ASHOK SINGH S/O UGAMSINGH RATHORE VERSUS STATE OF GUJARAT

Detention of conveyance alongwith the goods – the petitioner has already deposited the amount of tax and penalty – HELD THAT:- Having regard to the fact that in connection with the detention of the conveyance as well as the goods contained therein, the petitioner has already deposited the amount of tax and penalty, by way of interim relief, the second respondent is directed to forthwith release the conveyance in question together with the goods contained therein, subject to the final outcome of the petition.

Stand over to 20.11.2019.

No.- R/SPECIAL CIVIL APPLICATION NO. 17891 of 2019

Dated.- October 18, 2019

JUSTICE HARSHA DEVANI AND JUSTICE SANGEETA K. VISHEN

For The Petitioner (s) : MR HIREN J TRIVEDI and MR TAPAN N PATEL (8808)

For The Respondent (s) : NOTICE SERVED BY DS(5)

ORAL ORDER

(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)

1.The learned advocate for the petitioner has tendered a draft amendment. Amendment is allowed in terms of the draft. The same shall be carried out forthwith

2. Vide order dated 14.10.2019, this court had issued notice as well as notice as to interim relief returnable on 16.10.2019. Vide notice dated 5.10.2019, issued by the second respondent – State Tax Officer, the petitioner was called upon to remain present before the second respondent on 15.10.2019 at 11:00 hours at Songadh.

3. Mr. Hiren Trivedi, learned advocate for the petitioner submitted that on 15.10.2019, the petitioner had informed the second respondent about the order dated 14.10.2019 passed by this court whereby notice had been issued making it returnable on 16.10.2019 and had requested him to adjourn the matter; however, on the same day, that is, on 15.10.2019, the second respondent proceeded to pass an order of confiscation of goods and conveyance and demand of tax, fine and penalty under section 130 of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as the “CGST Act”) in Form GST-MOV-11. The learned advocate invited the attention of the court to the challan annexed at Annexure-G to the petition to point out that the petitioner has already deposited the amount of tax and penalty.

4. Mr. Trupesh Kathiriya, learned Assistant Government Pleader, states that he has not received any instructions in the matter as yet.

5. Having regard to the fact that in connection with the detention of the conveyance as well as the goods contained therein, the petitioner has already deposited the amount of tax and penalty, by way of interim relief, the second respondent is directed to forthwith release the conveyance in question bearing No.GJ-21-W-6997 together with the goods contained therein, subject to the final outcome of the petition.

6. The petitioner shall file an undertaking before this court to the effect that if he ultimately does not succeed in the petition, he shall pay the balance amount payable under the order of confiscation made under section 130 of the CGST Act, without prejudice to his right to challenge the said order of confiscation.

7. Stand over to 20.11.2019. Direct service, is permitted.

M/S JAI BABA AMARNATH INDUSTRIES VERSUS , STATE OF U.P. AND 3 OTHERS COUNSEL FOR

Territorial Jurisdiction – proposed location of various States and Area Benches of GSTAT has been finalised for 26 States and 5 Union Territories – HELD THAT:- The matter is engaging the attention of the Division Bench as also in view of the assurance given by Sri Shukla that the matter would be resolved by the appropriate authorities at the earliest, as prayed three weeks ‘time is granted to him to obtain instructions and file aproper affidavit, if necessary, to bring on record the further action taken for constitution of appropriate Benches of GSTAT for the State of Uttar Pradesh.

List on 13.11.2019.

No.- WRIT TAX No. – 942 of 2018

Dated.- October 16, 2019

Saumitra Dayal Singh, J.

Petitioner :- Rahul Agarwal

Counsel for Respondent :- C.S.C.,Anant Kumar Tiwari, Devendra Gupta, S.C.

ORDER

1. Heard learned counsel for the petitioner; Sri Krishnaji Shukla, Sri Anant Kumar Tiwari, Sri Devendra Gupta, learned counsel for the Union and ;learned Standing Counsel for the State-respondents.

2. Referring to the facts stated in the short counter affidavit that Union claims to have filed in Civil Misc. Writ Petition (Tax) No. 655 of 2018 of Sri S. Bhowmick, Under Secretary, Department of Revenue(Ministry of Finance), New Delhi, it has been stated that in the meeting of the GST Council dated21.06.2019, the proposed location of various States and Area Benches of GSTAT has been finalised for26 States and 5 Union Territories. Insofar as Uttar Pradesh is concerned, referring to copy of the agenda decision of that meeting being sub-clause (ii),it has been stated that the matter regarding constitution of benches in Uttar Pradesh was noted tobe considered separately.

3. Upon query made, Sri Krishnaji Shukla was not in a position to inform the Court as to the decision that came to be taken by the GST Council in that regard, in its subsequent meeting disclosed to have held on20.09.2019. In this regard, Sri Shukla submits, he had sought instructions but they are awaited.

4. Learned counsel for the petitioners would press that the plight of the litigants of the most populous State of the country, is extreme.

5. However, keeping in mind that the matter is engaging the attention of the Division Bench as also in view of the assurance given by Sri Shukla that the matter would be resolved by the appropriate authorities at the earliest, as prayed three weeks ‘time is granted to him to obtain instructions and file aproper affidavit, if necessary, to bring on record the further action taken for constitution of appropriate Benches of GSTAT for the State of Uttar Pradesh.

6. List on 13.11.2019, showing the name of Sri Krishnaji Shukla (also) as counsel for respondent.

PRAKASHSINH HATHISINH UDAVAT VERSUS STATE OF GUJARAT

Release of seized car as well as mobile phones – sub-section (2) of section 67 of the Gujarat GST Act, 2017 – wrongful availment of input tax credit – it is also alleged that the petitioner indulged in such activities attracting tax/input tax credit amounting to more than ₹ 10 -15 crores – HELD THAT:- Sub-section (2) of section 157 of the GGST Act gives immunity to an officer appointed or authorised under that Act for anything which is done or intended to be done in good faith under that Act or the rules made thereunder. Thus, an officer is protected provided he is authorised to do something under the GGST Act and provided such act has been done in good faith. Therefore, it was incumbent upon the respondent No. 4 to show whether he has been authorised by a person not below the rank of Joint Commissioner to carry out the search and that the action taken by him was in good faith failing which, he is not entitled to the immunity provided under section 157 of the GGST Act.

When an officer functioning under the GGST Act, acts in a highhanded and arbitrary manner in excess of the authority vested in him the same is required to be viewed very seriously. Justice demands that such citizen be compensated for the undue harassment faced by him on account of the unauthorised action of the concerned officer.

It is evident as to why the petitioner has taken such a stand. The said request of the petitioner seems to emanate from the fact that the petitioner who is covered by the Goods and Services Tax Act has to deal with the officer concerned day in and day out and is, therefore, afraid of taking any action against him out of fear of facing reprisal for his action as the entire department would be up in arms against him and he would have to face untold harassment in future. Therefore, at the request of the petitioner, the court refrains from passing any order of exemplary costs.

The impugned order of seizure dated 25. 10. 2018 passed by the respondent No. 4, is hereby quashed and set aside and the respondent NO. 4 is directed to forthwith release the vehicle as well as to mobile phones of the petitioner and hand them over to him – Petition allowed.

No.- R/SPECIAL CIVIL APPLICATION NO. 15365 of 2019

Dated.- October 16, 2019

JUSTICE HARSHA DEVANI AND JUSTICE SANGEETA K. VISHEN

For The Petitioner (s) : MR MAULIK VAKHARIYA(6628)

For The Respondent (s) : NOTICE SERVED BY DS(5) NOTICE SERVED(4)

ORAL JUDGMENT

(PER: HONOURABLE MS. JUSTICE HARSHA DEVANI)

1. Rule. Ms. Maithili Mehta, learned Assistant Government Pleader, waives service of notice of rule on behalf of the respondents.

2. Having regard to the controversy involved in the present case and the fact that the learned advocates for the respective parties were given to understand that the matter is to be finally heard, the matter was taken up for final hearing today.

3. By this petition under article 226 of the Constitution of India, the petitioner challenges the action of the respondents of seizing the petitioner’s car bearing number GJ-01-RX-0477 as well as his two mobile phones vide order of seizure dated 25. 10. 2018 made in exercise of powers under sub-section (2) of section 67 of the Gujarat Goods and Service Tax Act, 2017 (hereinafter referred to as the ‘GGST Act’) (Annexure-A to the petition) and seeks release of the above vehicle and the mobile phones so seized.

4. The facts as averred in the petition are that according to the respondents the petitioner had committed an offence punishable under sections 132(1)(b) and 132(1)(c) of the GGST Act on the allegation that the petitioner is the proprietor of M/s. Om Enterprise and had wrongly availed input tax credit amounting to ₹ 10-15 crores and passed on the same to various other buyers. It is further the case of the respondents that the petitioner indulged in such activities attracting tax/input tax credit amounting to more than ₹ 10 -15 crores.

5. It is the case of the petitioner that he was called by the third respondent-Assistant Commissioner of State Tax, on 25. 10. 2018 for the purpose of inquiry and investigation and on the same day he had appeared before the officer. However, during the course of the inquiry, the third respondent seized the car and the mobile phones of the petitioner without drawing any panchnama and the petitioner was directly served with a seizure memo issued under section 67(2) of the GGST Act.

6. It is the case of the petitioner that the aforesaid seizure of his car and mobile phones was made without following the provisions of section 67 of the GGST Act and rule 139 of the Central Goods and Service Tax Rules, 2017 (hereinafter referred to as ‘the rules’). It is further the case of the petitioner that though a period of more than six months has passed since the car and the mobile phones came to be seized, neither has the petitioner been served with a notice under sub-section (7) of section 67 of the GGST Act nor has he been served or any order affixed at his residential premises for extension of the period of seizure by a further period of six months. It is further the case of the petitioner that he has orally made several requests to the respondents that he is ready and willing to give a bond for provisional release of the articles seized, but till date, there is no response from the respondents. The petitioner made a representation to the third respondent on 5. 8. 2019; however, there was no response thereto. Being aggrieved, the petitioner has filed the present petition.

7. On 27. 9. 2019, this court passed the following order:-

1. This petition challenges the order of seizure dated 25. 10. 2018 passed by Shri B. B. Pandor, Assistant Commissioner of State Tax (1) (Enforcement), Division-1, Ahmedabad whereby the vehicle of the petitioner bearing No. GJ-01-RX-0477 and two phones have been seized. Such order of seizure has been made in exercise of power under sub-section (2) of section 67 of the Central Goods and Services Tax Act/ Gujarat Goods and Services Tax Act, 2017.

2. A perusal of the provisions of subsection (2) of section 67 of the Act reveals that the same envisages authorisation by an officer not below the rank of Joint Commissioner where he forms and opinion that the goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under the Act, are secreted in any place.

3. In the present case, a perusal of the impugned order shows that the details of the premises are Rajya Kar Bhavan, Ahmedabad, namely, the State Tax Office.

4. The learned Assistant Government Pleader upon a perusal of the record of the case is not in a position to point out any authorisation having been issued by a person not below the rank of Joint Commissioner for carrying out search in accordance with the provisions of subsection (2) of section 67 of the CGST/ GGST Act, 2017.

5. Under the circumstances, the impugned action of the said Officer appears to be totally without any authority of law. Moreover, since the details of the premises as stated in the impugned order is Rajya Kar Bhavan, Ahmedabad, it is manifest that no officer would permit search on such premises in accordance with the powers under sub-section (2) of section 67 of the CGST/ GGST Act, 2017.

6. In view of the above, Shri B. B. Pandor, Assistant Commissioner of State Tax (1) (Enforcement), Division-1, Ahmedabad shall be joined as respondent No. 4 in these proceedings.

7. Issue Notice to the newly joined respondent to explain as to under what circumstances and in exercise of which powers he has issued the impugned order dated 25. 10. 2018, returnable on 10th October, 2019.

8. Registry to forthwith forward a copy of this order to the concerned Officer.”

Accordingly, the concerned officer who passed the order of seizure has been joined as a party.

8. Mr. Maulik Vakhariya, learned advocate for the petitioner, invited the attention of the court to the impugned order of seizure to point out that the same has been passed under sub-section (2) of section 67 of the GGST Act. It was submitted that such order has been passed without any authorisation having been given to the concerned officer as contemplated under sub-section (2) of section 67 of the GGST Act. Reference was made to the impugned order to point out that in terms thereof, the premises at which the search came to be carried is Rajya Kar Bhavan, Ahmedabad. It was argued that the third respondent, being an Assistant Commissioner had not authority in law to made a seizure under section 67(2) of the GGST without him being authorised to carry out a search by a proper officer not below the rank of Joint Commissioner, and hence, the action of the third respondent of unlawfully seizing the car and the mobile phones of the petitioner is without any authority of law. It was submitted that therefore, the impugned order of seizure deserves to be set aside and the car and the mobile phones of the petitioner are required to be ordered to be released forthwith.

9. Opposing the petition, Ms. Maithili Mehta, learned Assistant Government Pleader, placed reliance upon the affidavit-in-reply filed by the respondent No. 4, wherein he has stated that the issue in the present petition pertains to assessment year 2017-18 and 2018-19 and that as per the calculation of the authorities, the petitioner has defrauded the Government to the tune of ₹ 13. 33 crores with respect to fake billing transactions and that as per the calculation carried out by the respondent authorities, the petitioner is involved in approximately 106 fake billing transactions and has wrongfully claimed input tax credit. It is inter alia stated in the affidavit that all the billing transactions shown by the petitioner in the returns filed by him are fake bills which were prepared by the petitioner with a view to receive input tax credit and after the month of July, the petitioner has not filed any of the mandatory returns which are required to be filed under the GGST Act, 2017 and hence he has committed a statutory breach by not filing GST returns.

