Applicabilty of CGST Act 2017

[K Balasubramanian]

1. Day in and Day out, several orders are being passed by various jurisdictional High Courts on the orders which are being passed by Adjudicating Authorities in gross violation of Sections 75(4) as well as 75(5). Almost in all the cases, the High Courts take note of such violation of principles of Natural Justice and simply set aside the adjudication orders and order for fresh adjudication.  However, neither the GST Department officials nor the CBIC take notice of such orders and try to reduce such orders. The cases on this category are increasing day by day forcing the tax payers to knock the doors of the jurisdictional high courts. The precious time of the high court  is also consumed in a routine matter where no legal analysis is involved.

2. A question arises as to whether the provisions contained in CGST Act 2017 are binding on the tax officials or they are free to pass any orders as they wish by ignoring the statutory provisions  contained in the CGST Act, 2017.

3. One interesting case was decided by the Allahabad High Court on 09/04/2025 in writ tax 1465 of 2024 in the case of M/S XESTION ADVISOR PRIVATE LIMITED VERSUS ADDITIONAL COMMISSIONER GRADE II AND ANOTHER - 2025 (4) TMI 628 - ALLAHABAD HIGH COURT where the Adjudicating Authority has passed order under section 62 even without issuing the required notice under section 46.

4. The Adjudicating Authority has completely ignored  the procedural requirements and straight away issued order under section 62 on 21/09/2020 itself, even without the required notice under section 46.

5. On 25/09/2020, this defect came to the notice of the Adjudicating Authority. He had the option to withdraw the order dated 21/09/2020 and could have started the matter fresh by  first issuing a notice on 25/09/2020 and passing the order under section 62 subsequently. Despite this position, he choose  to keep the order under section 62  live despite the procedural lapse.

6. Despite the petitioner filing the GSTR subsequent to order under section 62, the adjudicating authority did not wish to correct his error of the serious procedural lapse under which he has passed the order Under Section 62, wherein the adjudicating authority  has already  confirmed a demand of 19,80,000. He has missed the opportunity to appreciate the fact that the registered person had genuine difficulties in filing the GSTR in time and has finally now filed on 03/12/2020, which requires a lenient view.

7. As the demand was raised on 21/09/2020 itself, even  without issuing the required notice seeking to file the GSTR under section 46, the principles of natural justice are violated. On realizing this fact, notice under section 46 was issued on 25/09/2020, four clear days after passing order under section 62.

8. The petitioner preferred an appeal before the GST Authorities. Even the First Appellate Authority failed to notice the serious lacuna in the Adjudication Order and rejected the Appeal on 12/06/2024. The time limit to pass Appellate Orders in line with Section 107 (13) were not considered   by the First Appellate Authority.

9. It would be interesting to note that Directorate General of Taxpayers Services under GST has issued guidelines on the topic APPEALS AND REVIEW MECHANISM under GST which states that The Order In appeal has to be a speaking order. It shall state the points for determination, the decisions thereon and reasons for the decision. The law provides an advisory time limit of one year  to pass the Appellate Order from the date of filing the Appeal.

10. The High Court has taken note of the Adjudication order as well as the Order In Appeal and observed that there are serious violations of procedural requirements and serious lacuna in the orders, However, there were no strictures  against the Adjudication Authority as well as First Appellate Authority even though the high court has observed several lapses by the Adjudicating Officer as well as the First appellate Authority.

11. The High Court has simply quashed both the orders and ordered for fresh adjudication  by the original Adjudicating Authority.

12. I presume that as Finance Minister as well as Chairman CBIC are interested in strict compliance of GST provisions, which are common for registered person  as well as gst officials and accordingly I hope that necessary departmental actions might have already  been taken on the Adjudicating Authority as well as the First Appellate Authority connected therewith.

13. I appeal to the CBIC to closely go through selected high court orders wherein serious lacuna and lapses of department officials are commented so as to take necessary corrective measures to stop the further occurrences of such issues in future.

14. I conclude by stating that implementation as well as making it functional  of the goods and service tax appellate tribunal  in 2025 itself may reduce the unwarranted writs on GST matters before various Jurisdictional High Courts.