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, despite medical documentation showing husband's critical illness caused unavoidable circumstances. Court found Authority's rigid approach lacked judicial empathy and unreasonably interpreted statutory time limits. Non-formation of GST Appellate Tribunal denied petitioner's statutory right to higher appeal. HC quashed impugned orders dated May 24, 2024, finding procedural irregularities and arbitrary actions. Petitioner's rights under WBGST Act, 2017 restored with all benefits without adverse consequences.

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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).

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