9. 1 It is further averred in the affidavit-inreply that a warrant was issued under section 71 of the GGST Act on 9. 10. 2018 pursuant to which the business cum residential premises of the petitioner came to be accessed by the respondent No. 4, but the premises were closed since six months and the petitioner had shifted to some residential cum business premises at Sanand and that thereafter he had shifted to Gandhinagar.

That the authorities tried to trace out the petitioner’s new address, but even the bank officials were not aware of his changed residence or business premises. That on receiving information that the authorities had visited his old business premises, the petitioner on his own appeared before the authority on 25. 10. 2018, whereupon his statement came to be recorded, in which he categorically mentioned that he was involved in billing transactions at the behest of two other persons viz. Madhav Shah and Hitendra Shah and had admitted to pay the tax as calculated by the authorities and sought an adjournment. That the petitioner did not remain present nor did he pay the amount of tax within two days as mentioned in his statement, and hence, summons came to be issued to the petitioner on 1. 11. 2018, which was ignored by him. On 3. 11. 2018 a reminder was sent to the petitioner calling upon him to give information about Madhav Shah and Hitendra Shah as well as for payment of the amount of tax which he was liable to pay as the authorities had evidence to the effect that the petitioner was involved in billing transactions.

9. 2 It is further averred in the affidavit-inreply that the petitioner had filed an application for anticipatory bail before the Sessions Court, which came to be rejected and that the petitioner has preferred an application for anticipatory bail before the High Court which is pending. It is further averred that the petitioner has not co-operated with the authorities in providing information as to at whose behest he was working for fake bills. It is further stated that the authority had exercised powers under section 71 read with section 67(2) of the GGST Act by seizing the said vehicle and the mobile phones for the simple reason that the petitioner does not possess any other property either movable or immovable in nature and the petitioner is residing in rental premises situated at Gandhinagar.

9. 3 The learned Assistant Government Pleader submitted that it is in the backdrop of the aforesaid gross facts which have come on record, that the officer concerned has exercised powers of seizure and seized the vehicle in question. It was submitted that the action taken by the concerned officer was a bona fide action taken in the interest of revenue and the petitioner is not entitled to the grant of any of the reliefs prayed for in the petition.

10. In this case, the impugned order of seizure dated 25. 10. 2018 has been made in exercise of powers under sub-section (2) of section 67 of the GGST Act and hence, it would be germane to refer to section 67 of the GGST Act, which to the extent the same is relevant for the present purpose, reads as under:-

67. Power of inspection, search and seizure. -(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that–

(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or

(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.

(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under subsection (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:

Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:

Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act.

(3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.

(4) xxxx

(5) xxx

(6) xxxx

(7) Where any goods are seized under subsection

(2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized:

Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months.

(8) xxxxx

(9) xxx

(10)xxx

(11) xxx

(12) xxxx”

11. A perusal of the impugned order of seizure shows that the same has been issued in Form GST INS-02 prescribed under rule 139(2) of the CGST Rules. Rule 139 of the CGST Rules relates to inspection, search and seizure. Sub-rule (1) thereof provides for issuance of authorisation in Form GST INS-01 by the proper officer not below the rank of Joint Commissioner authorising any officer subordinate to him to conduct the inspection or search or, as the case may be, seizure of goods, documents or things liable to confiscation. Sub-rule (2) thereof provides that any goods, documents, books or things are liable to seizure under sub-section (2) of section 67, the proper officer or an authorised officer shall make an order of seizure in Form GST-INS-02. Subrule (5) thereof provides that the officer seizing the goods, documents, books or things shall prepare an inventory of such goods or documents or books or things containing inter alia, description, quantity or unit, make, mark or model where applicable, and get it signed by the person from whom such goods or documents or books or things are seized.

12. It is in the backdrop of the aforesaid statutory provisions that the validity of the action taken by the respondent No. 4 is required to be tested.

13. In this case, the respondent No. 4 – Assistant Commissioner has exercised powers under subsection (2) of section 67 of the GGST Act. It may be noted that the order of seizure merely refers to section 67(2) without reference to the relevant enactment. In the order it is stated that he is seizing the goods/books/documents and things referred to therein in exercise of powers conferred on him under sub-section (2) of section 67 as on scrutiny of books of account, registers, documents/paper and goods found during the inspection/search, he has reasons to believe that certain goods liable to confiscation and or documents and/or books and/or things useful or relevant to proceedings under that Act are secreted in the place mentioned above. Interestingly, in the seizure order, the place where the documents and/or books and/or things useful or relevant for the proceedings are secreted is stated to be “Rajya Kar Bhavan” namely the State Tax Office. Thus, according to the respondent No. 4, the petitioner has secreted goods/books/ documents and things at the State Tax Office and therefore, search is required to be carried out of those premises.

14. It may be pertinent to note that in the order dated 27. 09. 2019, whereby the respondent No. 4 was made a party respondent by name, it was specifically recorded that the learned Assistant Government Pleader, upon perusal of the record of the case is not in a position to point out any authorisation having been issued by a person not below the rank of Joint Commissioner for carrying out search in accordance with the provisions of sub-section (2) of section 67 of the CGST/GGST Act, 2017. Therefore, the respondent No. 4 was required to show as to whether he had passed the seizure order on the basis of any authorisation given to him by the proper officer as envisaged in sub-section (2) of section 67 of the GGST Act. However, in the affidavit-in-reply filed by the respondent No. 4 or even on the basis of the record, no material has been produced before this court to show that respondent No. 4 was authorised by the proper officer to search any premises or seize any goods, documents, books or things under sub-section (2) of section 67 of the GGST Act in the case of the petitioner. Thus, it is an admitted position that the respondent No. 4 – Assistant Commissioner was not conferred any power under sub-section (2) of section 67 of the GGST Act to carry out any search or inspection as stated in the order of seizure dated 25. 10. 2018. The impugned order has therefore, been passed without any authority of law. Consequently, the seizure of the car and the mobile phones belonging to the petitioner is illegal, arbitrary and is not backed by any authority of law.

15. As can be seen from the impugned order, in the table indicating the goods, books, documents and things seized, the second column relates to description/ books/documents/things seized. Below the said column, the respondent has merely referred to two phones indicating the make and a vehicle bearing number GJ-1-RX-0477. The vehicle is referred to only by its number without mentioning the make/mark or model. From the order of seizure, it is not possible to ascertain the make or model or the condition of the vehicle seized. A perusal of the impugned order further reveals that against the name of person to whom the premises where the search is carried out belong, nothing has been stated and it has been left blank and against the names of witnesses, the petitioner’s name and address has been shown. At the end of the order, the names of the witnesses are shown without complete addresses, making it impossible to identify the witnesses.

16. Thus, not only has the order of seizure been made without any authority of law, the order of seizure also suffers from various deficiencies as referred to hereinabove. It is, therefore, apparent that the entire exercise of seizing the car and the mobile phones of the petitioner is nothing but a farce under the guise of exercise of statutory powers without obtaining the necessary authorisation, and a blatant show of brute force by a high ranking officer in gross abuse of powers. The explanation given in the affidavit-in-reply as regards the illegalities alleged to have been committed by the petitioner, does not give the fourth respondent a licence to act in excess of the powers vested in him. Such action on the part of the respondent No. 4 cannot be countenanced even for a moment.

17. It may be noted that on 25. 9. 2019, this court had passed an order in the following terms:-

1. Mr. Maulik Vakhariya, learned advocate for the petitioner has invited the attention of the court to the order of seizure made under rule 139(2) of the Goods and Services Tax Rules, 2017, to point out that the petitioner’s car bearing No. GJ-01- RX-0477 has been seized at the Rajya Kar Bhavan, Ahmedabad. The attention of the court was invited to the provisions of sub-section (2) of section 67 of the CGST Act which finds reference in the order of seizure, to point out that the same relates to power of inspection, search and seizure. It was submitted that the petitioner’s car came to be seized when the petitioner had gone to the tax office for attending some proceeding there. It was submitted that the impugned order of seizure is totally without any authority of law, inasmuch as, sub-section (2) of section 67 of the CGST Act does not empower the respondents to act in such an arbitrary manner.

2. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 27th September, 2019.

Direct service is permitted today. 

Thereafter, on 27. 9. 2019 this court had passed an order as recorded hereinabove. Despite the aforesaid position, the respondent No. 4 has not thought it fit to release the vehicle of the petitioner without specific directions being issued by this court and has continued with the illegal action of the seizure of the petitioner’s car and the mobile phones.

18. Besides, in the affidavit-in-reply, the respondent No. 4 has the gumption to state that none of the fundamental rights of the petitioner have been violated because of any action or inaction on the part of the said respondent. Though a specific order was passed with reference to the relevant statutory provisions, the respondent No. 4 has not stated as to whether or not he was authorised to conduct any search and all that he stated is that the authorities had exercised powers of section 71 read with section 67(2) by seizing the said vehicle and the mobile phones for the simple reason that the petitioner did not possess any property viz. movable or immovable property in nature, and that in fact the petitioner was residing in rental premises situated at Gandhinagar. Thus, from the tenor of the affidavit-in-reply, it appears that the respondent No. 4 passed the order under section 67(2) of the GGST Act to protect the interest of the revenue.

19. In this regard, it may be noted that the powers to attach the property to protect the interest of the revenue are conferred by section 83 of the GGST Act. However, a condition precedent for exercise of powers under section 83 of the GGST Act is that any proceeding should be pending under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 thereof. In the present case, no proceeding under any of the above sections is stated to have been pending against the petitioner at the time when the order of seizure came to be made. The only proceeding which finds reference in the affidavit-in-reply is under section 71 of the GGST Act which relates to access to business premises. As is apparent of a plain reading of section 83 of the GGST Act, the same does not empower the Commissioner to take action thereunder during the pendency of proceedings under section 71 of the GGST Act.

Therefore, the impugned order of seizure made by the respondent No. 4 is not relatable to any provision of the GGST Act. Therefore, it is not even possible to say that the provision referred to in the impugned order is incorrect but that the respondent No. 4 was otherwise vested with such powers. Under the circumstances, the inescapable conclusion is that the respondent No. 4 has acted without any authority of law and in gross abuse of powers, which renders the impugned order of seizure, unsustainable.

20. However, having regard to the gross abuse of powers on the part of the respondent No. 4, merely setting aside the impugned order will not meet the ends of justice, inasmuch as, petitioner has been deprived of the use of his vehicle and his two mobile phones for a period of almost one year on account of such unauthorised action on the part of the fourth respondent and is therefore required to be adequately compensated in that regard. The officers acting under the GGST Act should well understand that they are required to act within the confines of the powers vested in them, that too, in a just and proper manner and should not exceed the powers vested in them or use the wide powers vested in them under the GGST Act as a tool for harassing the persons covered under that Act.

21. At this juncture it may be germane to refer to the provisions of section 157 of the GGST Act which reads thus:-

157. Protection of action taken under this Act.

(1) No suit, prosecution or other legal proceedings shall lie against the President, State President, Members, officers or other employees of the Appellate Tribunal or any other person authorised by the said Appellate Tribunal for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.

(2) No suit, prosecution or other legal proceedings shall lie against any officer appointed or authorised under this Act for anything which is done or intended to be done in good faith under this Act or the rules made thereunder. ”

22. Sub-section (2) of section 157 of the GGST Act gives immunity to an officer appointed or authorised under that Act for anything which is done or intended to be done in good faith under that Act or the rules made thereunder. Thus, an officer is protected provided he is authorised to do something under the GGST Act and provided such act has been done in good faith. Therefore, it was incumbent upon the respondent No. 4 to show whether he has been authorised by a person not below the rank of Joint Commissioner to carry out the search and that the action taken by him was in good faith failing which, he is not entitled to the immunity provided under section 157 of the GGST Act.

23. In the opinion of this court, when an officer functioning under the GGST Act, acts in a highhanded and arbitrary manner in excess of the authority vested in him the same is required to be viewed very seriously. Justice demands that such citizen be compensated for the undue harassment faced by him on account of the unauthorised action of the concerned officer.

This court is, therefore, inclined to award exemplary costs in favour of the petitioner.

24. However, it may be noted that the learned advocate for the petitioner, under instructions of the petitioner, has requested this court not to pass any orders which may affect the respondent No. 4 personally and has further stated that he is not interested in getting any compensation for the damage suffered by him on account of the arbitrary and unlawful action of the respondent No. 4. It is evident as to why the petitioner has taken such a stand. The said request of the petitioner seems to emanate from the fact that the petitioner who is covered by the Goods and Services Tax Act has to deal with the officer concerned day in and day out and is, therefore, afraid of taking any action against him out of fear of facing reprisal for his action as the entire department would be up in arms against him and he would have to face untold harassment in future. Therefore, at the request of the petitioner, the court refrains from passing any order of exemplary costs.

25. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned order of seizure dated 25. 10. 2018 passed by the respondent No. 4, is hereby quashed and set aside and the respondent NO. 4 is directed to forthwith release the vehicle as well as to mobile phones of the petitioner and hand them over to him.

