2025 (7) TMI 1191 - HC - GST

Dismissal of appeal on the ground of delay - availment and utilization of ITC in respect of the transactions - petitioner had taken advantage of certain fictitious transactions - HELD THAT - The petitioner had made voluntary payment under the provisions of Section 73(5) of the said Act. Although the proceeding was not contested by the petitioner however the proper officer had treated the aforesaid payment to be the payment made in compliance with the show cause notice though the record would speak otherwise. Ordinarily in such circumstances having regard to the payment being made voluntarily under Section 73(5) of the said Act an explanation ought to have been sought for from the petitioner in this regard. None could enlighten the Court as regards and further explanation being sought for from the petitioner. Further even before the statutory period for preferring the appeal had expired a part of the outstanding demand had been recovered on 14th April 2023 and the balance had been recovered on 16th May 2023. The appeal filed by the petitioner on 6th January 2024 was also rejected on the ground that there is no scope to accept the appeal beyond the prescribed period provided for. Ordinarily the petitioner could have assailed the said order by preferring a further appeal before the appellate tribunal. But since the appellate tribunal is yet to be constituted the petitioner has approached this Court. Having regard to the peculiar facts narrated and by noting that the entire amount of tax has ready been recovered from the petitioner the matter is required to be remanded back to the proper officer for providing an opportunity to the petitioner to explain the circumstances under which the payment was made voluntarily under Section 73(5) of the said Act. The petition is disposed off by way of remand.

Summary

ISSUES:

Whether the dismissal of an appeal on the ground of delay under Section 107 of the WBGST/CGST Act, 2017 was justified.Whether the proper officer erred in treating voluntary payments made under Section 73(5) of the Act as payments in compliance with the show cause notice.Whether recovery of tax demand prior to the expiry of the statutory period for appeal affects the validity of such recovery.Whether the petitioner was entitled to an opportunity to explain the circumstances of voluntary payment before final adjudication.Whether remand to the proper officer for adjudication on merits is appropriate where the appellate authority's order is set aside.

RULINGS / HOLDINGS:

The appellate authority's dismissal of the appeal solely on the ground of delay was set aside, as the petitioner made voluntary payments under Section 73(5) and was not given an opportunity to explain the same.The proper officer erred in treating the voluntary payments under Section 73(5) as payments made in compliance with the show cause notice without seeking any explanation from the petitioner.The recovery of the entire tax demand from the petitioner's Electronic Credit Ledger before the expiry of the three-month period from the date of the order was improper.The petitioner must be afforded an opportunity to respond to the show cause notice and explain the voluntary payments before adjudication on merits.The matter was remanded to the proper officer with directions to adjudicate afresh on merits after allowing the petitioner to respond within two weeks, and the prior orders dated 23rd February 2024 and 17th February 2023 were set aside.

RATIONALE:

The Court applied the provisions of the WBGST/CGST Act, 2017, particularly Sections 29(2)(e), 73(5), 74, and 107, emphasizing the procedural safeguards and the necessity of opportunity before adverse orders.The Court noted that voluntary payments under Section 73(5) are distinct from payments made in compliance with a show cause notice, requiring explicit clarification before treating them as such.The principle that recovery of tax demand should not precede the expiry of the statutory appeal period was underscored to protect the taxpayer's right to appeal.The absence of an appellate tribunal justified the writ petition, but the Court insisted on adherence to due process by remanding the matter for fresh adjudication.No dissent or doctrinal shift was indicated; the judgment reaffirmed established procedural rights under the GST framework.