2024 (9) TMI 1641 - HC - GST

Payment under Section 129 does not bar appeal where authorities' failure to record payments prevented filing

Section 129(5) is interpreted to operate only in relation to a show cause notice: payment of the entire amount specified in the notice concludes ... Right to appeal despite payment of the demand - deemed conclusion of proceedings upon payment under Section 129(5) - conditional requirement for filing appeal under Section 107(6) including proviso relating to payment of penalty - payment under protest - administrative portal malfunction preventing filing of statutory appeal - equitable relief for enabling filing of appeals where state fault prevented filingRight to appeal despite payment of the demand - deemed conclusion of proceedings upon payment under Section 129(5) - conditional requirement for filing appeal under Section 107(6) including proviso relating to payment of penalty - payment under protest - Whether payment in full of the tax, penalty and cess as determined under an order passed under Section 129(3) of the State Act operates to bar the petitioners from filing statutory appeals against those orders. - HELD THAT: - The Court examined the interplay between the appellate filing conditions and the effect of payment. Section 107(6) prescribes conditions for filing an appeal, and its proviso requires payment equal to 25% of the penalty for appeals against orders under Section 129(3); Section 129(5) provides that upon payment of the amount referred to in subsection (1) all proceedings in respect of the notice under subsection (3) shall be deemed concluded. The Court held that Section 129(5)'s deeming of conclusion of proceedings upon payment of the amount referred to in subsection (1) does not operate to extinguish the statutory right to appeal against an order passed under Section 129(3). The Court observed that Section 129(5) refers to the notice and not to the order and therefore cannot be read to take away the right of appeal where payment has been made, particularly where payment was made under protest and the appellants sought to exercise their appeal rights within the prescribed period. The Court further noted that the petitioners had timely informed the authorities of a portal malfunction which prevented filing of the appeals and that no corrective steps were taken by the respondents despite representations. Applying these legal principles to the facts, the Court concluded that the petitioners' right to file appeals remained intact and that the respondents' failure (portal glitch or non setoff) had prevented the filing of appeals. [Paras 8, 9, 10, 11, 12]Payment in full of the demand did not bar the petitioners from filing appeals against the orders passed under Section 129(3); the petitioners retained the right to appeal and their inability to file due to the respondents' fault was not imputable to them.Administrative portal malfunction preventing filing of statutory appeal - payment under protest - equitable relief for enabling filing of appeals where state fault prevented filing - What relief should be granted where petitioners, having paid the demanded amount and having been prevented by a portal malfunction (and despite representations) from filing the statutory appeals within the limitation period. - HELD THAT: - The Court found on the factual matrix that the petitioners had paid the demanded amounts, had informed the authorities within the appeal period about the portal alert and the payments being made under protest, but were unable to file appeals because the portal continued to require a setoff entry. In view of the respondents' admitted position that the demands stood concluded on payment and the respondents' failure to rectify the portal glitch or accept the appeals, the Court exercised its supervisory jurisdiction to grant prospective and remedial directions. The directions permit the petitioners to file the appeals within a limited period, require the respondents to make infrastructure available so the appeals are accepted on the portal, allow an additional short window to file manually if infrastructure is not provided, and preclude the respondents from insisting on limitation where appeals are filed within the periods directed by the Court. [Paras 13]Petitioners granted liberty to file appeals within ten days; respondents to ensure portal infrastructure to accept the appeals or accept manual filings within a further seven days; limitation shall not be insisted upon for appeals filed within the periods ordered.Final Conclusion: Writ petitions disposed of by holding that payment of the demand does not extinguish the statutory right to appeal; petitioners were allowed limited time to file the appeals and respondents were directed to facilitate acceptance of the appeals (electronic or manual) without taking a limitation point. Issues:1. Non-reflection of payments made by petitioners in the website affecting their ability to file statutory appeals.2. Glitch in the portal preventing petitioners from filing appeals despite making full payments.3. Interpretation of Section 129(5) of the State Act regarding conclusion of proceedings after payment.4. Right of petitioners to file appeals even after paying the entire demanded amount under Section 129(3) of the State Act.Analysis:Issue 1: The petitioners approached the court due to the respondent authorities' failure to reflect the payments made in the website, hindering their ability to file statutory appeals. The petitioners had paid the demanded amounts under protest but faced difficulties in initiating appeals due to this non-reflection.Issue 2: The glitch in the portal prevented the petitioners from filing appeals despite making full payments as demanded under Section 129(3) of the State Act. The petitioners submitted communications to the respondent authorities highlighting this issue, but no action was taken to rectify the problem, leading to the filing of the writ petitions.Issue 3: The respondent authorities argued that as per Section 129(5) of the State Act, upon payment of the amounts specified in Section 129(1), all proceedings under Section 129(3) are deemed concluded. This interpretation was used to justify not allowing the petitioners to file appeals.Issue 4: The court analyzed Sections 107 and 129 of the CGST Act, 2017, and the State Act to determine the petitioners' right to file appeals after paying the demanded amounts. The court found that there was no legal bar to filing appeals if the entire demand had been paid. It emphasized that Section 129(5) only pertains to the conclusion of proceedings specified in the notice, not the right to file appeals.In conclusion, the court held that the petitioners were wrongly deprived of their right to file appeals due to the respondent authorities' fault. The court directed the petitioners to file appeals within a specified timeline and instructed the respondent authorities to facilitate the acceptance of these appeals, even in manual mode if necessary, without insisting on the limitation period.