26. As noted hereinabove, this court was inclined to award exemplary costs in the matter; however, at the request of the petitioner, the court has refrained from passing such order. However, the registry is directed to forthwith communicate this order to the Chief Secretary of the State to bring it to his notice the manner in which the provisions of the GGST Act are being implemented by the officers functioning thereunder. It is also expected that appropriate action will be taken in this regard.

27. Rule is made absolute accordingly, with costs. Direct service is permitted.

SARVESHWAR SHYAMBIHARI MITTAL VERSUS STATE OF GUJARAT

Detention of goods alongwith the vehicle – on 31.7.2019, the petitioner paid the total amount of tax, penalty and fine in lieu of confiscation amounting to ₹ 32,04,256/- by way of a challan – HELD THAT:- Issue notice, returnable on 22.10.2019.

No.- R/SPECIAL CIVIL APPLICATION NO. 18779 of 2019

Dated.- October 21, 2019

JUSTICE HARSHA DEVANI AND JUSTICE SANGEETA K. VISHEN, JJ.

For The Petitioner (s) : MR KUNTAL A JOSHI (6269)

For The Respondent (s) : ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP(99)

ORAL ORDER

(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)

Mr. Pratik Jasani, learned advocate for Mr. Kuntal A. Joshi, learned advocate for the petitioner submitted that in this case, the conveyance together with the goods in question initially came to be detained by the State Tax Officer (2), Mobile Squad, Dahod, Division – 5, Vadodara on 22.7.2019 and Form GST MOV-01 and Form GST MOV-02 came to be issued on the same date. It was pointed that subsequent thereto, Form GST MOV-04 came to be issued on 25.7.2019 and a notice for confiscation of goods or conveyance and levy of penalty under section 130 of the Central Goods and Service Tax Act, 2017 read with the relevant provisions of other statutes came to be issued on 25.7.2019 computing the tax, penalty and fine leviable on the goods and conveyance. It was submitted that on 31.7.2019, the petitioner paid the total amount of tax, penalty and fine in lieu of confiscation amounting to ₹ 32,04,256/- by way of a challan. It was submitted that thereafter when the vehicle was proceeding further, the respondent No.2 – State Tax Officer, Mobile Squad, Ahmedabad, has once again detained the conveyance with the goods in question.

In view of the above, issue notice, returnable on 22.10.2019.

Direct service is permitted, today.

M/S WAY GLOBAL INDIA LIMITED VERSUS STATE OF HARYANA AND OTHERS

Revocation of cancellation order – registration of the petitioner under the GST regime was cancelled – HELD THAT:- The present writ petition has become infructuous as the Competent Authority has since passed order dated 11.10.2019, whereby the application for revocation has been rejected – Appeal disposed of as infructuous.

No.- CWP No. 23773 of 2019(O&M)

Dated.- October 23, 2019

Justice Jaswant Singh And Justice Lalit Batra, JJ.

For The Petitioner : Mr. A.K.Babbar, Advocate

For The Respondent : Ms. Mamta Singla Talwar, DAG, Haryana

ORDER

Jaswant Singh, J (Oral)

The registration of the petitioner under the GST regime was cancelled vide order dated 14.12.2018. The petitioner filed an application on 14.4.2019 seeking revocation of the cancellation order under Section 30 of HGST Act. Since the same was not decided, a direction was sought to decide the same early in the present writ petition.

At the time of hearing, learned counsel for the petitioner submits that the present writ petition has become infructuous as the Competent Authority has since passed order dated 11.10.2019, whereby the application for revocation has been rejected. It is further submitted that the order is appealable under Section 107 of HGST Act.

Disposed of as infructuous.

M/S NATIONAL STEEL AGENCIES VERSUS ASST. STATE TAX OFFICER SQUAD NO. I, SGST DEPARTMENT, PALAKKAD, THE STATE TAX OFFICER, SQUAD NO. 1, SGST DEPARTMENT, PALAKKAD AND THE COMMISSIONER OF STATE TAX, STATE GOODS AND SERVICES TAXES, THIRUVANANTHAPURAM

Detention of goods – Section 129 of the GST Act – detention was on the ground that the validity period of the e-way bill that accompanied the transportation had already expired at the time of detention – HELD THAT:- As the detention was on the ground that the validity period of the e-way bill that accompanied the transportation had already expired at the time of detention. Under the said circumstances, the detention cannot be said to be unjustified.

It is directed that if the petitioner furnishes a bank guarantee for the tax and penalty amount quantified in Ext.P4 order, then the respondents shall release the consignment and the vehicle to the petitioner.

No.- WP(C). No. 30059 OF 2019(F)

Dated.- November 8, 2019

JUSTICE A. K. JAYASANKARAN NAMBIAR, J.

For The PETITIONER : ADVS. SMT. M. K. HAJARA AND SRI. C. RAMACHANDRAN

For The RESPONDENT : GOVERNMENT PLEADER DR.THUSHARA JAMES

JUDGMENT

The petitioner has approached this Court aggrieved by Ext.P4 detention notice issued to him under Section 129 of the GST Act. I note from the perusal of Ext.P4 detention notice that the detention was on the ground that the validity period of the e-way bill that accompanied the transportation had already expired at the time of detention. Under the said circumstances, I find that the detention cannot be said to be unjustified.

2. Taking note of the plea of the petitioner, however, I direct that if the petitioner furnishes a bank guarantee for the tax and penalty amount quantified in Ext.P4 order, then the respondents shall release the consignment and the vehicle to the petitioner. The respondents shall, thereafter, proceed to adjudicate the issue after notice to the petitioner and in accordance with the procedure prescribed under Section 130 of the GST Act. The petitioner shall produce a copy of the writ petition together with a copy of the judgment before the respondents for further action.

UNION OF INDIA VERSUS BHARTI AIRTEL LTD. & ORS.

Validity of Circular issued by the CBIC – Jurisdiction – Form GSTR­-3B is return or not – imposition on rectification of Form GSTR­-3B in respect of the period in which the error had occurred – Circular No. 26/26/2017­GST dated 29.12.2017 – jurisdiction of the Delhi High Court to entertain the writ petition – writ petition suffered from the vice of nonjoinder of the necessary parties including that the High Court could not have issued a writ of mandamus – HELD THAT:- The writ petitioner was not challenging the individual action of the States or the Union Territories, but a policy decision of the Central authority who had issued the impugned Circular, namely, the Commissioner (GST). If the writ petitioner succeeded in that challenge, the consequential relief would follow. Non­impleadment of respective States/Union Territories would not come in the way of the writ petitioner to pursue the cause brought before the High Court by way of subject writ petition. Even the argument regarding High Court having exceeded jurisdiction in issuing writ of mandamus, does not commend to us. If the conclusion reached by the High Court regarding the efficacy of impugned Circular was to be upheld, no fault can be found with the directions issued by it in paragraph 24 of the impugned judgment, reproduced above. Accordingly, the preliminary objections regarding the maintainability of the writ petition and the jurisdiction of the Delhi High Court deserve to be rejected.

Whether the impugned Circular dated 29.12.2017 issued by the Commissioner (GST) is without authority of law? – HELD THAT:- In strict sense, it is not the direction issued by the Commissioner (GST) as such, but it is notifying the decision(s) of the Board taken in exercise of its powers conferred under Section 168(1) of the 2017 Act. It is a different matter that a circular is issued under the signatures of Commissioner (GST), but in essence, it is notifying the decision(s) of the Board, which has had authority and power to issue directions. Accordingly, the argument that the impugned Circular dated 29.12.2017 has been issued without authority of law, needs to be rejected.

The entire edifice of the grievance of the writ petitioner (respondent No. 1) was founded on non­operability of Form GSTR2A during the relevant period, which plea having been rejected as untenable and flimsy, it must follow that the writ petitioner/respondent No. 1 with full knowledge and information derived from its books of accounts and records, had done self-assessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised. It is for that reason, the respondent has advisedly propounded a theory that in absence of (electronic­auto populated record) mechanism made available as per Sections 37 and 38, return filed in Form GSTR­-3B is not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules – Appellant not only amended the statutory rule but also provided for filing of return manually in Form GSTR­-3B electronically through the common portal with effect from July 2017. This is manifest from the circulars/notifications issued from time to time including the timeline for submitting the returns.

A priori, despite such an express mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return submitted in Form GSTR­-3B for the relevant period in which the error had occurred – the assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR­-3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.

Suffice it to conclude that the challenge to the impugned Circular No. 26/26/2017­GST dated 29.12.2017, is unsustainable for the reasons noted hitherto – the stipulations in the stated Circular including in paragraph 4 thereof, are consistent with the provisions of the 2017 Acts and the Rules framed thereunder – appeal allowed.

No.- CIVIL APPEAL NO. 6520 OF 2021 (ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)

Dated.- October 28, 2021

Citations:

  1. MRF Ltd. Versus Assistant Commissioner (Assessment) , Sales Tax and others – 2006 (9) TMI 278 – Supreme Court
  2. Bharti Airtel Limited Versus Union of India And Ors. – 2020 (5) TMI 169 – DELHI HIGH COURT
  3. Adfert Technologies Pvt. Ltd. Versus Union of India And Ors. – 2019 (11) TMI 282 – PUNJAB AND HARYANA HIGH COURT
  4. KRISH AUTOMOTORS PRIVATE LIMITED Versus UNION OF INDIA & ORS. – 2019 (9) TMI 817 – DELHI HIGH COURT
  5. LEASE PLAN INDIA PRIVATE LIMITED Versus GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI & ORS. – 2019 (9) TMI 1044 – DELHI HIGH COURT
  6. M/s SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL Versus THE NODAL OFFICER – 2019 (9) TMI 319 – GUJARAT HIGH COURT
  7. M/s. Panduranga Stone Crushers Versus The Union of India – 2019 (8) TMI 1351 – ANDHRA PRADESH HIGH COURT
  8. M/s. Blue Bird Pure Pvt. Ltd. Versus Union Of India & Ors. – 2019 (7) TMI 1102 – DELHI HIGH COURT
  9. AAP AND CO., CHARTERED ACCOUNTS THROU AUTHORISED PARTNER Versus UNION OF INDIA & 3 other (s) – 2019 (7) TMI 401 – GUJARAT HIGH COURT
  10. Saji S., Proprietor, Adithya and Ambadi Traders, Ranjith R., Proprietor, Ranjith Roadlines Versus The Commissioner, State GST, The Assistant State Tax Officer – 2018 (11) TMI 954 – KERALA HIGH COURT

HON’BLE MR. JUSTICE A.M. KHANWILKAR AND HON’BLE MR. JUSTICE DINESH MAHESHWARI

For Petitioner(s) Mr. N. Venkataraman, SG Mr. Mohd. Akhil, Adv. Mr. Zoheb Hussain, Adv. Mr. Kanu Agarwal, Adv.  Mr. Mukesh Kumar Maroria, AOR

For Respondent(s) Mr. Harish N. Salve, Sr. Adv. Mr. Tarun Gulati, Sr. Adv. Ms. Anuradha Dutt, Adv. Mr. Tushar Jarwal, Adv. Mr. Rahul Sateeja, Adv. Mr. Deepak Thackur, Adv. Mr. Anurag Soan, Adv. Mr. Sparsh Bhargava, Adv.  Ms. B. Vijayalakshmi Menon, AOR

J U D G M E N T

A.M. KHANWILKAR, J.

1. This appeal emanates from the judgment and order dated 05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345 of 2018, whereby the High Court allowed the writ petition filed by respondent No.1 herein and read down paragraph 4 of the Circular No. 26/26/2017­GST dated 29.12.2017 (“impugned Circular”) issued by the Commissioner (GST), Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, GST Policy Wing (Commissioner (GST), to the extent it restricted the rectification of Form GSTR­-3B in respect of the period in which the error had occurred. The High Court also allowed respondent No.1 to rectify Form GSTR­-3B for the period in which error had occurred, i.e., from July to September 2017. Further, the High Court directed the appellant that on filing of the rectified Form GSTR­-3B, they shall, within a period of two weeks, verify the claim set forth by respondent No.1 and give effect to the same once verified.

2. This lis is aftermath of enacting the Central Goods and Services Tax Act, 2017, which came into force with effect from 01.07.2017. Vide Notification No.10/2017 dated 01.07.2017, Rules 59, 60 and 61 of the Central Goods and Services Tax Rules, 2017 were brought into force along with Forms GSTR­-1, GSTR­-2, GSTR­-2A, GSTR-­3 and GSTR­-3B.

3. In the context of the matter in issue, it may be apposite to take note of the Notification No.17/2017­Central Tax dated 27.07.2017 issued for amending Rule 61 by altering the wording of Rule 61(5) and introducing Rule 61(6). Rule 61(5), as it stood earlier when it came into force, read thus:

“(5) Where the time limit for furnishing of details in FORM GSTR­-1 under section 37 and in FORM GSTR­-2 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR­-3B, in lieu of FORM GSTR-­3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner”

4. This provision was not only substituted, but sub­Rule (6) was also inserted in Rule 61 by the said amendment vide Notification No.17/2017­Central Tax. The amended provision reads thus:

“Government of India Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Notification No. 17/2017 – Central Tax

New Delhi, the 27th July, 2017

G.S.R. ( )E.:­ In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:(1) …..

…..

