2025 (4) TMI 1153 - HC - GST

Appellate authorities must provide substantive reasoning for appeal dismissals under CGST Act, not rely on mere non-appearance

ST. Antony Trading And Transport Pvt. Limited Versus Joint Commissioner (Appeals), Thrissur.

The SC examined whether an Appellate Authority under the CGST Act can dismiss appeals solely due to non-appearance. The Court held that Section 107(12) ... Challenge to orders of the Appellate Authority under the Central Goods and Services Tax Act, 2017 - dismissal of appeal after noticing the non-appearance of the petitioner - whether the Appellate Authority under the CGST Act can dismiss appeals for default? - HELD THAT:- Section 107 (12) of the CGST Act specifically states that the order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination and the reasons for the decision. In the light of sub-clause (12) of Section 107 of the CGST Act, it is evident that the Appellate Authority has to consider the matter on merits and is not entitled to dismiss an appeal merely for non-appearance. Of course, when there is failure of the appellant to appear, the Appellate Authority shall not grant more than three adjournments to a party during the hearing of the appeal. Despite the failure of an appellant to appear, the Appellate Authority has to pass an order after determining the points for consideration, and the decision should be on merits. When the impugned order is appreciated, it is noticed that the points for determination had not been stated and the order was not issued on merits. There is no consideration of any of the issues raised by the appellant, and hence, the impugned order is perverse and is liable to be interfered with, in exercise of the jurisdiction under Article 226 of the Constitution of India. Conclusion - The Appellate Authority under the CGST Act cannot dismiss appeals merely on the ground of non-appearance without deciding on merits and without stating points for determination and reasons. Petition allowed. 1. ISSUES PRESENTED and CONSIDEREDThe primary legal question considered by the Court was whether the Appellate Authority under the Central Goods and Services Tax Act, 2017 (CGST Act) can dismiss appeals solely on the ground of the appellant's non-appearance. This raised subsidiary issues concerning the statutory mandate under Section 107(12) of the CGST Act regarding the requirements for the disposal of appeals, specifically whether the Appellate Authority is obliged to decide appeals on merits by stating points for determination and reasons for its decision, even in cases of default by the appellant.2. ISSUE-WISE DETAILED ANALYSISIssue: Whether the Appellate Authority can dismiss appeals for default/non-appearance without deciding on merits and without stating points for determination and reasons.Relevant legal framework and precedents: Section 107(12) of the CGST Act mandates that the Appellate Authority's order disposing of an appeal must be in writing, explicitly stating the points for determination and the reasons for the decision. This provision implies a substantive requirement that appeals must be adjudicated on merits rather than dismissed mechanically for procedural defaults such as non-appearance.The Court relied heavily on the Division Bench decision of the Patna High Court in Purushottam Stores vs. State of Bihar, which interpreted Section 107 of the CGST Act in detail. The Patna Bench held that the Appellate Authority must conduct a proper hearing and make a considered decision on the grounds of appeal, even if the appellant fails to appear after being granted three adjournments. The order must not be a mere formality or mechanical dismissal but must reflect an inquiry into the appeal's merits. The Patna Bench further emphasized that dismissal solely for non-appearance or lack of effective prosecution amounts to an abdication of the Appellate Authority's statutory duty.The Patna decision also referenced the Supreme Court's ruling in Commissioner of Income Tax, Madras v. Chenniappa Mudaliar, which emphasized the necessity for adjudicatory bodies to decide appeals on merits and not merely dismiss them on procedural grounds without consideration of substantive issues.Court's interpretation and reasoning: Applying these principles, the Court scrutinized the impugned orders, which dismissed the appeals for the financial years 2020-21 and 2021-22 due to the petitioner's non-appearance, without formulating any points for determination or providing reasons. The Court observed that the Appellate Authority had granted three adjournments but thereafter dismissed the appeals solely based on default, without any substantive adjudication.The Court held that such dismissal contravenes the express statutory mandate under Section 107(12) of the CGST Act. The Appellate Authority is required to consider the appeal on merits and pass a reasoned order stating the points for determination and the rationale for its decision. Non-appearance by the appellant does not absolve the Authority from this duty. The Court found the impugned orders to be perverse and legally unsustainable as they failed to comply with the statutory requirements and principles established by precedent.Key evidence and findings: The factual matrix showed that the petitioner was granted three adjournments, yet failed to appear for the hearing. The Appellate Authority dismissed the appeals without stating any points for determination or reasons, merely citing non-appearance. This procedural approach was challenged as contrary to the CGST Act and judicial precedent.Application of law to facts: The Court applied the statutory provisions and judicial principles to conclude that the impugned orders were invalid. The Appellate Authority's failure to decide the appeals on merits, to state points for determination, and to provide reasons rendered the dismissal orders legally defective.Treatment of competing arguments: The Government Pleader presumably argued in support of the impugned orders or the authority's power to dismiss for default. However, the Court rejected any such contention that dismissal for non-appearance could be automatic or without substantive adjudication. The Court emphasized the statutory and judicial insistence on reasoned orders and merit-based decisions.Conclusions: The Court concluded that the Appellate Authority under the CGST Act cannot dismiss appeals merely on the ground of non-appearance without deciding on merits and without stating points for determination and reasons. The impugned orders dismissing the appeals on such grounds were set aside. The matter was remanded for fresh consideration after affording the petitioner a fresh opportunity of hearing.3. SIGNIFICANT HOLDINGSThe Court held:'Section 107(12) of the CGST Act specifically states that the order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination and the reasons for the decision. In the light of sub-clause (12) of Section 107 of the CGST Act, it is evident that the Appellate Authority has to consider the matter on merits and is not entitled to dismiss an appeal merely for non-appearance.'Further quoting the Patna High Court:'When an appeal is dismissed for reason only of absence of the appellant or lack of effective prosecution, then the Tribunal should be found to have abdicated its powers and not followed the statutory mandate.'The Court established the core principle that an Appellate Authority's order under the CGST Act must be reasoned and merit-based, even in cases of default by the appellant, and mere non-appearance cannot justify dismissal without adjudication.Accordingly, the Court set aside the impugned orders and directed the Appellate Authority to reconsider the appeals afresh after granting a fresh hearing opportunity to the petitioner, thereby reinforcing procedural fairness and adherence to statutory mandates in tax appellate proceedings.