MARCH 31, 2020

By Pritam Mahure, CA

ON 24th March 2020, the Union Finance Minister announced a relief package including certain procedural concessions for GST payers. However, this Press Release (dated 24th March 2020) came after the GSTR-3B due date itself (as due date for filing GSTR-3B for February 2020 was 20th March 2020 for large taxpayers and 22 nd or 24th March 2020 for small taxpayers).

It may be noted that the aforesaid relief (dated 24th March 2020) came with a rider which reads - "6. Necessary legal circulars and legislative amendments to give effect to the aforesaid GST relief shall follow with the approval of GST Council."

Why GST payers are still awaiting circulars and legislative amendments?

However, even after a week the GST payers are awaiting legislative amendments (as Press Release sans legislative amendment/ relevant notification may not be workable).

One reason for the missing immediate steps / legislative amendments could be the impediment i.e. non-mention of specific procedure for pandemic under Article 279A of Constitution of India.

Twin mandate under Article 279A

As per Article 279A (9) of Constitution of India, "Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles…"

Given the specific twin requirement under Article 279A of Constitution of India, every decision by GST Council should be taken:

a. In a GST Council meeting and

b. By a majority of not-less than three fourths

However, due to the corona virus pandemic, the GST Council is unable to conduct meeting (after its 39th meeting held on 14th March 2020) particularly since the pandemic has started threatening and effectively put the entire nation on ‘pause' mode.

Can CGST Act come to rescue?

As an interim and exceptional measure, to tide over the challenging times, the GST Council may explore Section 148 (which provides for ‘Special procedure for certain processes') or section 168 (which provides for ‘Power to issue instructions or directions').

Usage of section 148 of CGST Act could be challenging as even section 148 is to be used after recommendations of the Council. Further, section 168 of CGST Act is to be used for the purpose of uniformity in the implementation of GST Act, however, the power bestowed under section 168 and the pandemic being faced does not reconcile.

All said and done, as Constitution of India is supreme, provision of CGST Act may not be able to override the mandatory process under Article 279A of Constitution of India.

What to do then?

Article 279A (8) provides as under:

'The Goods and Services Tax Council shall determine the procedure in the performance of its functions.'

Based on the aforesaid provision, the GST Council can, through a video conference immediately provide, separate process to get over impasse like current pandemic (including introduction of process or new section, if required, for such pandemic).

One of the prescribed procedures could be to empower, during the interim time period, the Chairman of GST Council to take decisions and for uniformity purposes, it is recommendable that such decisions of Chairman should be applicable in all States. However, whether the States will agree for handing over their power to Union, even for a brief period, is itself a big question.

However, in the long run, to address such pandemic, Article 279A of Constitution of India could be amended (to prescribe procedure for exceptional times).

What about Financial Emergency?

It may be noted that amongst three types of emergencies, Article 360 of Constitution of India provides for ‘Financial Emergency'. Article 360 (3) Constitution of India provides as under:

'(3) During the period any such Proclamation as is mentioned in clause (1) is in operation, the executive authority of the Union shall extend to the giving of directions to any State to observe such canons of financial propriety as may be specified in the directions, and to the giving of such other directions as the President may deem necessary and adequate for the purpose'.

As per news reports, even a PIL was filed in the Apex Court to declare Financial Emergency. However, in one of the press conferences the Hon'ble Finance Minister informed that there was no move to impose Financial Emergency.

Way forward

Now, whilst, the dust on the aforesaid matter settles, the GST payer will need to wait for the relevant notifications and Circulars for availing the announced relief in GST compliances.

(Author is Founder and CEO of CA Pritam Mahure and Associates. The views expressed are strictly personal.)