2. In the Central Goods and Services Tax Rules, 2017, …..

(v) in rule 61, with effect from 1st July, 2017, for sub­rule (5), the following sub­rules shall be substituted, namely:­

“(5) Where the time limit for furnishing of details in FORM GSTR­-1 under section 37 and in FORM GSTR­-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify that return shall be furnished in FORM GSTR­-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

(6) Where a return in FORM GSTR­-3B has been furnished, after the due date for furnishing of details in FORM GSTR­-2-

(a) Part A of the return in FORM GSTR-­3 shall be electronically generated on the basis of information furnished through FORM GSTR­-1, FORM GSTR­-2 and based on other liabilities of preceding tax periods and PART B of the said return shall be electronically generated on the basis of the return in FORM GSTR­-3B furnished in respect of the tax period;

(b) the registered person shall modify Part B of the return in FORM GSTR-­3 based on the discrepancies, if any, between the return in FORM GSTR­-3B and the return in FORM GSTR-­3 and discharge his tax and other liabilities, if any;

(c) where the amount of input tax credit in FORM GSTR-­3 exceeds the amount of input tax credit in terms of FORM GSTR­-3B, the additional amount shall be credited to the electronic credit ledger of the registered person.”;

…..”

5. This was followed by Notification No.18/2017­Central Tax dated 08.08.2017, whereby time to file Form GSTR­-1 for the months of July and August 2017 was extended to 05.09.2017 and 20.09.2017 respectively. On the same day, in exercise of the powers conferred by Rule 61(5) of the stated Rules, the Central Government issued Notification No.21/2017­Central Tax specifying that the return for the months of July and August 2017 shall be furnished in Form GSTR­-3B electronically through the common portal before the dates as specified in the corresponding entry in column (3) of the table given therein. To wit, the date for filing of Form GSTR­-3B for the month of July 2017 was notified as 20.08.2017 and that for the month of August 2017 was notified as 20.09.2017.

6. The Under Secretary to the Government of India issued another Notification bearing No.23/2017­Central Tax dated 17.08.2017 to extend the time for filing Form GSTR­-3B for the month of July 2017 for persons opting to file Form GST TRAN­1 on or before 20.08.2017 till 28.08.2017, subject to fulfilment of certain conditions like depositing of tax payable under the Act and payment of interest, if any. Respondent No.1 filed its return in Form GSTR­-3B for the month of July 2017 on 31.08.2017.

7. The Commissioner (GST) issued another Circular No.7/7/2017­GST dated 01.09.2017 relating to system­based reconciliation of information furnished in Forms GSTR­-1, GSTR­-2 and GSTR­-3B and the mechanism for correction of erroneous details furnished in Form GSTR­-3B.

8. On the representations received from the business community, the Under Secretary to the Government of India issued Notification No.35/2017­Central Tax dated 15.09.2017 in exercise of the powers conferred by Section 168 of the 2017 Act read with Rule 61(5) of the 2017 Rules and other enabling provisions, on the recommendations of the Goods and Services Tax Council, specifying the dates for filing of return for the concerned month as per the table given therein, in Form GSTR­-3B electronically, through the common portal on or before the last date specified in the corresponding entry in column (3) of the said table. The last date for the concerned English calendar month was specified as 20th day of the succeeding English calendar month for the period between August and December 2017. Respondent No.1 filed its return in Form GSTR­-3B on 20.09.2017 for the month of August 2017 and on 16.10.2017 for the month of September 2017.

9. The Under Secretary to the Government once again issued Notification No.56/2017­Central Tax dated 15.11.2017, specifying the timeline for filing of return in Form GSTR­-3B for the month of January, February and March 2018 as 20th February, 20th March and 20th April, 2018 respectively.

10. The Commissioner (GST) then issued the impugned Circular on the subject of filing of returns under GST, clarifying certain issues considered by the Central Board of Indirect Taxes and Customs to usher in uniformity in implementation across field formations. By this Circular, the earlier Circular issued on 01.09.2017 was kept in abeyance until the system­based reconciliation prescribed under that Circular was to be operationalized consequent to issue of relevant notification. Subparagraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing with amendment/corrections/rectification of errors, provided as follows;

“3. Amendment / corrections / rectification of errors:

3.1 Various representations have been received wherein registered persons have requested for clarification on the procedure for rectification of errors made while filing their FORM GSTR­-3B. In this regard, Circular No. 7/7/2017­GST dated 1st September 2017 was issued which clarified that errors committed while filing FORM GSTR – 3B may be rectified while filing FORM GSTR­-1 and FORM GSTR­-2 of the same month. Further, in the said circular, it was clarified that the system will automatically reconcile the data submitted in FORM GSTR­-3B with FORM GSTR­-1 and FORM GSTR­-2, and the variations if any will either be offset against output tax liability or added to the output tax liability of the subsequent months of the registered person.

3.2 Since, the GST Council has decided that the time period of filing of FORM GSTR­-2 and FORM GSTR ­3 for the month of July 2017 to March 2018 would be worked out by a Committee of officers, the system based reconciliation prescribed under Circular No. 7/7/2017­GST dated 1st September 2017 can only be operationalized after the relevant notification is issued. The said circular is therefore kept in abeyance till such time.”

(emphasis supplied)

11. It may be useful to advert to paragraph 4 of the same Circular, which reads thus:

“4. It is clarified that as return in FORM GSTR­-3B do not contain provisions for reporting of differential figures for past month(s), the said figures may be reported on net basis alongwith the values for current month itself in appropriate tables i.e. Table No. 3.1, 3.2, 4 and 5, as the case may be. It may be noted that while making adjustment in the output tax liability or input tax credit, there can be no negative entries in the FORM GSTR­-3B. The amount remaining for adjustment, if any, may be adjusted in the return(s) in FORM GSTR­-3B of subsequent month(s) and, in cases where such adjustment is not feasible, refund may be claimed. Where adjustments have been made in FORM GSTR­-3B of multiple months, corresponding adjustments in FORM GSTR­-1 should also preferably be made in the corresponding months.”

(emphasis supplied)

12. Respondent No. 1 was, however, keen on availing of the dispensation specified in the Circular dated 01.09.2017 for the relevant period (July to September 2017), having realized that there was surplus amount of ITC in its ledger account (electronic credit ledger). It is the case of respondent No.1 that it had been receiving various services from suppliers situated throughout India including Delhi. It being a supplier of services as well as recipient of services under the 2017 Act, was required to file the details of outward and inward supplies for every tax period and also of monthly return under the GST Act. In order to calculate the OTL and the claim of ITC, during the period from July till September 2017, there was no formal or official mechanism to check the authenticity of data so as to claim ITC for the relevant period against the transactions effected by it with its suppliers. Whereas, an inbuilt mechanism was guaranteed by the common electronic portal to be put in place by the Competent Authority under the 2017 Act. However, during the initial period, after introduction of the common electronic portal, it had several deficiencies and was not geared up to follow the specified regime of auto populated data ­ as predicated in Sections 37 and 38 of the 2017 Act.

13. Form GSTR­-1 for the relevant months of July to September 2017 was required to be filed before 10.01.2018 vide Notification No.72/2017­Central Tax dated 29.12.2017. Significantly, Form GSTR­-2A became operational only in September 2018. For that reason, as a stop gap arrangement, the registered persons were required to submit returns in Form GSTR­-3B. It is only after Form GSTR­-2A became operational in September 2018, it is stated that respondent No. 1 realized that it had sufficient amount in the ITC ledger account (electronic credit ledger) during the relevant period. Further, due to non­functionality of GSTR­-2A, respondent No. 1 had to discharge its OTL by depositing/paying in cash. Had Form GSTR­-2A been functional, there would have been no need for respondent No. 1 to pay the amount in cash, but could have utilized the ITC account (electronic credit ledger) for payment of corresponding OTL. For that reason, respondent No.1 would urge that if it was allowed to rectify Form GSTR­-3B, so as to avail ITC for the relevant period in terms of Circular dated 01.09.2017, the amount paid by it in cash towards the OTL would get credited to its electronic cash ledger account. However, the impugned Circular dated 29.12.2017 comes in the way of respondent No. 1 in doing so. Resultantly, respondent No.1 approached the High Court by way of writ petition under Article 226 of the Constitution of India, filed on 31.05.2018, praying for the following reliefs:

“PRAYER

“In light of the facts and circumstances mentioned above and in consideration of grounds taken above, the Petitioner most humbly prays that this Hon’ble Court may be pleased to:

(a) issue an appropriate writ, order or direction in nature of declaration that Rule 61(5), FORM GSTR­-3B and Circular No.26/2017 dated 29.12.2017 are ultra vires the provisions of the CGST Act to the extent they do not provide for the modification of information in the return of the tax period to which such information relates and are arbitrary, in violation of Articles 14, 19(1)(g), 265 and 300A of Constitution of India.

(b) issue an appropriate writ, order or directions declaring the Notifications No.23/2017­Central Tax dated 17.08.2017, 35/2017­Central Tax dated 15.09.2017 and 56/2017­Central Tax dated 15.11.2017, the same as ultra vires the provisions of Section 39(7) of the CGST Act to the extent it provides for payment of tax finally under the CGST Act by the date mentioned for filing FORM GSTR­-3B;

(c) issue an appropriate writ, order or direction in nature of certiorari or any other writ, order or direction of like nature, to call for, examine the records in relation to Circular No.26/2017 dated 29.12.2017 and quash the same to the extent it does not provide for the modification of the information in the return of the tax period to which such information relates as being arbitrary, in violation of Articles 14, 19(1)(g), 265 and 300A of Constitution of India.

(d) issue an appropriate writ, order or direction declaring the tax liability of the Petitioner filed under FORM GSTR­-3B is provisional and the output tax liability of the Petitioner will only crystalize after the filing of FORM GSTR­-1, 2 and 3.

(e) issue an appropriate writ, order or directions in the nature of mandamus or any other writ, directing the Respondents to operationalize/start the facility of FORM GSTR­-2 and FORM GSTR-­3 for period commencing from 01.07.2017;

(f) issue an appropriate writ, order or directions in the nature of mandamus or any other writ, directing the Respondents to provide the Petitioner the facility for amendment and modification of FORM GSTR­-3B and grant such consequential relief as may be necessary;

(g) Pass any orders as this Hon’ble Court may deem fit in the given facts and circumstances of the present case;”

14. During the pendency of the writ petition, Forms GSTR­-2, GSTR­-2A and GSTR-­3 came to be operationalized w.e.f. September 2018. The Central Government then issued Notification No.49/2019­Central Tax dated 09.10.2019, thereby omitting Rule 61(6) w.e.f. 01.07.2017 and substituting Rule 61(5) from the same date to read as follows:

“Government of India

Ministry of Finance

(Department of Revenue)

Central Board of Indirect Taxes and Customs

Notification No. 49/2019 – Central Tax

New Delhi, the 9th October, 2019

G.S.R……(E). ­ In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:

(1) …..

(4) In the said rules, in rule 61,­

(a) for sub­rule (5), the following sub­rule shall be substituted, with effect from the 1st July, 2017 namely:­

“(5) Where the time limit for furnishing of details in FORM GSTR­-1 under section 37 or in FORM GSTR­-2 under section 38 has been extended, the return specified in sub­section (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR­-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

Provided that where a return in FORM GSTR­-3B is required to be furnished by a person referred to in sub­rule (1) then such person shall not be required to furnish the return in FORM GSTR-­3;

…..”

(emphasis supplied)

We have adverted to this Notification whilst noting that validity thereof has not been challenged, though it has come into effect from 01.07.2017 and governs the period between July and September 2017, which is subject matter of this proceedings.

15. Notably, the High Court did not set aside the impugned Circular dated 29.12.2017, but preferred to read down only paragraph 4 thereof to the extent it restricted the rectification of Form GSTR­-3B in respect of period in which the error had occurred. For, the High Court was of the view that the stated restriction was contrary to the provisions of the 2017 Act and the Rules framed thereunder.

16. The High Court in its judgment took note of the repeated technical glitches in the electronic common portal introduced by the Department, during the transition phase from the erstwhile regime to the GST regime. The High Court then noted that respondent No.1 had submitted its monthly Form GSTR­-3B based on estimates, for the relevant period of July to September 2017. Further, the exact ITC in the electronic credit ledger for the relevant period could be known to respondent No. 1 a month later in October 2018, when GSTR­-2A became operational. Only thereafter, respondent No. 1 realized that there had been an excess payment of ₹ 923 crores in cash for discharging OTL. In other words, despite the fact that a bona fide error had occurred for reasons beyond the control of respondent No. 1, yet respondent No. 1 was unable to correct the mistake in Form GSTR­-3B for the relevant period. The High Court held that CGST contemplated a self­policing system. Resultantly, the statutory provisions had provided for generation of auto­populated data of the stakeholders. That was a right and not a mere facility made available to registered persons. Thus, every registered person had a right to correct the returns in the very month to which they relate and not visited with any adverse consequences for uploading incorrect data. The High Court noted the admission of the Department that the operation of Forms GSTR­-2 and GSTR-­3 could not be effected due to technical issues at their end necessitating postponement for indefinite period. In other words, the Department itself was not fully geared up to handle such an elaborate electronic procedure. The High Court further noted as to how due to nonfunctioning of Forms GSTR­-2 and GSTR-­3, Rule 61(5) and 61(6) was required to be inserted in the 2017 Rules and provide for monthly return in Form GSTR­-3B, which was a summary return. The High Court also accepted the contention of respondent No. 1 that it had to discharge the OTL for the relevant period in cash, even though it had ITC available to its credit in electronic credit ledger, due to the fault of the Department in not operationalizing the statutorily prescribed Forms GSTR­-2, GSTR­-2A and GSTR-­3. That had resulted in excess payment of cash by respondent No.1. The High Court also took note of the refund provisions to observe that even if there was a possibility to adjust the accumulated ITC in future, it could not be a ground to deprive respondent No.1 of its option to fully utilize the ITC which it was statutorily entitled to. The High Court held that there was no reason to restrict the mechanism of rectification to the returns of subsequent months. It also held that paragraph 4 of the impugned Circular dated 29.12.2017 was not in consonance with the provisions of the 2017 Act.

