Petitioner gets partial relief despite 68-day delay in GST appeal under Section 107 with additional deposit required

The Madras HC disposed of a petition challenging GST assessment orders for AY 2022-23. Despite petitioner's failure to respond to notices and 68-day delay beyond limitation period under Section 107 of GST enactments, the court provided partial relief on terms. The court required petitioner to deposit additional 15% of disputed tax (beyond existing 10% deposited during appeals) within 30 days through Electronic Cash Register, citing violation of natural justice principles.

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1. ISSUES PRESENTED and CONSIDERED

- Whether the impugned assessment orders dated 16.06.2023, passed pursuant to notices issued under DRC 01 and DRC 01A, are legally sustainable.

- Whether the petitioner's delay in filing appeals beyond the condonable period under Section 107 of the respective GST enactments justifies dismissal of appeals in limine.

- Whether the petitioner was denied principles of natural justice by not being given an opportunity to file documents to substantiate the case.

- Whether the writ petitions challenging the impugned orders are maintainable in view of the petitioner's delay and alleged inaction.

- The appropriate relief and conditions, if any, that the Court may impose while entertaining the writ petitions despite procedural lapses.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the impugned assessment orders

Relevant legal framework involves the provisions of the GST enactments under which assessment orders are passed following notices issued under DRC 01 and DRC 01A. The notices and orders relate to assessment years 2017-18, 2019-20 to 2021-22, and 2022-23.

The petitioner challenged the impugned orders on grounds that they lack merits and were passed without proper consideration of records and documents. The petitioner also contended that the orders were passed without affording opportunity to file documents, thereby violating principles of natural justice.

The Court examined the impugned orders and the procedural history, including the petitioner's replies to notices for earlier years and non-reply for 2022-23. The Court found that the impugned orders were passed following statutory procedures but noted the petitioner's grievance regarding lack of opportunity to submit documents.

The Court balanced the procedural compliance by the respondents with the petitioner's right to be heard and found merit in the petitioner's contention to the extent that opportunity to substantiate the case was not adequately provided.

Issue 2: Delay in filing appeals and dismissal in limine

The appeals filed by the petitioner against the impugned orders were delayed by 68 days beyond the condonable period under Section 107 of the GST enactments. The Appellate Commissioner rejected the appeals in limine citing the delay.

The respondents relied on precedents from the Supreme Court, including Singh Enterprises Vs CCE and CCE and Customs Vs Hongo India (P) Limited, which emphasize that delay and laches in filing appeals can justify dismissal, especially where the appellant has "slept over" their rights.

The Court acknowledged the principle that undue delay can disentitle a party to relief but also considered the petitioner's submissions that there are substantive records to substantiate the case and that natural justice was not observed.

The Court observed that while the petitioner's delay cannot be ignored, a rigid denial of remedy would be harsh. Therefore, the Court was inclined to exercise discretionary jurisdiction to partially come to the petitioner's rescue, subject to conditions.

Issue 3: Violation of principles of natural justice

The petitioner argued that the impugned orders were passed without affording a fair opportunity to file documents and substantiate the case, amounting to a violation of natural justice.

The Court considered the submissions and noted that principles of natural justice require that a party should be given an opportunity to present their case before adverse orders are passed. The petitioner's contention that such opportunity was denied was found to have substance.

The Court held that the petitioner must be allowed to file replies treating the impugned orders as addenda to the original show cause notices, thus enabling a fresh hearing and consideration.

Issue 4: Maintainability of writ petitions

The respondents contended that the writ petitions are not maintainable as the petitioner had delayed in filing appeals and had slept over its rights. The Court, however, exercised its discretionary jurisdiction to entertain the writ petitions on terms, recognizing the petitioner's right to be heard and the need to ensure justice.

The Court's approach reflects the principle that writ jurisdiction is not to be exercised as a matter of routine but can be invoked to prevent miscarriage of justice, especially where procedural lapses have caused prejudice.

Issue 5: Appropriate relief and conditions

The Court directed the petitioner to deposit 15% of the disputed tax amount in cash from the Electronic Cash Register, in addition to the 10% already deposited at the time of filing appeals, within 30 days of receipt of the order.

Upon compliance, the impugned orders were to be quashed, and the petitioner was required to file replies to the original notices treating the impugned orders as addenda. The respondents were directed to pass fresh orders within six months thereafter.

The Court made it clear that failure to comply with these conditions would result in dismissal of the writ petitions in limine, and the respondents could proceed as if the writ petitions were dismissed.

The petitioner was also directed to file necessary documents and cooperate with the respondents in the de novo proceedings.

3. SIGNIFICANT HOLDINGS

"The Court is inclined to come to the rescue of the petitioner partially on terms, subject to the petitioner depositing 15% of the disputed tax over and above 10% already deposited at the time of filing of appeals."

"If the petitioner complies with the same, the respective impugned orders shall stand quashed, in which case the petitioner has to file a reply to the respective notices that preceded the respective impugned orders, by treating the respective impugned orders as addendum to the respective show cause notices within the time stipulated above."

"In case the petitioner fails to comply with the conditions stipulated above, the respondents are at liberty to proceed against the petitioner as if this Writ Petition shall stand dismissed, in limine by this order."

Core principles established include the Court's power to exercise discretionary writ jurisdiction to mitigate harsh consequences of procedural lapses, provided the petitioner complies with conditions ensuring payment of disputed tax and cooperation in fresh proceedings.

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