SYSTEM ERROR COULD NOT DEPRIVE OF THE RIGHT TO APPEAL

Appeal before First Appellate Authority

Section 107 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides for filing appeal by any aggrieved person by any decision or order passed by an Adjudicating Authority under the Act or State Acts in the prescribed form within 3 months from the date of communication made to the said person. If the said person is prevented from filing appeal within the limitation period the appellant, along with the appeal papers, may file an application for condonation of delay for one month. Beyond that period the Appellate Authority cannot condone the delay.

Issue

The issue to be discussed in this article is as to whether the delay can be condoned for the system failure in the GST Portal which prevented the appellant from filing appeal with reference to decided case laws.

Case laws

The appeal, as per the present system, cannot be filed manually. The same shall be filed electronically in the GST portal. If there is any error in the system the appellant cannot able to file the appeal on line. In such cases the High Courts held that the delay may be condoned.

In ‘Hindustan Steel & Cement v. Assistant State Tax Officer’ – 2022 (8) TMI 393 - KERALA HIGH COURT, the appellant could not able to file appeal within the limitation period due to the errors in the system. Therefore, the company filed a writ petition before the Kerala High Court. The High Court, after examining the statutory provisions contained in Sections 129 and 107 of the Act, held that the right of appeal available to a person in such circumstances cannot be denied. The High Court observed that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand, does not mean that the intention of the legislature was to deny the right of appeal to the aggrieved party. The High Court further directed the Department to do the needful within one month from the date of receipt of the certified copy of the order. The High Court further directed the Department to issue a circular taking note of the observations of the High Court to prevent the recurrence of such issue.

In ‘Balvir Singh v. Assistant Enforcement Officer, Enforcement Squad State GST Department, Wayanad and others’- 2025 (6) TMI 1867 - KERALA HIGH COURT, the principal place of the business of the petitioner is located at Calicut and the principal place of business is at Bangalore. The goods transported by the petitioner to Calicut was intercepted by the Department and the vehicle was detained under Section 129(3) of the Act. The Authority passed an order against the petitioner confirming the tax demanded. Despite the petitioner was aggrieved against the said order, the petitioner paid the tax under protest. After this he took steps to file an appeal against the said order in the portal online in the Form GST APL 01. The petitioner is required to feed the date of the impugned order, dispute amount etc. Since the petitioner paid the entire tax, the system showed the outstanding amount as NIL. Since the disputed amount could not be ‘zero’ the system did not accept the appeal. Therefore, the petitioner could not upload the appeal in the system. The said face was intimated to the State Tax Officer by the petitioner, which was before the expiry of the statutory period for submitting an appeal under Section 107 of the Act. The Department replied that since the petitioner paid the entire tax and penalty through Form DRC – 03, the proceedings initiated against the petitioner was concluded. In the said reply, the communication made by the petitioner was not taken care of.

Therefore, the petitioner filed the appeal before the First Appellate Authority manually on 05.03.2024. The said appeal was considered by the First Appellate Authority, the third respondent. The manual appeal was rejected by the Appellate Authority on the ground that the appeal was time barred. Therefore, the petitioner filed the present writ petition before the Kerala High Court. The petitioner, prayed the following in the writ petition-

• To quash the impugned orders passed by the First respondent and third respondent;
• To direct the third respondent, the First Appellate Authority to restore the appeal to its files, consider the same and dispose of the appeal on merits after hearing the petitioner;
• To direct the fourth respondent to carry out necessary updates on the GST Portal to cover the contingencies highlighted by the petitioner in the writ petition;
• To pass such other orders as deem fit by the High Court including cost of the case.

The petitioner submitted the following before the High Court-

• The petitioner was prevented from invoking the statutory remedies available to him in time, for the reasons beyond the control of the petitioner.
• Due to the failure on the part of the system the petitioner was prevented from filing the appeal.

The High Court considered the submissions of the petitioner. The High Court was of the view that if the tax covered by the order under challenge was paid in full, will not take away the right of appeal of the petitioner. In this case the petitioner paid the full amount of tax and penalty under protect the petitioner was deprived of the opportunity to invoke the statutory remedy. The petitioner attempted to file appeal within the statutory period and it was prevented from filing appeal. The petitioner informed the said fact to the Department but the same has not been considered by the Department.

The High Court relied on its own judgment in ‘Hindustan Steel & Cement’ (supra). The High Court observed that the High Court passed the order on 20.07.2022 with directions to the Department the system was not updated by the Department which shows the laches on the part of the Department. Even though the Department is correct in rejecting the appeal which is filed manually beyond 4 months, the Department did not consider the circumstances which prompted the petitioner to file appeal beyond the statutory period. The High Court in its earlier order dated 20.07.2022 gave directions in this regard but the Department did not take care of it.

The High Court allowed the writ petition. The High Court directed the First Appellate Authority to consider the appeal filed by the petitioner on merits by treating it as an appeal submitted within the limitation period. The High Court further gave directions to the 4^th respondent to ensure the modifications in the portals are made, so as to enable the parties to upload the appeals even after making the payments covered under the impugned orders whether under protest or otherwise.