17. Accordingly, the High Court allowed the writ petition and permitted respondent No.1 to rectify Form GSTR­-3B for the period to which the ‘error relates’ i.e., the months of July to September 2017. The operative directions issued by the High Court read thus:

“24. Thus, in light of the above discussion, the rectification of the return for that very month to which it relates is imperative and, accordingly, we read down para 4 of the impugned Circular No. 26/26/2017-­GST dated 29.12.2017 to the extent that it restricts the rectification of Form GSTR­-3B in respect of the period in which the error has occurred. Accordingly, we allow the present petition and permit the Petitioner to rectify Form GSTR­-3B for the period to which the error relates, i.e. the relevant period from July, 2017 to September, 2017. We also direct the Respondents that on filing of the rectified Form GSTR­-3B, they shall, within a period of two weeks, verify the claim made therein and give effect to the same once verified. In view of the fact that the final relief sought by the Petitioner has been granted and the petition is allowed, no separate order is required to be passed in the application seeking interim relief. Accordingly, the said application is disposed of as such.”

18. The appellant has assailed the view so taken by the High

Court. At the outset, it was urged that the High Court had no territorial jurisdiction to entertain the writ petition filed by respondent No.1. This objection is founded on the argument that the source of power to levy and collect GST under the 2017 Act vests both in the State and the Centre. The Delhi High Court could not have decided the issues concerning other State(s) and that too without making them as party respondent. The writ petitioner has chosen to only implead the Council which is a body created only to decide about the policy and is not a tax collector as such. Thus, besides the High Court had no territorial jurisdiction, the writ petition suffered from the vice of non­joinder of necessary parties.

19. As regards the merits, the appellant has invited our attention to the constitutional background and the erstwhile regimes of the central excise law, service tax law etc., and in contrast, the dispensation provided in the GST regime and the obligation of every outward supplier to pay OTL. It is urged that the GST is a beginning of a new era of cooperative federalism and the purport of Article 246A read with Article 279A of the Constitution fortify that position. It is a regime to bring about paradigm shift in the erstwhile taxes such as excise duty, service tax, entry tax, VAT and other additional and minor levies based on multiple taxable events, which have been subsumed into one taxable event called “supply of goods and services”. The new dispensation enables both the Union of India and the respective States to become joint federal partner in taxing goods and services simultaneously and have equal rates on the occurrence of the taxable event. Notably, the 2017 Act is not ascribable to any Entry in List I, List II or for that matter, List III. It is a sui generis regime in the Constitution by virtue of Article 246A read with Article 279A and the field of taxation thereunder is goods and services and the power to tax is simultaneous and coextensive.

20. Shri N. Venkataraman, learned Additional Solicitor General of India, took us through the provisions of the 2017 Act regarding payment of duties/taxes and availing of ITC including the eligibility and utilization of ITC. As regards the eligibility and utilization of ITC, there is a statutory duty fastened on every registered person governed under various regimes and presently under the GST law, to pay OTL and a corresponding right to avail and utilize ITC, subject to eligibility and conditions specified therefor. The right to claim ITC, being a statutory right, is circumscribed by conditions and restrictions, subject to which a registered person is entitled to take credit. The provisions regarding entitlement of ITC enable a registered person to utilize the same for discharging the OTL. It is imperative upon a registered person to maintain records regarding transactions between suppliers and the recipients based on their agreements, invoices and books of accounts, either manually or electronically. The records so maintained by the registered person would itself reveal about the eligibility to credit; and its availment is within the exclusive domain of the supplier and the recipient concerned. The registered person under the law is obliged to do a self­assessment of its transactions and determine the OTL and exercise the option to avail of and utilize the ITC to the extent required or to pay the OTL by cash. The Authorities have no role to play whatsoever in that regard. It is an option to be exercised by the registered person and not by the Authorities. This principle has remained the same both before the GST and also post GST regime. Indeed, the registered person has been provided with a common electronic portal or tax electronic portal, which is only an enabler and a facilitator in bringing on board all the registered persons which include the supplier, recipient, registered person and other recipients. The efficacy of common electronic portal or so to say malfunctioning thereof, does not extricate the registered person from the primary obligation of self­assessment of OTL as predicated in Section 16 of the 2017 Act. For doing so, the registered person is obliged to maintain accounts and records as envisaged under Chapter VII of the 2017 Rules. That ought to be the basis for self­assessment of OTL in the first place. On the basis of the facts and figures emanating from such records, the registered person can collate the relevant information regarding entitlement to avail ITC collected from supplier of goods or services or for both which are used or intended to be used in the course of furtherance of his business. Suffice it to observe that the registered person is expected to exercise the option of utilizing ITC or to pay by cash for discharging his OTL at the time of filing of return on the information gathered from the primary record in his possession.

21. The eligibility and availment of ITC is indeed subject to conditions and restrictions in the manner specified in Section 49 of the 2017 Act. If the registered person intends to avail ITC, he can do so by paying the OTL from his electronic credit ledger referred to in Sections 2(46) and 49(2) of the 2017 Act. He can avail of ITC on the conditions specified in Section 16(2) read with Sections 41 and 49(2) of the 2017 Act. As per Section 59 of the 2017 Act, every registered person is required to self­assess the taxes payable under the 2017 Act and furnish a return for each tax period as specified under Section 39 of the 2017 Act.

22. It is urged that the scheme of the 2017 Act makes it amply clear that the obligation in the matter of deciding about the eligibility and mode of payment of OTL including self­assessment, is to be exercised by the registered person himself and the Authorities have no role to play at that stage. The registered person cannot find fault with the deficiencies in the common electronic portal so as to extricate from this obligation. Similar obligation was required to be discharged by him even before the GST regime came into being vide the 2017 Act with effect from 01.07.2017. The functions or features provided in the common electronic portal of auto matching and auto populating of the record of the supplier and the recipient and vice versa are only a facility made available to the registered person. The features provided in the context of Sections 42 and 43 of the 2017 Act relating to ITC and OTL, are dynamic and seamless processes of matching of invoices of the supplier and the recipient. The invoice matching mechanism contemplated under Sections 42 and 43, was expected to be accomplished by the introduction of a set of forms, namely, GSTR­-1, GSTR­-1A, GSTR­-2, GSTR­-2A and GSTR-3. As per the mechanism predicated in the 2017 Act, the entire exchange processes were intended to happen between 11th and 17th of every following month and once the reconciliation gets over, every registered person had to file a monthly return in Form GSTR-­3 by 20th of the following month and discharge his OTL. As aforesaid, to overcome the initial problems faced after introduction of the common electronic portal and the non­operability of the concerned forms, it was decided to make a stop gap arrangement enabling the registered person to file his return electronically in Form GSTR­-3B, which contains necessary information relevant for completing the self­assessment process and payment of OTL, if any. Though a stop gap arrangement, it was always treated as return within the meaning of Section 39 of the 2017 Act. Any rectification regarding omission or incorrect particulars referred to therein, could be furnished in the month or quarter during which such omission or incorrect particulars came to be noticed. Taking any other view would result in ushering in inconsistency and uncertainty not only to the concerned registered person, but also to his recipient and supplier and other records not directly connected with the registered person. Hence, allowing correction/rectification of Form GSTR­-3B of the concerned period is not permissible in the new dispensation; and for which reason, an express provision had been made in Section 39(9)1 that rectification regarding omission or incorrect particulars in the return so filed can be effected for the month or quarter during which such omission or incorrect particulars are noticed and not in the concerned return. The corrections permitted in Forms GSTR­-1 and GSTR­-2 are of different nature, whereas the return filed in Form GSTR­-3B for the relevant period ought to remain as it is.

23. It is further urged that Sections 37 and 38 of the 2017 Act do not provide for right relating to eligibility of ITC. The obligation to do self­assessment of ITC and of OTL and to pay the self­assessed OTL by using the ITC or by cash payment, is a matter of exercising option for electing the mode of discharge of OTL. Further, reconciliation predicated under Sections 37 and 38 between the outward supplier, registered person and the subsequent recipient, does not impact the rights and obligations of the registered person regarding self­assessment of OTL and the duty to pay the self-assessed OTL in the manner he wants to discharge by using self-assessed ITC or cash payment.

24. It is urged that the option so exercised by the registered person is his own volition and the Authorities have no concern or any role to play at that stage. The High Court has completely glossed over this crucial aspect and proceeded to answer the matter in issue being swayed by the fact that common electronic portal had faced rough weather during the initial phase and that the statutory forms were not operationalized. The High Court was impressed by the argument of the writ petitioner that due to nonoperability of the stated forms, the writ petitioner was denied of access to the relevant information, in particular about the ITC amount in its electronic credit ledger. This plea could not have been taken by the writ petitioner considering the obligation of selfassessment of ITC and of OTL and duty to pay self­assessed OTL. The eligibility of ITC and the right to exercise option to pay the OTL through the mode of his choice would come later. For doing the self­assessment, the registered person is fully equipped with accounts and records maintained by him as per the statutory requirement, which are in his complete control and knowledge. In other words, the High Court committed manifest error in opining that the stipulation specified in the impugned Circular, is contrary to the provisions of the 2017 Act; whereas, express provisions of the 2017 Act provide to the contrary. Further, the High Court erroneously assumed that the writ petitioner had submitted the monthly Form GSTR­-3B for the period of July to September 2017, based on its estimate. The writ petitioner cannot be permitted to take such a plea despite the statutory requirement of maintaining accounts and records as provided by the 2017 Act and the Rules framed thereunder. Furthermore, effecting correction/rectification in the returns for the month or quarter during which such omission or incorrect particulars have been noticed, does not in any way result in denying the right to avail ITC. The fact that respondent No.1 would not be eligible to get refund of cash also, cannot be the basis to permit the registered person to swap the entry in the electronic cash ledger with the entry in the electronic credit ledger or vice versa. No such mechanism has been provided in the 2017 Act or the Rules framed thereunder. If permitted, even as one of the cases because of non­operability of the forms at the relevant time, may result in chaotic situation and collapse of the tax administration of the Union, States and the Union Territories.

25. Per contra, learned counsel for respondent No. 1 has supported the reasons as had weighed with the High Court in upholding the challenge and reading down paragraph 4 of the impugned Circular dated 29.12.2017 to the extent it restricts the rectification of Form GSTR­-3B in respect of the period in which the error had occurred. It is emphasized that Form GSTR­-3B is only a stop gap arrangement to overcome the technical glitches in the common electronic portal and non­operability of the concerned statutory forms enabling auto­populating of relevant entries and records. The fact that circumstances prevalent at the initial stages of introduction of common electronic platform has been acknowledged by the authorities and introduction of Form GSTR-3B is a testimony of that admission. Having done so, it was not open to the authorities to deny the taxpayers their dues, in particular, right to revise their returns and avail of ITC. The provision made in the impugned Circular dated 29.12.2017, not permitting rectification of the return is conceptually flawed and not consistent with the legislative intent and the provisions of the 2017 Act and the Rules framed thereunder. It denies the taxpayer his statutory right to utilize credits, due to technical problems in not putting the electronic platform in place. The respondent realized that huge amounts of excess ITC is available in its books only after Form GSTR­-2A was made operational in September, 2018. By not permitting the respondent to avail of ITC shown in the electronic credit ledger had resulted in collection of double tax from the respondent and an unfair advantage to the Government. Permitting the registered person to avail of the excess ITC in its electronic credit ledger, cannot be considered to be unfair advantage taken by the taxpayer.

26. The 2017 Act provided that in a Business to Business (B 2 B) transaction, a supplier (of goods/services) and a recipient (of goods/services) would interact with each other through a common electronic portal which as per the statutory framework was required to provision for payment of tax and furnishing of returns including availing/taking and utilization of credit. Sections 37, 38 read with Section 42 of the 2017 Act and Rules 59 and 60 of the 2017 Rules are indicative of the features that were required to be provided in the common portal. It is supposed to provide for auto-populating of the records of supplier and the recipient including the facility of interaction of GSTN through Forms GSTR­-1, 1A, 2, 2A and 3 and generation and filing of periodical returns. It contemplated an automatic matching, reversal and reclaim of ITC. The mechanism for rectification has been envisaged in Section 39(9) of the 2017 Act, which is subject to the steps to be taken under Sections 37 and 38 regarding matching and verification. The return to be filed in Form GSTR­-3B had no such features and was only a stop­gap arrangement, as the mechanism provided in Sections 37 and 38 was not put in place. The provision regarding rectification under Section 39(9), therefore, had no application to the stop­gap arrangement of filing return in Form GSTR­-3B, much less for the relevant period (July to September 2017). Hence, reliance placed on Section 39(9) of the 2017 Act to justify the stipulations specified in the impugned Circular dated 29.12.2017, cannot be countenanced.

