2023 (8) TMI 173 - HC - GST

HC sets aside GST registration cancellation appeal rejection, remands case for proper procedural compliance under Section 107(6)

JEM Exporter, Versus Union of India, State of Maharashtra, Commissioner of CGST & C. Ex, Appeal-I, Joint Commissioner Appeal-I, CGST & Cx. Mumbai, Deputy Commissioner Mumbai, Assistant Commissioner, Superintendent, Mumbai

The HC set aside the Commissioner (Appeal)'s order dated 17th June 2022 that rejected an appeal against cancellation of GST registration. The Commissioner ... Maintainability of appeal - fulfilment with the requirement of pre-deposit or not - Rejection of application for revocation of cancellation of registration of the Petitioner - HELD THAT:- As per section 107(6) of the CGST Act, 2017, no appeal shall be filed unless the Appellant has paid admitted tax, interest, fine, fee and penalty in full and a sum equal to 10% of the amount of tax in dispute in relation to which the appeal has been filed. Rule 108(2) of the CGST Rules provides that the grounds of appeal and the form of verification as contained in GST APL 01 form shall be signed in the manner specified in Rule 26 - The Commissioner (Appeal) in his order dated 17th June 2022 in para 5.4 to 5.6 observed that the Appellant has not provided challan or proof of having made pre-deposit. The Commissioner (Appeal) further observed that filing of certified copy of the order against which the appeal is filed has not been complied with and further the appeal is not signed by the proprietor nor has the Appellant submitted any authority letter of the signatory. Therefore, the Commissioner (Appeal) held that the appeal is to be rejected on this ground itself. The Commissioner (Appeal) was not justified in deciding the matter on merits after having come to a conclusion that the appeal is to be rejected on the ground of no proof of pre-deposit, failure to file certified copy of the order and the appeal not having been authenticated as per rule 26(2)(a) of the CGST Rules. If the appeal is rejected on this ground, then any adjudication on merits is not permissible by the Appellate Authority and would be without jurisdiction. The contention raised that the procedure for processing the refund application and for cancellation of registration has not been followed and thereby objecting the very procedure adopted by the adjudicating authority was not canvassed before the lower authorities by the Petitioner. The Order in Appeal dated 17th June 2022 is set aside and restored to the file of the Commissioner (Appeal) - Commissioner (Appeal) will issue a defect memo to the Petitioner pointing out the procedural defect in the appeal and would give adequate opportunity for rectifying the same - Petition disposed off. Issues Involved:1. Legality of the rejection of the application for revocation of cancellation of GST registration.2. Legality of the demand for tax, interest, and penalties.3. Compliance with procedural requirements for filing an appeal.4. Adherence to natural justice principles.Summary:Issue 1: Legality of the Rejection of Application for Revocation of Cancellation of GST RegistrationThe petitioner challenged the order by the Commissioner of Goods and Service Tax and C Ex. [Commissioner (Appeal)] dated 17th June 2022, which upheld the rejection of the application for revocation of cancellation of the petitioner's GST registration. The petitioner argued that the cancellation was improper as the procedure prescribed under Rules 21A, 22, and 23 of the CGST Rules was not followed, and a notice under Section 74 of the CGST Act was not appropriate for processing the refund application.Issue 2: Legality of the Demand for Tax, Interest, and PenaltiesThe petitioner contended that the demand of Rs. 1,01,02,741/- along with interest and penalties was raised without following the prescribed procedure for processing refund applications under Rules 89 to 97A of the CGST Rules. The petitioner argued that no demand could be raised while processing the refund application, and at most, an order rejecting the refund application could be passed.Issue 3: Compliance with Procedural Requirements for Filing an AppealThe respondents argued that the petitioner failed to comply with mandatory pre-deposit requirements and did not authenticate the appeal as per Rule 26 of the CGST Rules. The Commissioner (Appeal) observed that the appeal was liable to be rejected due to non-compliance with procedural requirements, including the failure to provide proof of pre-deposit, non-filing of a certified copy of the order, and lack of proper authentication of the appeal memo.Issue 4: Adherence to Natural Justice PrinciplesThe court held that the Commissioner (Appeal) was not justified in deciding the matter on merits after concluding that the appeal was to be rejected on procedural grounds. The court emphasized that justice cannot be denied for failure to comply with procedural requirements without giving an opportunity to rectify the defects. The court cited various judgments, including the Supreme Court's decision in Jagat Dhish Bhargava Vs. Jawahar Lal Bhargava, emphasizing that substantive rights should not be defeated on technical grounds.Conclusion:The court set aside the Order in Appeal dated 17th June 2022 and restored the matter to the file of the Commissioner (Appeal). The Commissioner (Appeal) was directed to issue a defect memo to the petitioner, pointing out the procedural defects and providing an opportunity to rectify them. If the petitioner rectifies the defects, the Commissioner (Appeal) will pass a fresh order disposing of the appeal on merits. The petition was disposed of with no order as to costs, and all contentions of the parties were kept open.