2024 (11) TMI 979 - HC - GST

Penalty for excess input tax credit quashed after appeal dismissed for delay despite medical emergency

Calcutta HC allowed writ petition challenging penalty for excess input tax credit. Appellate Authority dismissed petitioner's appeal solely for delay, ... Levy of penalty for availing excess Input Tax credit - delay in filing the appeal by the petitioner - HELD THAT:- This Court allows the writ petition on the grounds that the delay in filing the appeal by the petitioner was due to an unavoidable personal circumstances, including the critical illness of her husband, which required extensive medical attention. The petitioner provided supporting medical documentation, but the Appellate Authority refused to condone the delay. This rigid approach fails to account for genuine extenuating circumstances, reflecting a lack of judicial empathy and an unreasonable interpretation of statutory time limits. Given the petitioner's situation, this decision by the Appellate Authority to dismiss the appeal based solely on timing considerations was unduly harsh and legally unsound. Moreover, the petitioner’s right to further appeal has been obstructed by the non-formation of the GST Appellate Tribunal, effectively denying her a statutory right to a higher appeal. In light of the procedural irregularities, the arbitrary nature of the actions and the statutory misapplication, this court finds the petitioner’s case to be meritorious. Accordingly, the writ petition is allowed, and the impugned orders dated May 24, 2024 is quashed. The petitioner’s rights under the WBGST Act, 2017, are restored, with all benefits that accompany this decision, without any adverse consequences arising from the annulled orders. Application disposed off. Issues:Challenge to order imposing penalty for availing excess Input Tax Credit under WBGST Act, 2017. Appeal against order confirming demand and penalties. Delay in filing appeal due to personal circumstances. Violation of principles of natural justice. Non-formation of GST Appellate Tribunal obstructing right to appeal.Analysis:The petitioner, a business entity engaged in wholesale and retail trade, challenged an order imposing penalties for availing excess Input Tax Credit under the WBGST Act, 2017. The Appellate Authority confirmed the demand and penalties, leading to the petitioner filing an appeal under Section 107 of the Act. The petitioner cited personal circumstances, specifically her husband's critical illness, as the reason for the delay in filing the appeal. Despite providing medical documentation, the appeal was rejected on grounds of limitation, prompting the petitioner to file a writ petition challenging the order (Paragraphs 1-5).The petitioner contended that the order passed by the adjudicating authority lacked adherence to principles of natural justice as no personal hearing was provided, violating Section 75(4) of the CGST Act, 2017/WBGST Act, 2017. It was argued that the authority acted in a biased and arbitrary manner, disregarding procedural mandates and statutory obligations. The petitioner also highlighted that the authority failed to consider the reversal of erroneously availed Input Tax Credit and exceeded the statutory time limit prescribed by law (Paragraphs 6-8).The delay in filing the appeal was attributed to extenuating personal circumstances, particularly the critical illness of the petitioner's husband. Despite providing supporting medical documentation, the Appellate Authority refused to condone the delay, leading to the petitioner asserting that her right to appeal was obstructed due to the non-formation of the GST Appellate Tribunal. The petitioner argued that this denial infringed upon her constitutional rights under various articles of the Indian Constitution (Paragraphs 9-10).The respondent authorities argued that the appeal exceeded the allowable period of four months under Section 107 of the WBGST Act, 2017. While a brief condonation request was included with the appeal, a show-cause notice was issued questioning the delay. The Court, after examining the arguments and documents presented, allowed the writ petition, emphasizing that the delay was due to unavoidable personal circumstances, and the Appellate Authority's refusal to condone it was unduly harsh and legally unsound. The Court quashed the impugned orders, restoring the petitioner's rights under the law (Paragraphs 11-13).