2025 (6) TMI 1867 - HC - GST

Taxpayer's time-barred appeal under CGST Section 107 restored due to system failures preventing timely filing

Balvinder Singh Prop. Ms Symphony Impex Versus Assistant Enforcement Officer Enforcement Wayanad, Enforcement Officer Wayanad, Joint Commissioner (Appeals) State GST Department Eranchipalam Calicut, Goods And Services Tax Network New Delhi.

The Kerala HC quashed an order rejecting a taxpayer's appeal as time-barred under CGST Act Section 107. The petitioner was prevented from filing the ... Initiation of proceedings u/s 129 of the CGST Act - time limitation - it is the specific case of the petitioner that, due to the failure on the part of the system maintained by the respondents to address the situation that arose in this case, the petitioner was prevented from filing appeal - HELD THAT:- As regards the right of an appeal contemplated under Section 107 of the CGST Act is concerned, if the taxpayer is aggrieved by any order passed by the authorities concerned, he can invoke the said remedies. The fact that the tax covered by the order under challenge was paid, will not take away such right of appeal of the party. Here in this case, merely because, the petitioner remitted the amount under protest, he was deprived of the opportunity to invoke the statutory remedy. The denial of that statutory remedy was not attributable to the petitioner at all, but solely because of the shortcomings in the system provided by the respondents for filing the appeal. Ext.P2 would indicate that, the petitioner made an attempt to file an appeal within the statutory period and he was prevented from doing the same only because of the reason that, the petitioner had paid the entire amount demanded as per the impugned order. Even though the said aspect was highlighted by the petitioner before the authorities concerned in Ext. P3, it was not addressed by the authorities. As far as the Ext.P6 order is concerned, under no circumstances the same can be treated as a justifiable one. Of course it is true that, technically the 3rd respondent was justified in adopting the view that the appeal is time barred, as the same was submitted after the expiry of four months, which was beyond the condonable period of delay. However, there was no attempt to consider the circumstances which prompted the petitioner to submit an appeal beyond the statutory period and the same ought to have been taken into account. Evidently, it was impossible for the petitioner to submit an appeal with the provisions available in the system provided by the respondents. This writ petition is disposed of, quashing Ext.P6 with a direction to the 3rd respondent to restore Ext.P5 appeal and to consider the matter on merits by treating it as an appeal submitted in time. 1. ISSUES PRESENTED and CONSIDERED- Whether the petitioner was unjustly prevented from filing an appeal under Section 107 of the CGST Act due to technical/systemic shortcomings in the GST portal, despite having paid the disputed amount under protest.- Whether the impugned order passed under Section 129(3) of the CGST Act (Ext.P1) can be quashed on grounds of procedural or substantive infirmity.- Whether the rejection of the petitioner's appeal (Ext.P6) on the ground of delay in filing beyond the statutory period is justified, considering the petitioner's inability to file the appeal online within time due to system limitations.- Whether the authorities are obliged to update the GST portal to accommodate appeals in situations where the disputed amount has been paid, so as to ensure the statutory right of appeal is not frustrated.- Whether the petitioner is entitled to a writ of mandamus directing restoration and consideration of the appeal on merits and to mandate system improvements to prevent recurrence of such issues.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Right to Appeal under Section 107 despite Payment of Disputed AmountThe legal framework under Section 107 of the CGST Act provides a statutory right of appeal to a taxpayer aggrieved by any order passed by the authorities. The petitioner's contention was that payment of the disputed amount under protest, as per Ext.P1 order under Section 129(3), did not extinguish his right to appeal.The Court examined the statutory scheme and relevant precedents, including a prior judgment of the same High Court in W.P.(C) No.17454/2022, which dealt with a similar factual matrix. The Court reaffirmed that the right of appeal is not lost merely because the tax or penalty has been paid. The legislative intent is to preserve the remedy of appeal irrespective of payment status.Key findings included that the petitioner attempted to file the appeal within the statutory period, but the GST portal rejected the filing because the disputed tax amount was shown as 'NIL' due to the prior payment. This technical impediment prevented the petitioner from exercising the statutory remedy.The Court found the denial of appeal rights was not attributable to the petitioner but arose from systemic deficiencies in the portal maintained by the respondents. The authorities' failure to address the petitioner's grievance (Ext.P3) reflected a lack of responsiveness and procedural fairness.Issue 2: Validity of the Order Passed under Section 129(3) (Ext.P1)The petitioner sought quashing of Ext.P1 order. However, the Court did not find substantive grounds to quash the order itself. The focus was rather on the procedural denial of appeal rights post issuance of Ext.P1. The Court emphasized that the remedy of appeal is essential to challenge such orders, and hence procedural access to appeal must be ensured.Issue 3: Rejection of Appeal (Ext.P6) on Grounds of DelaySection 107(1) and (4) prescribe the time limits for filing appeals. The 3rd respondent rejected the petitioner's manually filed appeal (Ext.P5) as barred by limitation, since it was filed beyond the four-month period.The Court acknowledged the technical correctness of this rejection on face value but held that the rejection was unjustifiable because the petitioner was prevented from filing the appeal online within time due to the portal's failure to accept appeals where the demand was shown as 'NIL'.The Court underscored that the petitioner's delay was excusable given the impossibility of filing the appeal through the prescribed online mechanism. The authorities failed to consider these circumstances, which warranted interference with Ext.P6.The Court relied on the principle that a party cannot be prejudiced for the fault or laches of the department or system, especially when the petitioner made timely attempts to comply with statutory requirements.Issue 4: Obligation to Update GST Portal to Accommodate Appeals Post PaymentThe Court noted that the prior judgment in W.P.(C) No.17454/2022 had directed the respondents to update the GST portal and issue appropriate circulars to address this exact contingency. The events in the present case occurred after that judgment, yet no corrective action was taken.This demonstrated systemic neglect and failure to implement judicial directions. The Court held that the respondents are under a duty to modify the portal to enable filing of appeals even after payment of disputed amounts, whether under protest or otherwise.This is essential to uphold the statutory right of appeal and to prevent denial of justice due to technical glitches.Issue 5: Reliefs and DirectionsThe Court found merit in the petitioner's prayer for writs of certiorari and mandamus. It quashed Ext.P6 order rejecting the appeal as time barred and directed the 3rd respondent to restore and consider the appeal (Ext.P5) on merits treating it as filed within time.The Court also directed the 4th respondent to carry out necessary updates to the GST portal within three months to enable uploading of appeals even after payment of amounts under impugned orders.Further, the 4th respondent was directed to facilitate the Assessing Officer to process the restored appeal and pass final orders expeditiously.3. SIGNIFICANT HOLDINGS'The fact that the tax covered by the order under challenge was paid, will not take away such right of appeal of the party.''The denial of that statutory remedy was not attributable to the petitioner at all, but solely because of the shortcomings in the system provided by the respondents for filing the appeal.''The petitioner cannot be prejudiced for the fault of the Department and he cannot be denied his remedies because of the reason that he could not perform an impossible task.''The respondents are under a duty to modify the portal to enable filing of appeals even after payment of disputed amounts, so as to uphold the statutory right of appeal.''Ext.P6 requires interference and is hereby quashed. The appeal shall be restored and considered on merits treating it as filed within time.''The 4th respondent shall ensure appropriate modifications in the portal within three months from the date of receipt of this judgment.'