the goods and services tax, as the Council may decide. (5) The Goods and Services Tax Council shall recommend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndation(s) made by the GST Council would be specifically dealt with in the later segments of the instant judgment. 10. Before further proceeding to analyze Article 279A of the Constitution, it is relevant to note that a reading of the Objects and Reasons of the Constitution (122nd Amendment) (GST) Bill, 2014, the Parliamentary reports and the speeches would indicate that Article 246A and Article 279A were introduced with the objective of enhancing cooperative federalism and harmony between the States and the Centre. In that context, Article 279A(6) of the Constitution is required to be analyzed. Sub-Article (6) of Article 279A brings into effect the concept of cooperative federalism. In terms with the said Sub-Article, the recommendations to be made by the GST Council has to be made through a harmonized deliberation between the federal units. 11. This Court further finds it pertinent to mention that on account of the outbreak of COVID-19 pandemic and the difficulties faced by assessee as well as the GST Authorities, the Taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020 was enacted on 29.09.2020. By the said Act of 2020, Section 168A was inserted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that on account of the force majeure, it was beyond the control of the Authorities to complete or comply within the time limit specified/prescribed/notified in the Act. 16. Sub-Section (2) of Section 168A is also very relevant inasmuch as it empowers the Government to issue a notification in terms with Sub-Section (1) of Section 168A and such power shall also include the power to give retrospective effect from a date not earlier than the date of commencement of the Act. 17. Section 44 of the Central Act stipulates the requirement of filing of the Annual Return for every financial year in FORM GSTR-9 on or before the 31st day of December following the end of such financial year, through the common portal, either directly or through a facilitation center notified by the Commission. For the financial year 2017-18 the annual return was therefore required to be filed on or before 31st of December, 2018. By a Notification No.8/2019-CT dated 14.11.2019, the Central Government by exercising the powers under Section 179 of the Central Act, extended the period for filing the annual return to 31st December, 2019. 18. Applying the above principle for the Financial Year 2018-19, the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Act for issuance of the order under Sub-Section (9) of Section 73 for the Financial Year 2017-18 was extended upto 30th of September, 2023. 21. The records further reveals that various tax administrations requested before the GST Council seeking recommendation for extending the period in respect to the financial year 2017-18, 2018-19 and 2019-20. The GST Council in its 49th Meeting recommended extension of the time limit under Sub-Section (10) of Section 73 of the Central Act for Financial Years 2017- 18, 2018-19 and 2019-20 for only three months. The relevant portion of the 49th Meeting of the GST Council being pertinent to the dispute involved is reproduced herein under: Agenda item 4(vii) : Extension of time limit under sub-section (10) of section 73 of CGST Act for FY 2017-18, FY 2018-19 and FY 2019-20. 5.7 Principal Commissioner (GSTPW) informed that there have been requests from tax administrations for further extension of time limit under Section 73 of CGST Act for issuance of Show Cause Notices (SCN) and Orders for financial year 2017-18, 2018-19 and 2019-20, considering that the scrutiny and audit were delayed because of Covid-19 pandemic. He informed that the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the Financial Year 2017-18 up to 31st of December, 2023; for the Financial Year 2018-19 up to 31st March, 2024 and for the Financial Year 2019-20 up to the 30th of June, 2024. This Notification No.9/2023-CT is impugned in some of the writ petitions. 23. The record further reveals and more particularly from the stand of the CGST in their first affidavit filed in WP(C) No.1229/2024 that though the period was extended vide the Notification No.9/2023-CT but as the time limit for issuance of notice in terms of Section 73(2) of the Central Act for the financial year 2018-19 was expiring on 31.12.2023 and there was no meeting of the GST Council scheduled to be held, the Central Government issued the Notification No.56/2023-CT thereby extending the time limit for passing of the order under Section 73(9) for the financial year 2018-19 up to 30th April, 2024 and for the financial year 2019-20 up to 31st August, 2024. 