Condoned the delay in period of limitation for filing the appeal by the assessee

[CA Bimal Jain]

The Hon’ble Gujarat High Court in the matter of M/S. MANJEET COTTON PVT. LTD. VERSUS COMMISSIONER OF STATE TAX - 2022 (12) TMI 1229 - GUJARAT HIGH COURT condoned the delay of period of limitation to file appeal before the Appellate Authority by the assessee. Held that, assessee has the right to challenge the assessment order by appealing to the Appellate Authority, and such right should be exercised to maintain the possibility of addressing a larger issue.

Facts:

M/s. Manjeet Cotton Pvt. Ltd. (“the Petitioner”) is involved in the business of trading of cotton bales, cotton yarn, cottonseed oil cake, etc.

A Show Cause Notice (“SCN”) under Section 73 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) along with summary thereof in Form GST DRC – 01 dated January 13, 2022 was issued by the Revenue Department (“the Respondent”) in which it was alleged that the Petitioner had received certain nil rated or exempted supplies, but had not reversed the Input Tax Credit (“ITC”) related to the said supply and a demand of INR 36,15,696/- with an interest of 24%p.a. was made.

The Petitioner submitted a reply in Form GST DRC – 06 requesting the Respondent to grant adjournment of 30 days to submit a detailed reply. However, the Respondent granted adjournment of 15 days, to which the Petitioner failed to reply.

Subsequently, search Proceedings under Section 67(2) of the CGST Act was carried out at the registered premise of the Petitioner on February 17, 2022 and summons were issued and on February 19, 2022 the Petitioner’s statement was recorded. The Petitioner reversed the ITC accounting to INR 1,19,149/- along with the interest pertaining to the year 2017-18 to 2020-21.

The Respondent in the month of June, 2022, debited the Electronic Credit Ledger (“ECL”) of the Petitioner against the demand raised vide its Order dated February 21, 2022 (“the Impugned Order”) and Notice under Section 79(1)(c) of the CGST Act was also issued and the manager of the bank was asked to pay the amount of INR 13,74,981/- on behalf of the Petitioner, against which the manager froze all debit transactions from the bank account of the Petitioner.

The petitioner was of view that the issue was resolved as the Petitioner had reversed the tax along with the interest and penalty. However, the Petitioner received a communication from its bank on June 21, 2022, indicating that the demand had been raised electronically and the bank was asked to adjust it.

Being aggrieved, this petition has been filed.

Issue:

Whether the Petitioner be allowed to appeal before the Appellate Authority even when it was beyond the period of appeal?

Held:

The Hon’ble Gujarat High Court in M/S. MANJEET COTTON PVT. LTD. VERSUS COMMISSIONER OF STATE TAX - 2022 (12) TMI 1229 - GUJARAT HIGH COURT held as under:

• Noted that, the Petitioner neither submitted the reply nor did the Petitioner appear in person before the Respondent or followed in the matter.
• Stated that, it is only in the month of June, the Petitioner woke up from its slumber or may be it was a limited understanding of the act, which had resulted into not pursuing the matter before such period by the Petitioner.
• Further observed that, the officer concerned cannot be held responsible as it had already granted the opportunity of hearing to the Petitioner, which the Petitioner did not avail and hence, the officer cannot be blamed.
• Held that, the Petitioner is desirous of going to the Appellate Authority for questioning and challenging the Impugned Order, and this being the Petitioner’s right should be exercised to keep the larger issue open.
• Condoned the period of limitation and allowed the Petitioner to challenge the Impugned Order before the Appellate Authority within 2 weeks.
• Directed the Appellate Authority to decide the appeal on merits and in accordance with law after providing opportunity of hearing to the Petitioner.
• Further stated that, the Petitioner would be entitled to seek recredit of the amount credited from its bank account, barring the amount of pre-deposit which shall be decided by the Respondent.
• Further directed that, there shall be no further coercive recovery and Petitioner shall be entitled to operate its bank account, till the matter is decided.

Relevant Provisions:

Section 107 of the CGST Act:

“107. Appeals to Appellate Authority.–

(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.

(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.

Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.

(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.

(8) The Appellate Authority shall give an opportunity to the appellant of being heard.

(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:

Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.

(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order:

Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:

Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74.

(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.

(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed:

Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.

(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.

(15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf.

(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.”

(Author can be reached at info@a2ztaxcorp.com)