2025 (7) TMI 776 - HC - GST

Challenge to order rejecting the appeal filed under Section 107 of the WBGST/CGST Act 2017 - HELD THAT - It would prima facie transpire that on the basis of the scrutiny conducted under Section 61 steps were taken against the petitioner. Following the above the notice in form ASMT 10 was also issued. This followed the pre-show-cause notice in form DRC 1A and the show-cause in form DRC 01. None of the aforesaid notices were responded to by the petitioner. No explanation was afforded to the proper officer. It is contended that since the petitioner was unwell the petitioner could not respond to the same. On merits it is found that the matter pertains to wrongfully utilized of Input Tax Credit (ITC). Incidentally it is also noted that interest has also been levied on the petitioner for availing ITC though it is not clear from the records whether the petitioner has utilized the ITC. The orders passed by the proper officer dated 20th November 2023 and the appellate order dated 15th December 2025 stands set aside - Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the appellate authority was justified in rejecting the appeal filed under Section 107 of the WBGST/CGST Act, 2017 on the ground of delay without considering the petitioner's explanation for the delay.

- Whether the petitioner's physical disability and medical condition, which allegedly prevented timely response to notices and filing of appeal, constitute sufficient cause for condoning the delay.

- Whether the orders passed by the proper officer under Section 73 of the said Act and the appellate authority's order rejecting the appeal are liable to be set aside in light of the petitioner's circumstances and procedural fairness.

- The scope and application of the relevant statutory provisions and judicial precedents regarding condonation of delay and procedural fairness in tax adjudication under the WBGST/CGST Act, 2017.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification for rejection of appeal on ground of delay without considering petitioner's explanation

The legal framework governing appeals under the WBGST/CGST Act, 2017 requires that appeals be filed within a prescribed period, with the appellate authority empowered to condone delay if sufficient cause is shown. The appellate authority rejected the appeal as barred by limitation relying on precedents including judgments from the Punjab and Haryana High Court and the case of Commissioner of Customs and Central Excise v. M/s Hongo India Pvt. Ltd., which emphasize strict adherence to limitation periods and scrutinize explanations for delay.

However, the petitioner relied on the Division Bench decision of this Court in S.K. Chakraborty v. Union of India & Ors., which directs a more compassionate and pragmatic approach in cases involving genuine hardship or disability. The petitioner submitted that the appellate authority failed to consider the explanation of physical disability and medical treatment, which prevented timely filing.

The Court noted that the appellate authority's order dismissed the appeal solely on the ground of delay, without adequately evaluating the explanation or affording an opportunity to the petitioner to be heard on this aspect. The petitioner's medical condition, including a confirmed 30% physical disability and a bed-ridden state during the relevant period, was a significant factor that ought to have been considered.

The Court emphasized that procedural fairness requires that such explanations be examined and an opportunity be given to the affected party before rejecting an appeal on limitation grounds.

Issue 2: Sufficiency of petitioner's physical disability and medical condition as cause for condonation of delay

The petitioner's claim of physical disability was supported by medical certification from a government hospital. The petitioner was unable to respond to multiple notices (forms ASMT 10, GST DRC 01A, GST DRC 01) and was unaware of the order under Section 73 due to being bedridden.

The Court recognized that the petitioner's medical condition was a plausible explanation for the delay in filing the appeal and responding to notices. The Court observed that strict limitation rules must be tempered by consideration of genuine hardship, especially where the petitioner's disability prevented timely action.

While the respondents argued that the petitioner had not responded to statutory notices and that the appellate authority's rejection was justified, the Court found that the petitioner's circumstances warranted a fresh opportunity to be heard and to file appropriate responses.

Issue 3: Validity of orders passed by proper officer and appellate authority in light of petitioner's circumstances

The order under Section 73 was passed after the petitioner failed to respond to notices. The appellate authority rejected the appeal as barred by limitation. The Court found that these orders were passed without affording the petitioner an opportunity to explain his non-response due to disability and medical treatment.

In the interest of justice and fairness, the Court set aside both the order under Section 73 dated 20th November, 2023 and the appellate order dated 15th January, 2024. The Court remanded the matter to the proper officer for fresh proceedings.

The petitioner was directed to file a response to the show-cause notice within a fixed timeframe, with the proper officer mandated to dispose of the proceedings after hearing the petitioner, in accordance with Section 75(4) of the Act. The Court made clear that no extension of time would be granted beyond the specified date.

The Court also quashed the order of attachment dated 23rd July, 2024, which had been issued against the petitioner.

Issue 4: Application of statutory provisions and judicial precedents regarding delay and procedural fairness

The Court's approach reflects the balance between strict compliance with limitation periods under the WBGST/CGST Act and the principles of natural justice and equity. The Court referred to the Division Bench judgment in S.K. Chakraborty, which advocates for a compassionate approach in cases involving genuine disability or hardship.

The Court implicitly acknowledged that while tax laws impose stringent timelines, these cannot override the fundamental right to be heard and the need to consider exceptional circumstances such as physical disability.

The Court's direction for remand and fresh opportunity aligns with the statutory mandate under Section 75(4) to provide a hearing before passing final orders and the broader principle that procedural fairness must be observed in tax adjudications.

3. SIGNIFICANT HOLDINGS

"Considering the peculiar facts noted hereinabove and taking note of the fact that the petitioner may have been prevented from responding to the above notices and preferring the appeal within time by reasons of his physical disability and his medical treatment including, his bed ridden state as claimed by the petitioner, I am of the view that it shall be prudent at this stage for this Court to remand the matter back to the proper officer for affording an opportunity to the petitioner to file an appropriate response."

"The orders passed by the proper officer dated 20th November, 2023 and the appellate order dated 15th December, 2025 stands set aside. The petitioner shall be at liberty to file a response to the show-cause issued in form DRC 01 dated 16th March, 2023 for the tax period July, 2017 to July, 2018 within 16th July, 2025."

"It is made clear that the direction for filing the response is pre-emptory and no extension shall be afforded to the petitioner."

"The pre-deposit made by the petitioner shall however be retained to the credit of the proceedings and shall abide by the result of the proceedings and may be utilized by the petitioner in future for availing the multi tiered adjudicatory process."

"The order of attachment issued in form GST DRC 13 dated 23rd July, 2024 forming annexure P7 to the writ petition shall stands quashed."

The core principles established include the necessity to consider genuine explanations for delay, especially in cases involving physical disability, the imperative of affording an opportunity of hearing before rejecting appeals on limitation grounds, and the recognition that procedural fairness and equity must guide tax adjudication processes under the WBGST/CGST Act.

Ultimately, the Court held that the appellate authority erred in dismissing the appeal solely on limitation grounds without considering the petitioner's disability and medical treatment. The matter was remanded for fresh consideration, ensuring the petitioner's right to be heard and to respond to the show-cause notice within a fixed time frame.