27. It is urged that Form GSTR­-3B is a summary return and does not contain the invoice­wise details. The recipient who had no access to the vendor’s returns had no facility to verify the correctness of the ITC taken. Form GSTR­-3B is a consolidated return wherein the assessee manually files its total credit, OTL etc. The appellant cannot take advantage of its own failure of not being able to operationalize Forms GSTR­-2 and GSTR-­3 right at the inception when the provisions of the Act came into force. It is unfair and inequitable that failure of the department should benefit the department by forcing the registered person to discharge OTL. On the other hand, the assessees were given to understand right from 2015 that the system of return filing will be automated under GST. The entire industry and trade accordingly contemplated system changes based on these declarations i.e., return filing and taking/utilizing credit will be on the basis of auto­populated returns. Notably, three days before the implementation of GST, even though Sections 37, 38, 39, 42 and 43 were notified and were brought into force, the appellant issued Notification No. 10/2017 ­ Central Tax dated 28.06.2017 stating that the automated system will not be implemented and a summary manual return under Section 61(5) in Form GSTR­-3B, which is “in lieu of” Form GSTR-­3 has to be filed. The parameters specified in Form GSTR-­3 were substituted in Form GSTR­-3B. This arrangement was soon altered by issuing Notification No. 17/2017­Central Tax dated 27.07.2017, thereby amending Rule 61(5) retrospectively with effect from 01.07.2017, omitting the words “in lieu of” and expressly mentioning that Form GSTR­-3B was introduced only till the period Sections 37 and 38 were not in operation. Further, Form GSTR­-3B was only a stop­gap arrangement and while filing of Form GSTR­-2 is operationalized, Form GSTR-­3 of the preceding tax periods will be automatically generated and filled after acceptance/rejection contemplated under Sections 37 and 38 of the 2017 Act. In October 2019, by amending Rule 61(5) retrospectively making the return filed in Form GSTR­-3B final return, the automated system contemplated under Sections 37 to 39 was formally done away with in the teeth of statutory mandate.

28. According to respondent No. 1, it is only after operationalization of GSTR­-2A in September, 2018 that complete data for July to September 2017 became available to it and on the basis of which it wanted to revise the return filed for that period. It was possible to do so in terms of Circular No. 7/7/2017 dated 01.09.2017, which predicated that the details furnished in Form GSTR­-3B will be corrected based on Forms GSTR­-1 and GSTR­-2 and will be auto­populated and will reflect in Form GSTR-­3 in that particular month. However, that was done away with by introducing impugned Circular No. 26/26/2017­GST dated 29.12.2017. The arrangement specified in the impugned Circular was against the spirit of the Act and the Rules framed thereunder. Hence, the High Court justly recorded that finding. It is urged that rectification/adjustment mechanism for the month when the errors are noticed is contrary to the scheme of the 2017 Act and would defeat the statutory right of the assessee by putting a fetter to not avail the ITC, though available in his account of electronic credit ledger. The High Court rightly read down paragraph 4 of the impugned Circular dated 29.12.2017 and also issued direction to allow the respondent to rectify Form GSTR­-3B for the period to which error relates i.e., July to September 2017, subject to verification by the authorities concerned. This was obviously an equitable arrangement and not opposed to any provision of the Act or the Rules. This direction would enable the respondent to avail of the ITC from the surplus shown in his account of electronic credit ledger and the excess amount paid in cash would correspondingly be reinstated in electronic cash ledger of the respondent, which is to the tune of ₹ 923 crores. As a matter of fact, the impugned Circular dated 29.12.2017 is wholly without jurisdiction as it arbitrarily alters the statutory framework. It is also inconsistent with the return filing system under previous tax regime, such as Service Tax Rules, Central Excise Tax Rules, Delhi Value Added Tax Act, Income Tax Act etc. In all these legislations, it would have been open to the assessee to rectify the original selfassessed return at a later point of time. It is urged that the High Court was competent to issue writ of mandamus as it has been done in the present case.

29. We have heard Mr. N. Venkataraman, learned Additional Solicitor General of India for the appellant and Mr. Harish N. Salve and Mr. Tarun Gulati, learned senior counsel appearing for respondent No. 1.

30. At the outset, the preliminary issue raised by the appellant regarding jurisdiction of the Delhi High Court to entertain the writ petition or that the writ petition suffered from the vice of nonjoinder of the necessary parties including that the High Court could not have issued a writ of mandamus, need not detain us. As regards the jurisdiction of the Delhi High Court, the registered office of respondent No. 1 is in Delhi. The appellant (respondent in the writ petition) also has its office in Delhi. The relief claimed in the writ petition amongst others, was to challenge provisions of the central Act and the circulars issued by the competent authority having its office in Delhi. Hence, the jurisdiction of the Delhi High Court cannot be a matter of any doubt. Similarly, the argument of the appellant that State Governments/Union Territories are necessary parties, does not take the matter any further. As aforesaid, the writ petitioner was not challenging the individual action of the States or the Union Territories, but a policy decision of the Central authority who had issued the impugned Circular, namely, the Commissioner (GST). If the writ petitioner succeeded in that challenge, the consequential relief would follow. In our opinion, non­impleadment of respective States/Union Territories would not come in the way of the writ petitioner to pursue the cause brought before the High Court by way of subject writ petition. Even the argument regarding High Court having exceeded jurisdiction in issuing writ of mandamus, does not commend to us. If the conclusion reached by the High Court regarding the efficacy of impugned Circular was to be upheld, no fault can be found with the directions issued by it in paragraph 24 of the impugned judgment, reproduced above. Accordingly, the preliminary objections regarding the maintainability of the writ petition and the jurisdiction of the Delhi High Court deserve to be rejected.

31. Another issue that needs to be decided at the threshold is whether the impugned Circular dated 29.12.2017 issued by the Commissioner (GST) is without authority of law. Indisputably, the Circular has been issued to notify the clarification given by the Board in exercise of its powers conferred under Section 168(1) of the 2017 Act in order to consolidate the information in various notifications and circulars regarding return filing and to ensure uniformity in implementation across field formations. The decision was taken by the Board after considering various representations received seeking clarifications on various aspects of return filing such as return filing dates, applicability of quantum of late fee, amendment of errors in submitting/filing of Form GSTR­-3B and other related queries. In strict sense, it is not the direction issued by the Commissioner (GST) as such, but it is notifying the decision(s) of the Board taken in exercise of its powers conferred under Section 168(1) of the 2017 Act. It is a different matter that a circular is issued under the signatures of Commissioner (GST), but in essence, it is notifying the decision(s) of the Board, which has had authority and power to issue directions. Accordingly, the argument that the impugned Circular dated 29.12.2017 has been issued without authority of law, needs to be rejected.

32. Reverting to the analysis of the issues and contentions done by the High Court, it is primarily focused on the grievance of the writ petitioner that due to non­operability of Form GSTR­-2A at the relevant time (July to September 2017), it had been denied of access to the information about its electronic credit ledger account and consequently, availing of ITC for the relevant period and instead to discharge the OTL by paying cash to its vendors. Thus, it has resulted in payment of double tax and unfair advantage to the tax authorities because of their failure to operationalize the statutory forms enabling auto­populating statement of inward supplies of the recipient and outward supplies including facility of matching and correcting the discrepancies electronically. The High Court, however, did not enquire into the cardinal question as to whether the writ petitioner was required to be fully or wholly dependent on the auto generated information in the electronic common platform for discharging its obligation to pay OTL for the relevant period between July and September 2017. The answer is ­ an emphatic No. In that, the writ petitioner being a registered person, was under a legal obligation to maintain books of accounts and records as per the provisions of the 2017 Act and Chapter VII of the 2017 Rules regarding the transactions in respect of which the OTL would occur. Even in the past (till recently upto the 2017 Act came into force), during the pre­GST regime, the writ petitioner (being registered person/assessee) had been maintaining such books of accounts and records and submitting returns on its own. No such auto­populated electronic data was in vogue. It is the same pattern which had to be followed by the registered person in the post­GST regime.

33. As per the scheme of the 2017 Act, it is noticed that registered person is obliged to do self­assessment of ITC, reckon its eligibility to ITC and of OTL including the balance amount lying in cash or credit ledger primarily on the basis of his office record and books of accounts required to be statutorily preserved and updated from time to time. That he could do even without the common electronic portal as was being done in the past till recently pre­GST regime. As regards liability to pay OTL, that is on the basis of the transactions effected during the relevant period giving rise to taxable event. The supply of goods and services becomes taxable in respect of which the registered person is obliged to maintain agreement, invoices/challans and books of accounts, which can be maintained manually/electronically. The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing self-assessment. The primary source is in the form of agreements, invoices/challans, receipts of the goods and services and books of accounts which are maintained by the assessee manually/electronically. These are not within the control of the tax authorities. This was the arrangement even in the pre­GST regime whilst discharging the obligation under the concerned legislation(s). The position is no different in the post­GST regime, both in the matter of doing self­assessment and regarding dealing with eligibility to ITC and OTL. Indeed, that self­assessment and declarations would be any way subject to verification by the tax authorities. The role of tax authorities would come at the time of verification of the declarations and returns submitted/filed by the registered person.

34. Section 16 of the 2017 Act deals with eligibility of the registered person to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. The input tax credit is additionally recorded in the electronic credit ledger of such person under the Act. The “electronic credit ledger” is defined in Section 2(46) and is referred to in Section 49(2) of the 2017 Act, which provides for the manner in which ITC may be availed. Section 41(1) envisages that every registered person shall be entitled to take credit of eligible input tax, as self­assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger.

35. As aforesaid, every assessee is under obligation to self­assess the eligible ITC under Section 16(1) and 16(2) and “credit the same in the electronic credit ledger” defined in Section 2(46) read with Section 49(2) of the 2017 Act. Only thereafter, Section 59 steps in, whereunder the registered person is obliged to self­assess the taxes payable under the Act and furnish a return for each tax period as specified under Section 39 of the Act. To put it differently, for submitting return under Section 59, it is the registered person who has to undertake necessary measures including of maintaining books of accounts for the relevant period either manually or electronically. On the basis of such primary material, self­assessment can be and ought to be done by the assessee about the eligibility and availing of ITC and of OTL, which is reflected in the periodical return to be filed under Section 59 of the Act.

36. Section 59 does make reference to Section 39, which deals with furnishing of returns, but the fact remains that for furnishing of returns, preparatory work has to be done by the assessee himself and is not fully or wholly dependent on the common electronic portal for that purpose. Just couple of weeks before the relevant period between July and September 2017, the writ petitioner/respondent No. 1 had been doing that exercise which it was expected to continue even under the post­GST scheme. The factum of non­operability of Form GSTR­-2A, therefore, is flimsy plea taken by the writ petitioner/respondent No. 1. Indeed, if the stated form was operational, the same would have come handy to the writ petitioner for doing self­assessment regarding eligibility of ITC and availing thereof. But it is a feeble excuse given by the writ petitioner/respondent No. 1 to assail the condition specified in impugned Circular dated 29.12.2017 regarding the rectification of the return submitted manually in Form GSTR­-3B for the relevant period (July to September 2017).

37. The question of reading down paragraph 4 of the said Circular would have arisen only if the same was to be in conflict with the express provision in the 2017 Act and the Rules framed thereunder. The express provision in the form of Section 39(9) clearly posits that omission or incorrect particulars furnished in the return in Form GSTR­-3B can be corrected in the return to be furnished in the month or quarter during which such omission or incorrect particulars are noticed. This very position has been restated in the impugned Circular. It is, therefore, not contrary to the statutory dispensation specified in Section 39(9) of the Act. The High Court, however, erroneously noted that there is no provision in the Act, which restricts such rectification of the return in the period in which the error is noticed. It is then noted by the High Court that as there is no possibility of getting refund of surplus or excess ITC shown in the electronic credit ledger, therefore, the only remedy that can enable the writ petitioner to enjoy the benefit of the seamless utilization of the ITC is by way of rectification in its annual tax return (Form GSTR­-3B) for the relevant period. Further, the High Court in paragraph 23 of the impugned judgment, noted that the relief sought in the case before it, was indispensable. This logic does not commend to us. For, if there is no provision regarding refund of surplus or excess ITC in the electronic credit ledger, it does not follow that the assessee concerned who has discharged OTL by paying cash (which he is free to pay in cash in spite of the surplus or excess electronic credit ledger account), can later on ask for swapping of the entries, so as to show the corresponding OTL amount in the electronic cash ledger from where he can take refund. Payment for discharge of OTL by cash or by way of availing of ITC, is a matter of option, which having been exercised by the assessee, cannot be reversed unless the Act and the Rules permit such reversal or swapping of the entries. As a matter of fact, Section 39(9) provides for an express mechanism to correct the error in returns for the month or quarter during which such omission or incorrect particulars have been noticed.

38. The entire edifice of the grievance of the writ petitioner (respondent No. 1) was founded on non­operability of Form GSTR2A during the relevant period, which plea having been rejected as untenable and flimsy, it must follow that the writ petitioner/respondent No. 1 with full knowledge and information derived from its books of accounts and records, had done self-assessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised. It is for that reason, the respondent has advisedly propounded a theory that in absence of (electronic­auto populated record) mechanism made available as per Sections 37 and 38, return filed in Form GSTR­-3B is not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules. This is yet another untenable plea taken by respondent No. 1. For, the appellant having realized that the mechanism specified in Sections 37 and 38 of the 2017 Act cannot be put in place due to non-operability of the forms governing such mechanism, had to amend the rules to make a stop­gap arrangement until the entire mechanism became operational. Appellant not only amended the statutory rule but also provided for filing of return manually in Form GSTR­-3B electronically through the common portal with effect from July 2017. This is manifest from the circulars/notifications issued from time to time including the timeline for submitting the returns.