24. It is pertinent to mention herein that in spite of the fact that there was no recommendation from the GST Council but in the Notification No. 56/2023-CT, the Central Government had used the phrase on the recommendation of the Council . It is also apposite to take note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners further submitted that the Respondent Authorities on the basis of the Notification No.56/2023-CT had passed various impugned orders under Section 73(9) of the Central Act as well as the State Act and as such, the said orders are without jurisdiction having been passed beyond the period prescribed in Section 73(10). It has also been submitted to the effect that a perusal of Section 168A of the both the Central Act and the State Act shows that the recommendation of the GST Council is a condition precedent, there cannot be a subsequent ratification by the GST Council. The learned counsels for the petitioners further submitted that although in the circular dated 14.05.2024 as well as the initial affidavit filed in WP(C) No.1229/2024, there is a mention that the matter would be placed before the next GST Council Meeting, however, from a perusal of the Minutes of the Meeting which followed after the 49thMeeting of the GST Council i.e. the 50th, 51st, 52nd, 53rd as well as on 54th, there is no agenda seeking recommendations for extension. 27. The learned counsel for the petitioners further submitted that the affidavit so filed by the CGST on 19.08.2024 is completely misconceived inas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that in certain cases, the recommendation of the GST Council is not binding whereas in respect to secondary legislations, it is binding. It was therefore contended that when Section 168A of both the Central Act or the State Act stipulated that only on recommendation, the power can be exercised, then it is only following the mandate of the said stipulations, the power could have been exercised. 31. Per Contra, Mr. S. C. Keyal, the learned Standing counsel appearing on behalf of the CGST submitted that in view of the coming into effect of the Finance Act, 2024, no cause of action in respect to the instant writ petition survive inasmuch as the Petitioners herein would be entitled to the various reliefs in terms with the amendments so brought in to the Central Act. Mr. S. C. Keyal, the learned Standing counsel fairly submitted that in respect to the Notification No.56/2023-CT, there was no recommendations made by the GST Council for issuance of the said notification and to his knowledge there is also no ratification by the GST Council till date. In addition to that, as regards the force majeure, the learned counsel submitted that during this period, on account of the COVID-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given anxious consideration to the respective submission. 38. This Court has duly taken note of that the impugned Orders-in-Original which are challenged in the instant batch of writ petitions are orders passed in respect to the Financial Year 2018-19 and 2019-20. The impugned Order- in-Original insofar as Financial Year 2018-19 are concerned have been passed on or after 01.04.2024. Insofar as WP(C) No.4990/2024 which relates to Financial Year 2019-20, the impugned Order-in-Original was passed on 30.08.2024. Under such circumstances, the challenge so made to the Notification No.9/2023-CT as well as the pari materia notification issued by the State Government dated 06.09.2024 has no relevance for which this Court is not considering the challenge to the Notification No.09/2023-CT as well as the Notification dated 06.09.2024 issued by the State Government. The question which therefore arises is as to whether the Notification No.56/2023-CT dated 28.12.2023, is ultra vires the provisions of Section 168A of the Central Act? 39. In the preceding segments of the instant judgment, this Court had dealt with Section 168A of both the Central Act and the State Act as well as its amplitude. Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormity with Rule 5 of the Rules and, therefore, the said application could not have been entertained by the State Government. It was also argued that in the absence of any recommendation by GCDA and the Chief Town Planner, the State Government could not have granted exemptions from operation of the Rules for construction of an eight-storeyed building by the 5th respondent. Whereas, learned counsel for the 5th respondent contended that the meaning of the word recommendation does not necessarily mean a no-objection certificate by GCDA and the Chief Town Planner, but it contemplates only their viewpoint. He further argued that even if GCDA and the Chief Town Planner had objected to grant of the application, the State Government, in exercise of its overriding power can permit dispensation of the Rules for construction of a high-rise building. In order to appreciate the argument of the parties, it is necessary to quote the relevant portion of Rule 5, which runs thus : 5. Power of Government to exempt buildings. The Government may in consultation with the Chief Town Planner exempt any building from the operation of all or any of the provisions of these Rules, subject