2022 (3) TMI 626 - HC - GST

Ex-parte tax demand order upheld as appellate remedy available under Section 174(2)(c) CGST Act despite Finance Act repeal

M/s Maurya Enterprises Versus Additional Commissioner Central Excise And Service Tax and others

The HC dismissed the writ petition challenging an ex-parte tax demand order passed by Joint Commissioner under Finance Act, 1994. Despite the petitioner's ... Appealable order or not - Violation of principles of natural justice - ex-parte order - despite issuance of SCN, the petitioner has not participated or approached before the Additional Commissioner, Central Excise and Service Tax - demand of tax with interest and penalties - effect of repealment of the amendment of Finance Act, 1994 being Act No. 32 of 1994 - whether the petitioner’s right of Appeal is still protected as it was envisaged under the Finance Act, 1994? - HELD THAT:- Even if as an effect of Section 174 i.e. repealment of the Finance Act, 1994 is taken into consideration, if the argument of the learned counsel for the petitioner is considered, then too, the order of Joint Commissioner, impugned in the present writ petition, would be appellable under Section 107 of the CGST Act, 2017. Owing to this peculiar situation, where during the intervening period of subsistence of the order of imposition of tax on the petitioner by an order dated 31.12.2015, when the law has undergone a change with the enforcement of the CGST Act, 2017, this Court is of the view that in view of sub Clause (c) of sub Section (2) of Section 174 of the CGST Act, 2017, where it saves the rights and privileges including therewith the obligation and liability, which had accrued as a consequence of the amendment of Finance Act, 1994, in that eventuality, the assessee of the taxes under the Finance Act, 1994 could still avail the remedy of Appeal under Section 84 of the Finance Act, 1994, and the order of the Joint Commissioner, would be appellable under Section 84 of the Finance Act, 1994, which stand repealed to the extent it has been provided under sub Section (2) of Section 174 of the CGST Act, 2017. The writ petition is dismissed with liberty reserved for the petitioner to resort to the Appellate proceedings, which are available to him, in accordance with law. Issues:1. Imposition of tax liability under the Finance Act, 1994 and subsequent suspension of registration under the CGST Act, 2017.2. Challenge to the Demand Notice dated 31.12.2015 filed by the petitioner.3. Interpretation of Section 174 of the CGST Act, 2017 regarding the effect of repealment of the Finance Act, 1994 on the petitioner's right of appeal.Analysis:Issue 1:The petitioner, a sole proprietorship, faced a demand of Rs. 37,22,254/- along with interest and penalties under the Finance Act, 1994. Subsequently, upon seeking registration under the CGST Act, 2017, the petitioner was identified as a defaulter, leading to the suspension of registration and hindering business operations.Issue 2:The petitioner challenged the ex parte Demand Notice dated 31.12.2015 by the Joint Commissioner. The challenge was initiated belatedly on 05.12.2021, following a Show Cause Notice issued on 09.08.2021 for the cancellation of the petitioner's CGST registration.Issue 3:The central issue revolved around the interpretation of Section 174 of the CGST Act, 2017 concerning the repealment of the Finance Act, 1994. The argument focused on whether the petitioner's right of appeal under the Finance Act, 1994 was preserved post-repealment. The respondents contended that the savings clause of Section 174 protected rights, privileges, obligations, and liabilities acquired under the amended Act.The learned counsel for the respondents emphasized that the obligation or liability, including tax liability settled under the Finance Act, 1994, was safeguarded by the savings clause of Section 174 of the CGST Act, 2017. This protection extended to the petitioner's right to appeal under Section 84 of the Finance Act, 1994.Considering the repealment's implications, the Court opined that the petitioner could still avail the remedy of appeal under Section 84 of the Finance Act, 1994, despite its repeal. The Joint Commissioner's order was deemed appellable under Section 84 of the Finance Act, 1994, as saved by Section 174 of the CGST Act, 2017.Ultimately, the writ petition was dismissed, with the petitioner granted liberty to pursue appellate proceedings as per the available legal recourse.This detailed analysis encapsulates the legal intricacies and implications of the judgment rendered by the Hon'ble Sharad Kumar Sharma, J., addressing the issues of tax liability imposition, challenge to the Demand Notice, and the interpretation of statutory provisions under the CGST Act, 2017.