2023 (8) TMI 524 - HC - GST

Appeals on Partnership Firm Dues Must Be Filed Within 3 Months of Order Communication Under Rule 108

The HC dismissed the petitions challenging recovery of dues from partners of partnership firms, holding that appeals must be filed within three months ... Interpretation of Section 107 of the CGST Act - Rule 108 of the CGST Rules - electronic filing of appeal and consequence for limitation - service/communication of order as commencement point for limitation - uploading of Order in Original on GST portal as alternative mode of service - Rule 93 - re credit of rejected refund claim dependent on undertaking or finally rejected appeal - Section 79 - recovery of tax including debit freeze of bank accounts - Section 169 - modes of service of decision, order or notice - Section 90 - joint and several liability of partners for firm's duesInterpretation of Section 107 of the CGST Act - Rule 108 of the CGST Rules - electronic filing of appeal and consequence for limitation - service/communication of order as commencement point for limitation - uploading of Order in Original on GST portal as alternative mode of service - Whether non uploading of an order on the GST portal prevented filing of an appeal in electronic mode and delayed commencement of the limitation period for filing an appeal under Section 107. - HELD THAT: - The Court held that the statutory limitation for filing an appeal under Section 107 begins from the date the decision or order is communicated to the person. Rule 108 prescribes the form and electronic filing mechanism but does not prescribe that limitation will run only from the date of uploading of the order on the portal; uploading is an alternative mode of making the order available. Where the order has been communicated (manually, by email or otherwise as permitted under Section 169/Section 37C), the limitation period commences from that communication. Authorities and precedents relied upon by the petitioners (including decisions where portal technical glitches prevented filing) were confined to their peculiar facts and addressed the question of computing limitation where uploading had not occurred and no effective electronic filing was possible. In the facts of these petitions the orders were communicated to the petitioners/partners and repeated notices were sent; consequently the inability or delay in uploading did not excuse non filing within the statutory period. [Paras 10, 11, 13, 14]Non uploading of the order did not, by itself, prevent filing of an appeal or defer commencement of the limitation period where the order had been otherwise communicated; limitation ran from communication and the petitions alleging inability to file for that reason fail.Rule 93 - re credit of rejected refund claim dependent on undertaking or finally rejected appeal - Whether the refund amount should be re credited to the electronic credit ledger where no undertaking was given and no appeal was filed. - HELD THAT: - Rule 93 provides that re credit to the electronic credit ledger occurs when the claimant gives an undertaking that he shall not file an appeal or when the appeal is finally rejected. The Court found that in the present case the claimant had neither furnished the prescribed undertaking nor filed an appeal (the appeal was not pending or finally rejected), and therefore the statutory preconditions for re credit under Rule 93 were absent. The authority's refusal to re credit the claimed refund therefore accorded with the rule's express conditions. [Paras 11]Re credit was not permissible because there was no undertaking by the claimant and no appeal had been finally rejected.Section 79 - recovery of tax including debit freeze of bank accounts - Section 90 - joint and several liability of partners for firm's dues - service/communication of order as commencement point for limitation - Whether recovery actions (including debit freeze of bank accounts) under Section 79 were valid and whether partners could escape liability where orders had been communicated and appeals were time barred. - HELD THAT: - The Court recorded that recovery proceedings under Section 79(1)(c) were initiated after the appeal period had lapsed; the impugned Orders in Original had been communicated to the authorised person and letters were sent requesting payment or intimation of appeal. Where the appeal period had expired (including by operation of extended limitation rules applicable in the period), dues became recoverable and the department was entitled to pursue recovery measures including seeking debit freeze from banks. Further, Section 90 makes the firm and each partner jointly and severally liable for dues; the partners therefore remained liable and could not escape liability on the ground of non uploading where communication had been effected and appeals were not filed in time. [Paras 15, 16]Recovery steps under Section 79 were permissible and partners are jointly and severally liable under Section 90; the appeals filed after initiation of recovery were time barred and the challenge to recovery failed.Final Conclusion: The petitions were dismissed. The Court held that where an Order in Original has been communicated by permitted modes, limitation for filing an appeal under Section 107 runs from communication and not from portal uploading; re credit under Rule 93 is permissible only upon an undertaking or final rejection of appeal; and recovery measures under Section 79 and partner liability under Section 90 were lawfully invoked. Rule discharged; petitions dismissed with no costs. Issues Involved:1. Interpretation of Section 107 of the Central Goods and Services Tax Act, 2017 (CGST) and Rule 108 of the Central Goods and Services Tax Rules, 2017.2. Non-uploading of Order-In-Original (OIO) on the GST Portal.3. Re-credit of rejected refund claims.4. Limitation period for filing appeals.5. Recovery proceedings and liability of partners.Summary:Issue 1: Interpretation of Section 107 and Rule 108 of CGST Act and RulesThe petitions raised a common question regarding the interpretation of Section 107 of the CGST Act and Rule 108 of the CGST Rules. The court needed to decide whether the petitioners were prevented from filing appeals electronically due to the non-uploading of Orders-In-Original (OIO) on the GST Portal.Issue 2: Non-uploading of OIO on GST PortalIn Special Civil Application No. 14867 of 2022, the petitioner argued that the OIO dated 23.08.2019 was not uploaded on the GST Portal, preventing them from filing an appeal electronically as mandated by Rule 108. The court noted that the petitioner received the OIO manually but did not file an appeal. The court held that the non-uploading of the OIO did not prevent the petitioner from filing an appeal, as the manual receipt of the order was sufficient for filing an appeal electronically.Issue 3: Re-credit of Rejected Refund ClaimsThe petitioner in Special Civil Application No. 14867 of 2022 also sought re-credit of the rejected refund claim in their electronic ledger under Rule 93 of the CGST Rules. The court found that the petitioner neither filed an appeal nor provided an undertaking not to file an appeal, as required by Rule 93. Therefore, the request for re-credit was rightly rejected.Issue 4: Limitation Period for Filing AppealsThe court examined whether the limitation period for filing appeals began from the date of manual receipt of the OIO or from the date of its uploading on the GST Portal. The court referred to relevant provisions, including Section 107, Section 169 of the CGST Act, and Rule 108 of the CGST Rules. The court concluded that the limitation period commenced from the date the order was manually received, not from its uploading on the GST Portal.Issue 5: Recovery Proceedings and Liability of PartnersIn Special Civil Applications No. 4876 and 5731 of 2023, the petitioners argued that recovery proceedings initiated under Section 79 of the CGST Act were invalid due to the non-uploading of the OIO. The court found that the petitioners were manually served with the orders and did not file appeals within the prescribed period. The court held that the recovery proceedings were valid and that the partners were jointly and severally liable for the dues under Section 90 of the CGST Act.Conclusion:The court dismissed all petitions, holding that the non-uploading of OIOs on the GST Portal did not prevent the petitioners from filing appeals electronically. The limitation period for filing appeals commenced from the date of manual receipt of the orders. The court also upheld the validity of the recovery proceedings and the joint and several liability of the partners.