to conditions if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. Thus, the meaning of the word recommend , when read in the context of the Rules shows that it means giving of a favourable report opposed to an unfavourable one . We, therefore, find that recommendations by GCDA and the Chief Town Planner are sine qua non for granting exemption from operation of the Rules by the State Government. In the absence of such recommendations, the State Government was not legally justified in granting exemption from operation of the Rules for construction of a high-rise building. However, the position would be different where GCDA and the Chief Town Planner give an unfavourable report on irrelevant or extraneous ground and in that case, the Government can call for a fresh report for meeting the viewpoint of GCDA and the Chief Town Planner. Here, what we find is that there were neither recommendations by GCDA and the Chief Town Planner, nor the State Government obtained any fresh report to contradict the viewpoint of GCDA and the Chief Town Planner while granting exemption from operation of the Rules for constructing a high-rise building. We are, therefore, of the view that the impugned orders suffer from serious legal infirmity. From the above quoted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 246-A vests Parliament and the State Legislatures with a unique, simultaneous law-making power on GST. It is in this context that the role of the GST Council gains significance. The recommendations of the GST Council are not based on a unanimous decision but on a three-fourth majority of the members present and voting, where the Union's vote counts as one-third, while the States' votes have a weightage of two-thirds of the total votes cast. There are two significant attributions of the voting system in the GST Council. First, the GST Council has an unequal voting structure, where the States collectively have a two-third voting share and the Union has a one-third voting share; and second, since India has a multi-party system, it is possible that the party in power at the Centre may or may not be in power in various States. Therefore, the GST Council is not only an avenue for the exercise of cooperative federalism but also for political contestation across party lines. Thus, the discussions in the GST Council impact both federalism and democracy. The constitutional design of the Constitution Amendment Act, 2016 is sui generis since it introduces unique features of federalism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the GST Council are not binding, then the entire structure of GST would crumble does not hold water. Such a reading of the provisions of the Constitution diminishes the role of the GST Council as a constitutional body formed to arrive at decisions by collaboration and contestation of ideas. 46. Therefore, from the above analysis, it is apparent that the object behind the insertion of the Article 246A and Article 279A and overriding Article 254 is to promote fiscal federalism and cooperative federalism. Under such circumstances, the recommendations to be made by the GST Council if required as per the provisions of the Central Act or the State Act has to be construed to be a sine qua non for exercise of power by the Union or the State Government. In other words, wherever the provisions of the Central Act or the State Act stipulates that an act is required to be done on the recommendation of the GST Council, the act can be done only when there is a recommendation. As observed by the Supreme Court in V.M. Kurian (supra), the meaning of the word recommend would also in the opinion of this Court be applicable to the interpretation of Section 168A to mean giving of a favourable rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Appeal before the Supreme Court, the learned Attorney General amongst other contentions submitted that taking into account the constitutional scheme and that the Union and the States have agreed to go by the recommendations of the GST Council in every aspect of GST law wherever required, the recommendations so made by the GST Council were binding and must be respected in the spirit of collaborative federalism. (iii) The Supreme Court in the said judgment and more particularly at Paragraph No. 57 and its sub-paragraphs analyzed the five categories into which the phrase recommendation had been deployed in the Constitution i.e. (a) Recommendations by the President under Articles 3, 109, 111, 113, 117, 203, 207, 255 and 274 prior to laying before the Parliament for voting. (b) Recommendations followed by consultation; (c) Recommendations with accountability; (d) Non-Qualifying recommendations; (e) Recommendations which are obligatory in nature. (iv) The observations of the Supreme Court in paragraph Nos. 58 and 59 are relevant and the same are quoted herein below: 58. A survey of the above provisions indicates that the nature and meaning of the term recommendation differs