2025 (5) TMI 850 - HC - GST

Taxpayer Granted 45-Day Window to Appeal GST Return Filing Dispute, Ensuring Fair Hearing and Right to Challenge Tax Demand

M/s. Harsh Khanna And Sons HUF Versus Assistant Commissioner Division GST Delhi East Commissionerate.

SC examined a GST case involving delayed return filing and Input Tax Credit (ITC) denial. The court permitted the petitioner to file an appeal within 45 ... Availment of Input Tax Credit (ITC) claimed by the Petitioner - belated filing of Goods and Services Tax (GST) returns beyond the prescribed deadline under Section 16(5) of the Central Goods and Services Tax Act, 2017 - Appealable order - HELD THAT:- In the opinion of this Court, the question as to what is the effect of nonfiling of returns within the prescribed period and whether there was a lapse on the Petitioner in even curing the deficiencies which were pointed out by the deficiency memo etc., would be factual aspects, which would have to be appreciated by the Appellate Authority - The impugned order is appealable order under Section 107 of the CGST Act. The difficulty that the Petitioner expresses is that since no reply was filed, there are no documents on record on behalf of the Petitioner. The Petitioner is permitted to avail of the appellate remedy under Section 107 of the CGST Act - Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court include:- Whether the Petitioner's belated filing of Goods and Services Tax (GST) returns beyond the prescribed deadline under Section 16(5) of the Central Goods and Services Tax Act, 2017 (CGST Act) precludes the availment of Input Tax Credit (ITC) claimed by the Petitioner.- The legal consequences of non-filing or delayed filing of GST returns on the entitlement to ITC and the validity of the demand raised by the tax authorities under Sections 16(4), 16(5), 16(6), 50, 73 of the CGST Act and corresponding provisions of the Integrated Goods and Services Tax Act, 2017 (IGST Act) and State GST Act (SGST Act).- Whether the Petitioner's failure to respond to the Show Cause Notice (SCN) and participate in the personal hearings affects the validity of the impugned order.- The scope of appellate remedy available under Section 107 of the CGST Act for challenging the impugned order and the procedural safeguards to be afforded to the Petitioner in the appeal process.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Effect of Belated Filing of GST Returns on ITC AvailmentThe relevant legal framework comprises Sections 16(4), 16(5), and 16(6) of the CGST Act, 2017, which govern the conditions and timelines for availing ITC. Section 16(5) specifically mandates that ITC shall not be available if the return relating to the said credit is not filed within the prescribed period.The Court noted that the Petitioner filed the returns on 14th December 2021, whereas the deadline was 30th November 2021. This delay of 14 days led the Assistant Commissioner to conclude that the ITC claimed by the Petitioner amounting to Rs. 70,45,630/- was not admissible, resulting in a demand under Section 73 of the CGST Act for recovery of the ITC along with interest under Section 50 and penalty under Section 73(9).The Court observed that the question of whether the delay was excusable and whether the Petitioner had taken any steps to cure the deficiency (such as responding to the deficiency memo) are factual matters that fall within the jurisdiction of the Appellate Authority. The Court refrained from adjudicating on the merits of the delay, emphasizing that the factual matrix and evidence must be examined during the appeal.Issue 2: Validity of the Impugned Order in Light of Non-Participation by the PetitionerThe Petitioner did not file any reply to the SCN nor appeared for personal hearings, which led to the passing of the impugned order. The Court acknowledged this lapse but did not treat it as a bar to the Petitioner's right to appeal. Instead, the Court highlighted that the impugned order is appealable under Section 107 of the CGST Act.The Court permitted the Petitioner to avail the appellate remedy and to file all relevant documents and evidence in support of its case before the Appellate Authority. It recognized that the absence of a reply at the SCN stage had resulted in no documents being on record but emphasized that the appeal process would provide an opportunity for the Petitioner to present its case comprehensively.Issue 3: Procedural Safeguards and Appellate RemedyThe Court underscored the procedural safeguards inherent in the CGST Act by directing that the appeal be entertained on merits and not be dismissed on the ground of limitation. It mandated that the appeal be filed within 45 days along with the pre-deposit as required under the statute.This direction ensures that the Petitioner's substantive rights are protected and that the Appellate Authority undertakes a full-fledged consideration of the facts and law, including any mitigating circumstances for the delay in filing returns.3. SIGNIFICANT HOLDINGSThe Court held that the issue of denial of ITC on account of delayed filing of returns is essentially a factual determination to be examined by the Appellate Authority. The Court stated:'The question as to what is the effect of nonfiling of returns within the prescribed period and whether there was a lapse on the Petitioner in even curing the deficiencies which were pointed out by the deficiency memo etc., would be factual aspects, which would have to be appreciated by the Appellate Authority.'Further, the Court preserved the Petitioner's right to appeal and emphasized the importance of procedural fairness by directing:'The Appellate Authority shall consider the matter on merits itself and not dismiss it on the ground of limitation.'Core principles established include:The statutory bar on ITC availment due to delayed filing of returns under Section 16(5) is subject to factual inquiry and is not to be mechanically applied without considering the circumstances and evidence.Non-participation in SCN proceedings does not preclude the Petitioner from seeking appellate remedy.The appellate process under Section 107 of the CGST Act provides an effective forum for adjudication of disputes arising from tax demands, with the requirement of pre-deposit and adherence to limitation periods, but with a mandate for merits-based consideration.Final determinations on each issue are:The Court did not quash the impugned order but allowed the Petitioner to file an appeal within 45 days with pre-deposit.The Petitioner was granted an opportunity to submit documents and evidence in the appeal to support the case for condonation of delay and entitlement to ITC.The Appellate Authority was directed to consider the appeal on merits and not reject it on procedural grounds such as limitation.