Not sure but it seems that the gemara is saying that Beis Din was in session and paskened dinim on Shabbos.
Am I understanding this correctly?
What about Lo Sivaru Aish Bchol Mosvosheichim and many other sources that indicate Beis Din did not pasken on shabbos?
Yisroel Rabinowitz , Lakewood
The Mishnah above 21b states that, when the Beis Hamikdash stood, Shabbos could be desecrated for any month so that the witnesses could come to Yerushalayim and say that they had seen the new moon. Rashi writes that this is so the Rosh Chodesh korban could be offered at the correct time. The Gemara 21b learns this from the word "BeMo'adam"; that Yomtov and Rosh Chodesh should be carried at the correct time.
If the eidim can break Shabbos to travel to the Beis Din, the Beis Din can certainly pasken for kidush hachodesh on Shabbos.
In addition, the verse Lo Siva'aru Aish refers to Beis Din punishing on Shabbos (see Rambam Hilchos Shabbos 24;7); not specifically to paskening.
I later found that the Tosfos Yomtov asks your question, and according to his answer one does not have to say that the Beis Din were receiving witnesses for kidush hachodesh, as I wanted to say.
Tosfos Yom Tov writes that the Beis Din were not sitting for a Din, because the Mishnah says at the end of Maseches Beitzah that one may not do a Din on Shabbos and Yomtov. The Gemara Sanhedrin 88b states that on weekdays the Sanhedrin sat in the Lishkas Hagozis and on Shabbos they sat in the Chail. Rashi DH Yoshvin writes that this is so it should not look as if they are paskening a din. Tosfos Yomtov adds that the Beis Din were giving Hora'ah; they were teaching people what to do, and this is not included in the prohibition of settling monetary disputes on Shabbos.
Behatzlochah Rabah
Dovid Bloom