context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 65 and 66 as follows : 65. The contention of the Union is that the recommendations of the GST Council are binding since Parliament and the State Legislatures have agreed to align themselves with the recommendations as is evident from the provisions of the IGST Act and the CGST Act. Certain provisions of the IGST Act, the CGST Act and the SGST Acts expressly provide that the rule- making power delegated to the Government shall be exercised on the recommendations of the GST Council. For instance, Section 5 of the IGST Act provides that the taxable event, taxable rate and taxable value shall be notified by the Government on the recommendations of the Council . Similarly, the power of the Central Government to exempt goods or services or both from levy of tax shall be exercised on the recommendations of the GST Council under Section 6 of the IGST Act. Section 22 provides that the Government may exercise its rule-making power on the recommendations of the GST Council. The CGST Act also provides for similar provisions in Sections 9, 11 and 164. 66. The provisions of the IGST Act and the CGST Act which provide that the Union Government is to act on the recommendations of the GST Council ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not binding, there is no requirement of recommendation by the GST Council to exercise the power. (B) The power to be exercised under Section 168A by the Government is a delegated power to issue a Notification which can be termed as a delegated legislation or a secondary legislation. The primary legislation is the Central Act or the State Act. In the judgment of the Mohit Minerals Pvt. Ltd. (supra), the Supreme Court at paragraph No.66 as quoted above had clearly observed that when the Government is exercising power to notify secondary legislations to give effect to the uniform taxation system, the recommendations are binding. Be that as it may, irrespective of the fact whether the recommendations are binding or not can it be said that without recommendations, the power under Section 168A could be exercised. The answer has to be in the negative. (C) It is also very important to note that the power conferred on the Government under Section 168A to extend the timelines is power conferred under both the Central Act and the State Act. This power is conferred on the basis of the exercise of the legislative powers of the Parliament and the State Legislature as the case may be. Under suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued any pari materia notification for the period on or after 01.04.2024 for the Financial Year 2018-19 and for the period on or after 01.07.2024 for the Financial Year 2019-20. 51. Under such circumstances, the impugned Orders-in-Original which have been passed under Section 73(9) both under the Central Act as well as State Act are beyond the time period prescribed under Section 73(10) of both the Central Act or the State Act for which the same are liable to be interfered with as being passed without jurisdiction. 52. The respective impugned Orders-in-Original which have been put to challenge in the instant batch of writ petitions are set aside and quashed. The details of the impugned Orders-in-Original which are set aside are provided in the Appendix to the instant judgment. 53. With above observations and directions, all the writ petitions stands allowed. However no costs. 54. Before parting with the records, the learned Standing counsels appearing on behalf of both the CGST and the SGST submitted that both the Union Government as well as the State Government has the power in terms of Section 168A(2) of both the Central Act and State Act to issue retrospective notifications a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of State Tax, Guwahati challenged in WP(C) No.4226/2024 is set aside and quashed. 10. The impugned Order-in-Original bearing No.ZD180424046955130 dated 30.04.2024 passed by the Assistant Commissioner of State Tax, Guwahati challenged in WP(C) No.4257/2024 is set aside and quashed. 11. The impugned Order-in-Original bearing No.ZD1804240476738 dated 30.04.2024 passed by the Assistant Commissioner of State Tax, Dibrugarh challenged in WP(C) No.4456/2024 is set aside and quashed. 12. The impugned Order-in-Original bearing No.ZD180824024091L dated 30.08.2024 passed by the Assistant Commissioner of State Tax, Dibrugarh challenged in WP(C) No.4990/2024 is set aside and quashed. 13. The impugned Order-in-Original bearing No.ZD1804240449850 dated 30.04.2024 passed by the Assistant Commissioner of State Tax, Guwahati challenged in WP(C) No.4495/2024 is set aside and quashed. 14. The impugned Order-in-Original bearing No.ZD180424021954C dated 23.04.2024 passed by the Deputy Commissioner of State Tax, Dhubri challenged in WP(C) No.4577/2024 is set aside and quashed. 15. The impugned Order-in-Original bearing No.ZD180424026300G dated 24.04.2024 passed by the Deputy Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