39. It is futile to urge that Section 39(9) has no application to the fact situation of the present case. In that, allowing filing of return in Form­GSTR­-3B albeit a stop gap arrangement, is ascribable to Section 39 of the 2017 Act read with Rule 61 of the 2017 Rules. Indeed, it is not comparable to the mechanism specified for electronically generated Form GSTR-­3 referable to Rule 61. Nevertheless, Form GSTR­-3B is prescribed as a “return” to be furnished by the registered person and by the subsequent amendment of Rule 61(5) brought into force with effect from 01.01.2017, it has been clarified that such person need not furnish return in Form GSTR-­3 later on. Notably, the validity of that amendment including that of Notification dated 09.10.2019 bearing No. 49/2019, is not put in issue before us.

40. No doubt, in the initial stages, it was notified that Form GSTR­-3B will be in lieu of Form GSTR-­3 but that was soon corrected by deletion of that expression. At the same time, as the mechanism for furnishing return in terms of Sections 37 and 38 was not operationalized during the relevant period (July to September 2017) and became operational only later, the efficacy of Form GSTR­-3B being a stop gap arrangement for furnishing of return, as was required under Section 39 read with Rule 61, would not stand whittled down in any manner. It would still be considered as a return for all purposes though filled manually electronically.

41. The Gujarat High Court in the case of AAP & Co., Chartered Accountants through Authorized Partner vs. Union of India & Ors. 2019-TIOL-1422-HC-AHM-GST, was called upon to consider the question whether the return in Form GSTR­-3B is the return required to be filed under Section 39 of the 2017 Act. Although, at the outset it noted that the concerned writ petition had been rendered infructuous but, went on to answer the question raised therein. It took the view that Form GSTR­-3B was only a temporary stop­gap arrangement till due date of filing of return Form GSTR-­3 is notified. We do not subscribe to that view. Our view stands reinforced by the subsequent amendment to Rule 61(5), restating and clarifying the position that where return in Form GSTR­-3B has been furnished by the registered person, he shall not be required to furnish the return in Form GSTR-­3. This amendment was notified and came into effect from 01.07.2017 Vide Notification/GSR No. 772(E) dated 9th October, 2019 retrospectively. The validity of this amendment has not been put in issue.

42. The Delhi High Court in the impugned judgment, has taken note of decision of the Andhra Pradesh High Court in case of Panduranga Stone Crushers vs. Union of India & Ors 2019-TIOL-1975-HC-AP-GST. This decision dealt with the period between July 2017 and March 2018 for the financial year 2017­2018. The petitioner therein had submitted Form GSTR­-3B return through GST portal, as required. While doing so, he had inadvertently and by mistake reported IGST input tax credit in a column relating to import of goods and services instead of placing that particular amount, namely, IGST input tax credit in all other ITC column. The writ petitioner asserted that he was entitled to rectify such mistake which had crept in Form GSTR­-3B returns. The Union of India had contended that said situation was covered by Section 39(9) of the 2017 Act and the petitioner could rectify the omission, but did not avail the chance to rectify or modify the returns. Therefore, he was not entitled to relief as claimed in the writ petition. The Andhra Pradesh High Court relied on the decision of the Gujarat High Court in AAP & Co. 2019-TIOL-1422-HC-AHM-GST and the decision of the Kerala High Court in Saji S. Proprietor, Adithya and Ambadi Traders & Anr. vs. The Commissioner, State GST Department & Anr. dated 12.11.2018 in W.P.(C) No. 35868/2018, wherein the Kerala High Court had permitted the request for transfer of tax liability from the head “SGST” to “IGST”, enabling the registered person to carry out rectification. The Andhra Pradesh High Court allowed the petitioner to follow the same suit. The view taken in these decisions though not assailed before this Court cannot impact the logic commended to us in this judgment on the basis of interpretation and application of the relevant provisions to the facts of this case.

43. The Delhi High Court in the present case then relied on the decision of the Punjab & Haryana High Court in the case of Adfert Technologies Pvt. Ltd. vs. Union of India & Ors 2019-TIOL-2519-HC-P&H-GST. In that case, the petitioner was unable to file return before 31.12.2017 being the extended time due to heavy load upon accountants, who were having number of assesses, lack of proper knowledge of computer system, complexity in filling different columns of TRAN­1 etc. The Punjab & Haryana High Court noted that GST was an electronic based tax regime and most of people of India were not conversant with electronic mechanism and not able to load simple forms electronically. Be it noted that the factum of inability to access the electronic portal to submit return within the specified time due to technical faults in the portal is entirely different than the assertion to grant adjustment of amount voluntarily paid in cash by the assessee towards OTL. The latter can be allowed only if the law enacted by the Parliament expressly permitted such swapping of entries of the electronic credit ledger vis­a­vis electronic cash ledger; and certainly not permissible in the teeth of Section 39(9) of the 2017 Act. Relying on the decision of the Gujarat High Court in Siddharth Enterprises vs. The Nodal Officer 2019-TIOL-2068-HC-AHM-GST, however, the Court noted that denial of credit of tax/duty paid under existing Acts would amount to violation of Article 14 and 300A of the Constitution of India. It noted that unutilized credit has been recognized as vested right and property in terms of Article 300A of the Constitution. This decision was on facts of that case concerning erroneous entry recorded in Form GSTR­-3B and not regarding right asserted to swap the mode of payment of OTL in cash to be adjusted against electronic credit ledger as in the present case in the guise of rectification of return filed in Form GSTR­-3B for the earlier period.

44. Reference was then made to decision of this Court in MRF Ltd., Kottayam vs. Asstt. Commissioner (Assessment), Sales Tax & Ors. (2006) 8 SCC 702, wherein it is held that a person may have a legitimate expectation of being treated in a certain way by an administrative authority, even though he has no legal right in private law to receive such treatment. The High Court then referred to the decision of Delhi high Court in Krish Authomotors Pvt. Ltd. vs. Union of India & Ors. 2019-TIOL-2153-HC-DEL-GST, which had permitted the writ petitioners to either submit the TRAN­I form electronically by opening the electronic portal or to tender the said form manually before the specified date and thereafter to process the claim for ITC in accordance with law. The Punjab & Haryana High Court agreed with the view taken by the Gujarat High Court and the Delhi High Court. The conclusion so recorded by the Punjab & Haryana High Court will have no bearing on the facts of this case in light of the opinion expressed in this judgment, as we have held that consequent to submission/filing of Form GSTR­-3B, as envisaged by the 2017 Act, it can be rectified only in the manner specified in Section 39(9) read with Rule 61(5), as applicable at the relevant time. In other words, the rectification can be done only in the return to be furnished in the month or quarter during which such omission or incorrect particulars are noticed and not in the return for the period to which it relates.

45. The High Court in the impugned judgment, has also adverted to the decisions of the Delhi High Court in Blue Bird Pure Pvt. Ltd. vs. Union of India & Ors. 2019 SCC OnLine Del 9250 and in Lease Plan India Private Limited vs. Government of National Capital Territory of Delhi & Ors decided on 13.9.2019 in W.P.(C) No. 3309/2019. For the same reasons, the conclusion reached in the said two decisions will be of no avail to respondent No. 1.

46. We need not multiply the authorities referred to in the concerned judgments, and cited before us, as in our opinion, these decisions have not dealt with the cardinal aspect of statutory obligation fastened upon the registered person to maintain books of accounts and record within the meaning of Chapter VII of the 2017 Rules, which are primary documents and source material on the basis of which self­assessment is done by the registered person including about his eligibility and entitlement to get ITC and of OTL. Form GSTR­-2A is only a facilitator for taking an informed decision while doing such self­assessment. Nonperformance or non­operability of Form GSTR­-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self­assessment in Form GSTR­-3B manually on electronic platform. The provision contained in Section 39(9) of the 2017 Act and Rule 61 of the Rules framed thereunder, as applicable at the relevant time, apply with full vigor to the returns filed by the registered person in Form GSTR­-3B.

47. Significantly, the registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which such omission or incorrect particulars are noticed. Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge OTL by paying cash. That is a matter of option exercised by the registered person on which the tax authorities have no control, whatsoever, nor they have any role to play in that regard. Further, there is no express provision permitting swapping of entries effected in the electronic cash ledger vis­a­vis the electronic credit ledger or vice versa.

48. A priori, despite such an express mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return submitted in Form GSTR­-3B for the relevant period in which the error had occurred. Any unilateral change in such return as per the present dispensation, would have cascading effect on the recipients and suppliers associated with the concerned transactions. There would be complete uncertainty and no finality could ever be attached to the self­assessment return filed electronically. We agree with the submission of the appellant that any indulgence shown contrary to the statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories. Resultantly, assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR­-3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.

49. As noted earlier, the matching and correction process happens on its own as per the mechanism specified in Sections 37 and 38, after which Form GSTR-­3 is generated for the purposes of submission of returns; and once it is submitted, any changes thereto may have cascading effect. Therefore, the law permits rectification of errors and omissions only at the initial stages of Forms GSTR­-1 and GSTR-­3, but in the specified manner. It is a different dispensation provided than the one in pre­GST period, which did not have the provision of auto­populated records and entries.

50. Suffice it to conclude that the challenge to the impugned Circular No. 26/26/2017­GST dated 29.12.2017, is unsustainable for the reasons noted hitherto. We hold that stipulations in the stated Circular including in paragraph 4 thereof, are consistent with the provisions of the 2017 Acts and the Rules framed thereunder. Having said that, it must follow that there is no necessity of reading down paragraph 4 of the impugned Circular as has been done by the High Court vide impugned judgment. In any case, the direction issued by the High Court being in the nature of issuing writ of mandamus to allow the writ petitioner to rectify Form GSTR­-3B for the period ­ July to September 2017, in the teeth of express statutory dispensation, cannot be sustained.

51. No other issue has been dealt with by the High Court except to read down of the stated Circular, which as aforesaid, is wholly unnecessary.

52. In view of the above, this appeal is allowed. The impugned judgment and order is set aside. Resultantly, the writ petition filed by respondent No. 1 before the High Court stands dismissed. There shall be no order as to costs.

All applications stand disposed of.

 

—————-

Notes:

1. 39. Furnishing of returns.­

(1) to (8) …..

(9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub­section (1) or sub­section (2) or sub­section (3) or sub­section (4) or sub­section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.

(emphasis supplied)

SATYAKAM ARYA VERSUS UNION OF INDIA & ANR.

Seeking extension of Amnesty Scheme – cap on the late fees to be collected – exemption from the payment of late fees between 25 March 2020 and 30 June 2020 – refund of amounts calculated – HELD THAT:- The Amnesty Scheme itself lies in the realm of a policy intervention by the Union Government. The terms on which the Amnesty has been granted are hence matters of policy. There are no merit in the petition.

Petition dismissed.

No.- WRIT PETITION (CIVIL) NO. 178/2021

Dated.- March 4, 2021

HON’BLE DR. JUSTICE D.Y. CHANDRACHUD AND HON’BLE MR. JUSTICE M.R. SHAH

For the Petitioner : Mr. Anjanaye Mishra, Adv., Mr. Shahrukh Ejaz, Adv., Mr. Aviral Saxena, AOR

For the Respondent : None

ORDER

1 Invoking the jurisdiction of this Court under Article 32 of the Constitution, the petitioner has sought reliefs in the context of the GST Amnesty Scheme. To bring focus on the nature of the grievance, the reliefs which have been sought in these proceedings are extracted below:

a. Issue a Writ, Order or Direction in the nature of Mandamus to extend the GST Amnesty Scheme effected through its Notification bearing No. 52/2020 dated 24.05.2020 for two months.

b. Issue a Writ, Order or Direction in the nature of Mandamus to refund the exhibiting amount collected under the garb of late fee towards late filing of GST return for the period of lockdown to all Assessee who have paid the late fee.

c. Issue a Writ, Order or Direction in the nature of Mandamus to the Respondent to put the upper cap on Late Fees to an extent of ₹ 500/- per return.

d. Issue a Writ, Order or Direction in the nature of Mandamus to exempt the late fee that is being charged for the lockdown period starting from 25.03.2020 till 30.06.2020 by the Respondent on account of delayed filing of GST return by the Assesses.

2 In our view, these reliefs pertain to the realm of policy, on which, it would be inappropriate to entertain a proceeding under Article 32 of the Constitution. The petitioner, inter alia, seeks (i) an extension of the Amnesty Scheme; (ii) a cap on the late fees to be collected; (iii) exemption from the payment of late fees between 25 March 2020 and 30 June 2020; and (iv) refund of amounts calculated.

3 The Amnesty Scheme itself lies in the realm of a policy intervention by the Union Government. The terms on which the Amnesty has been granted are hence matters of policy. We, therefore, find no merit in the petition.

4 The Petition is dismissed.

5 Pending applications, if any, stand disposed of

DEVENDRA DWIVEDI VERSUS UNION OF INDIA & ORS

Powers of inspection, search, seizure and arrest – penalties and prosecution – validity of section 69 &132, section 70(1), section 67(1) and 69, Section 137 and section 135 of GST – right to life under Article 21 of the Constitution – HELD THAT:- The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue. Following this course of action is desirable, for this Court will then have the benefit of a considered view emanating from the High Court. Though the Counsel for the petitioners invokes Article 21, this is a case involving essentially a challenge to revenue legislation. Undoubtedly, the jurisdiction of this Court under Article 32 is a salutary constitutional safeguard to protect the fundamental rights of citizens. The Court must be solicitous in exercising it where a breach of fundamental human rights is in issue. But equally, whether recourse to the jurisdiction under Article 32 should be entertained in a particular case is a matter for the calibrated exercise of judicial discretion.

There is regime of well-established remedies and procedures under the laws of criminal procedure. Revenue legislation also provides its own internal discipline. Short circuiting this should not become a ruse for flooding this court with petitions which can, should and must be addressed before the competent fora. Hence we are of the view that it would be appropriate to relegate the petitioner to the remedy of a petition under Article 226 so that this Court has the benefit of the considered view of the jurisdictional High Court.

The petitioners must be relegated to pursue the remedies in accordance with law – Petition dismissed.

No.- Writ Petition(s)(Criminal) No(s).272/2020 W.P.(Crl.) No. 273/2020 (X) W.P.(Crl.) No. 276/2020 (X) W.P.(Crl.) No. 298/2020 (X)

Dated.- January 7, 2021

HON’BLE DR. JUSTICE D.Y. CHANDRACHUD, HON’BLE MS. JUSTICE INDIRA BANERJEE And HON’BLE MR. JUSTICE SANJIV KHANNA

For the Petitioner : Mr. Mukul Rohatgi, Sr. Adv. Mr. Bijendra Chahar, Sr. Adv. Mr. Amit Bhandari, Adv. Mr. Kumar Shashank, Adv. Mr. Purushottam Sharma Tripathi, AOR Mr. Abhishek Tripathi, Adv. Mr. Mukesh Kumar Singh, Adv. Mr Vijay Aggarwal, Adv. Mr Mudit Jain, Adv. Mr Yugant, Adv. Mr. Akbar Siddique, AOR

For the Respondent : Mr K K Venugopal, Attorney General For India Mr. Tushar Mehta, Solicitor General Mr. S.V. Raju, ASG Mr. Zoheb Hossain, Adv. Mr. Kanu Agarwal, Adv. Mr. B. Krishna Prasad, AOR

ORDER

W.P.(Crl) No.272/2020, 273/2020 and 276/2020

1 Mr Mukul Rohatgi, learned Senior Counsel appearing on behalf of the petitioners, seeks the permission of the Court to withdraw the petitions with liberty to move the High Court in appropriate proceedings.

2 The writ petitions are dismissed as withdrawn with liberty as prayed.

W.P.(Crl.) No. 298/2020

1 Invoking the jurisdiction of this Court under Article 32 of the Constitution, the following reliefs have been sought by the petitioners in these proceedings:

“1. Issue an appropriate Writ, order(s) or direction(s) declaring Sections 69 & 132 of the Central Goods Service Tax Act, 2017,as unconstitutional and ultra vires to Article 21 of the Constitution of India and hence unconstitutional, illegal and unenforceable;

2. Issue an appropriate Writ, order(s) or direction(s) to the Respondent to comply with the mandatory procedure under Chapter XII of the Code of Criminal Procedure, 1973 including Section 154, 157, 167, 172 etc for valid commencement of investigation into any offence qua the petitioner.

3. Declare the entire investigations erroneously commenced by the Respondents qua the Petitioner as non est, illegal, void ab initio for not following the mandatory procedure under Chapter XII of the Code of Criminal Procedure, 1973 and therefore violative of the “procedure established by law”.

4. Issue an appropriate Writ, order(s) or direction(s) declaring Section 70( 1) of the Central Goods Service Tax Act, 2017, as unconstitutional and ultra vires to Article 20(3) of the Constitution of India and hence unconstitutional, illegal and unenforceable;

5. Issue an appropriate Writ, order(s) or direction(s) declaring Section 67 (1) and S. 69 of the CGST Act are ultra vires and violative of the principles of natural justice, as the said Section does not provide for recording of reasons to believe in writing, unlike other statutes such as Prevention of Money Laundering Act, 2002

6. Issue an appropriate Writ, order(s) or direction(s) declaring provisions of Section 137 of the CGST Act 2017 contrary to the settled principles of law, which provide that there can be no fastening of vicarious liability for a criminal offence requiring mens rea, without there being an active role being proved by the prosecution.

7. Issue an appropriate Writ, order( s) or direction( s) declaring provisions of Section 135 of CGST Act, 2017, unconstitutional as it requires Accused to disprove the reverse burden of proof not by preponderance of probability but beyond reasonable doubt.”

2 The above reliefs would indicate an amalgam of:

(i) A challenge to the constitutional validity of certain provisions of the Central Goods Service Tax Act 2017;

(ii) A direction for compliance with the procedure for investigation enunciated in Chapter XII of the Code of Criminal Procedure 1973; and

(iii) Declaring the investigations which have been instituted against the petitioner as illegal.

3 During the course of the hearing, it has been urged on behalf of the petitioner that it would be necessary for this Court to entertain the present proceedings under Article 32 of the Constitution having regard to some earlier orders issuing notice, where similar issues have been involved. It has been submitted that having regard to these orders and the constitutional issues which have been raised, it would be appropriate for the Court to consider the challenge both to the constitutional validity of the statute and determine the legality of the investigation which has been commenced. It is urged that the right to life under Article 21 of the Constitution is engaged in the challenge.

4 These submissions which have been urged by Mr Vijay Aggarwal have been opposed by Mr K K Venugopal, learned Attorney General for India and Mr Tushar Mehta, learned Solicitor general.

5 From the proceedings before this Court, we find that on 10 April 2019, a Bench of three-Judges declined to entertain Writ Petition (Crl) Nos 107 and 108 of 2019. The record also indicates that several other petitions which were instituted under Article 32 of the Constitution have eventually been withdrawn, including the following:

(i) Writ Petition (Crl) No 260 of 2020 withdrawn on 28 October 2020;

(ii) Writ Petition (Crl) No 167 of 2020 withdrawn on 7 August 2020;

(iii) Writ Petition (Crl) No 241 of 2020 withdrawn on 9 September 2020; and

(iv) Writ Petition (Crl) No 157 of 2020 withdrawn respectively on 14 July 2020 and 20 July 2020 in relation to the two petitioners.

The earlier petition under Article 32 was withdrawn before this Court today after submissions were urged.

6 The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue. Following this course of action is desirable, for this Court will then have the benefit of a considered view emanating from the High Court. Though the Counsel for the petitioners invokes Article 21, this is a case involving essentially a challenge to revenue legislation. Undoubtedly, the jurisdiction of this Court under Article 32 is a salutary constitutional safeguard to protect the fundamental rights of citizens. The Court must be solicitous in exercising it where a breach of fundamental human rights is in issue. But equally, whether recourse to the jurisdiction under Article 32 should be entertained in a particular case is a matter for the calibrated exercise of judicial discretion. There is regime of well-established remedies and procedures under the laws of criminal procedure. Revenue legislation also provides its own internal discipline. Short circuiting this should not become a ruse for flooding this court with petitions which can, should and must be addressed before the competent fora. Hence we are of the view that it would be appropriate to relegate the petitioner to the remedy of a petition under Article 226 so that this Court has the benefit of the considered view of the jurisdictional High Court.

7 While it has been pointed out that in certain cases, notice was issued by this Court, the learned Attorney General for India has, on the other hand, submitted that this was at the initial stage of hearing and, as indicated above, a three- Judge Bench of this Court has declined to entertain the petitions under Article 32 by the order dated 10 April 2019.

8 Following the orders of the three-Judge Bench of this Court in the above cases, we are of the view that the petitioners must be relegated to pursue the remedies in accordance with law. Besides the fact that the constitutional challenge can be addressed before the High Court, the grievance in regard to the conduct of the investigation can appropriately be addressed before the competent forum, either in exercise of the jurisdiction under Article 226 or, as the case may be, Section 482 or analogous provisions of the Code of Criminal Procedure 1973.

9 On these grounds, we are not inclined to entertain the writ petition under Article 32. The petition is accordingly dismissed. However, we clarify that we have left it open to the petitioners to pursue the remedies which are available in law in respect of the reliefs which have been sought in these proceedings.

10 Pending application, if any, stands disposed of.

M/S. GOLKONDA HOTELS AND RESORTS LIMITED,

Exemption from GST – composite supply or not – pure services – business of providing accommodation and services – in the course of the business they have supplied the services of boarding and lodging facility for the officials of Greater Hyderabad Municipal Corporation – Sl.No.3 of Notification No.12/2017 – HELD THAT:- Under serial no. 3 of Notification No. 12/2017 pure services provided “in relation to any function” entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule – Hon’ble Supreme Court of India in the case of HH. MAHARAJADHIRAJA MADHAV RAO JIWAJI RAOSCINDIA BAHADUR VERSUS UNION OF INDIA [1970 (12) TMI 87 – SUPREME COURT] observed that the expression “relating to” means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant.

By his own admission in the application, the applicant provided accommodation services to GHMC in relation to conduction General Elections to the Legislative Assembly of Telangana State. Thus there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.

No.- A.R. Com/11/2021 and TSAAR Order No.32/2021

Dated.- December 29, 2021

Citations:

  1. DOYPACK SYSTEMS (PVT) LTD Versus UNION OF INDIA – 1988 (2) TMI 61 – Supreme Court
  2. HH. MAHARAJADHIRAJA MADHAV RAO JIWAJI RAOSCINDIA BAHADUR Versus UNION OF INDIA – 1970 (12) TMI 87 – Supreme Court

SRI B. RAGHU KIRAN, IRS, AND SRI S.V. KASI VISWESWARA RAO, MEMBER

[ORDER UNDER SECTION 98(4) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER SECTION 98(4) OF THE TEALANGANA GOODS AND SERVICES TAX ACT, 2017.]

******

  1. M/s. Golkonda Hotels And Resorts Limited, 10-1-124, Golkonda Hotel, Masab Tank, Jubilee Hills, Hyderabad, Telangana, 500028 (36AACCS8570J1ZX) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules.
  2. At the outset, it is made clear that the provisions of both the CGST Act and the TGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression ‘GST Act’ would be a common reference to both CGST Act and TGST Act.
  3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of ₹ 5,000/- for SGST and ₹ 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted.
  4. Brief facts of thecase:

M/s. Golconda Hospitality Services and Resorts Limited, are in the business of providing accommodation and services and in the course of the business they have supplied the services of boarding and lodging facility for the officials of Greater Hyderabad Municipal Corporation for conducting 2018 General Election for Telangana State Legislative Assembly. According to the applicant these services are exempt from GST under Sl.No.3 of Notification No.12/2017, dt: 28.06.2017, which however needs to be clarified. Hence this application.

  1. Questions raised:

Whether the services provided by the applicant to GHMC are exempt under Sl.No.3 of Notification No.12/2017.

  1. Personal Hearing:

The Authorised representative of the applicant namely Sree Harsha, CA attended the personal hearing held on 25-11-2021. The authorized representative reiterated their averments in the application submitted and contended as follows:

  1. That, they are providing accommodation services to GHMC during 2018 State Elections.
  2. That in their opinion tax is not payable on supply of services to GHMC as same is covered under Article 243w of Constitution of India and therefore covered under Sl.No.3 of Notification 12 of 2017.
  3. Discussion & Findings:

Under the Article 243W of Constitution of India, municipalities may be entrusted with the responsibilities for:

  1. Preparation of plans for economic development and social justice.
  2. Performance of functions and implementation of schemes in relation to matters listed in 12th schedule.

Under the schedule 12 to Constitution of India, the functions and schemes are as follows:

  1. Urban planning including town planning.
  2. Regulation of land-use and construction of buildings.
  3. Planning for economic and social development.
  4. Roads and bridges.
  5. Water supply for domestic, industrial and commercial purposes.
  6. Public health, sanitation conservancy and solid waste management.
  7. Fire services.
  8. Urban forestry, protection of the environment and promotion of ecological aspects.
  9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.
  10. Slum improvement and up gradation.
  11. Urban poverty alleviation.
  12. Provision of urban amenities and facilities such as parks gardens, playgrounds.
  13. Promotion of cultural, educational and aesthetic aspects.
  14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums.
  15. Cattle ponds; prevention of cruelty to animals.
  16. Vital statistics including registration of births and deaths.
  17. Public amenities including street lighting, parking lots, bus stops and public conveniences.
  18. Regulation of slaughter houses and tanneries.

Now under serial no. 3 of Notification No. 12/2017 pure services provided “in relation to any function” entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule.

The Hon’ble Supreme Court of India in the case of Doypack Systems Pvt. Ltd. vs. Union of India (UOI) and Ors. (12.02.1988 – SC) AIR 1988 SC 782 clarified the meaning of the expression “in relation to” as follows:

“In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 521 where it is stated that the term ‘relate” is also defined as meaning to ring into association or connection with. It has been clearly mentioned that “relating to” has been held to be equivalent to or synonymous with as to “concerning with” and “pertaining to”.

Similarly the Hon’ble Supreme Court of India in the case of Madhav Rao Jivaji Rao Scindia Vs Union of India AIR 1971 SC 530 observed that the expression “relating to” means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant.

By his own admission in the application, the applicant provided accommodation services to GHMC in relation to conduction General Elections to the Legislative Assembly of Telangana State. Thus there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.

  1. The ruling is given as below:

In view of the above discussion, the questions raised by the applicant are clarified as below:

Questions Ruling
Whether the services provided by the applicant to GHMC are exempt under Sl.No.3 of Notification No.12/2017. No.