2025 (7) TMI 1866 - HC - GST

Timelines under Section 107(4) WBGST Act are directory; natural justice violation leads to quashing assessment order

The HC allowed the writ petition, setting aside the impugned orders of the Appellate Authority and Proper Officer. It held that the timelines under ... Dismissal of writ petition of the appellant/partnership firm on the ground of time limitation - power of Appellate Authority and/or the writ court to condone the delay - Violation of principles of natural justice - invocation of restrictive scope of an intra-court appeal. Dismissal of writ petition of the appellant/partnership firm on the ground of time limitation - power of Appellate Authority and/or the writ court to condone the delay - HELD THAT:- In S.K. Chakraborty [2023 (12) TMI 290 - CALCUTTA HIGH COURT], the Co-ordinate Bench of this Court categorically observed that the timelines stipulated in Section 107(4) of the WBGST Act are not mandatory and the provisions of the Limitation Act are applicable - The mere fact that an order of stay has been passed in respect of the said judgment does not take away the value of the same as a precedent. The operation of the order between the parties therein has been stayed, but the ratio therein is binding on co-ordinate Benches as per the Law of Precedents. It is interesting to note, by drawing inspiration from previous analogy with the 1997 Act, that Section 40 of the said Act stipulates that subject to the provision of the said Act relating to the limitation, the provisions of the Limitation Act shall apply to all proceeding and appeals under the 1997 Act. Hence, despite the Limitation Act having been applied in respect of the said Act, the proviso to Section 7(2) of the 1997 Act provides a specific and express exclusion of the operation of the Limitation Act, unlike Section 107(4) of the WBGST Act - this Court is of the opinion that the timeline stipulated in Section 107(4) of the WBGST Act is not mandatory but directory. In the present case, the notice under Section 73(1) was, for all practical purposes, the first notice issued in connection with the assessment to the appellant/assessee. Thus, the term “additional” did not apply at all. If there was a question of multiple notices being issued at that point of time, or of previous notices having been issued, there still could have been a justification for uploading the notice under Section 73(1) under the Additional Tab - In the present case, however, since the said notice was the first of its kind in respect of the present assessment, there was no reason or occasion at all for the appellant to click the Additional Tab. Hence, the accessibility of the notice only under the Additional Tab, as opposed to the Normal Tab, could not constitute a proper communication or uploading as contemplated in Section 73(1) of the WBGST Act, read with the concerned Rules. In the present case, sufficient grounds have been made out by the appellant for condonation of the delay in preferring the appeal before the Appellate Authority after about three months and twenty days from the expiry of the four months’ outer limit as provided in the statute. Violation of principls of natural justice - HELD THAT:- It is well-settled that the strict rule of interpretation is applied in respect of taxing and penal statutes. Since the relevant provisions of the WBGST Act are penal in nature and the WBGST Act itself is a taxing statute, the strict rule of interpretation has to be applied in construing its provisions. Going by the said rule, where some action is provided for in the statute to be done in a particular mode and manner, it either has to be done exactly in accordance therewith or not at all - on a composite reading of Section 73, sub-sections (1) and (9) and Section 75(4) of the GST Act, it is seen that not only is a notice to be served before passing an assessment order, the Proper Officer is to comply with both the requirements – consider the representation/reply to the Show Cause Notice and also to give an opportunity of hearing to the assessee in the event a written request in that regard is received from the assessee or an adverse decision is contemplated against such person. In the present case, there was palpable violation, not only of the principles of natural justice but also the specific provisions of Section 73(9), read with Section 75(4), of the WBGST Act, which palpably vitiated the assessment order of the Proper Officer - the impugned orders of the Appellate Authority as well as the Proper Officer ought to be set aside without going into the technicality of delay, more so since the delay was not inordinate and sufficient explanation for the delay was furnished. Whether the restrictive scope of an intra-court appeal ought to be invoked in the present case? - HELD THAT:- The learned Single judge turned the strict rule of interpretation in respect of taxing statutes, applicable to the WBGST Act, on its head by sticking to the said principle for the purpose of considering the timelines provided, while giving a go-bye to such principle in interpreting the specific provisions of opportunity of hearing and consideration of representation embodied in Sections 73(9) and 75(4) of the WBGST Act. It is trite law that if the statute provides a particular mode in which an order has to be passed or an action has to be taken by an authority, it is either to be done in that manner or not at all. In the present case the timelines, even on a strict interpretation, are not mandatory whereas the provision for giving an opportunity of hearing on the representation of the assessee is so. Such vital aspect was totally overlooked in the impugned order - Secondly, while considering the starting point of limitation, the learned Single Judge proceeded on the premise that due communication of the notice was effected on the appellant, without taking into account the glitches as pointed out above in uploading the notice on the Additional Tab instead of the Normal Tab. The judgment of the learned Single Judge is vitiated by patent error of law and, as such, ought to be set aside - Application allowed. ISSUES: Whether the timelines stipulated under Section 107(1) and Section 107(4) of the West Bengal Goods and Services Tax Act, 2017 ('WBGST Act') for preferring an appeal are mandatory or directory.Whether the Appellate Authority and the writ court have the power to condone delay beyond the statutory period prescribed under Section 107 of the WBGST Act.Whether the delay in preferring the appeal in the present case ought to have been condoned on the facts, including medical grounds and difficulty in accessing the notice.Whether the communication of the assessment order by uploading it only on the 'Additional Tab' of the GST Portal constitutes proper service or communication under Section 73(1) of the WBGST Act and the Rules framed thereunder.Whether the fixing of a personal hearing date prior to the date for filing reply to the Show Cause Notice violates the principles of natural justice and vitiates the assessment order.Whether the Proper Officer failed to comply with the statutory mandate under Sections 73(9) and 75(4) of the WBGST Act to consider the representation and grant an opportunity of hearing when an adverse decision was contemplated.Whether the writ court can interfere with the order of the Appellate Authority dismissing the appeal on limitation grounds where there is a violation of natural justice or patent illegality. RULINGS / HOLDINGS: The timelines stipulated in Section 107(1) and Section 107(4) of the WBGST Act are not mandatory but directory, as Section 107(4) does not contain mandatory or negative language debarring appeals beyond the period, unlike Section 107(6). Therefore, the provisions of the Limitation Act apply.The Appellate Authority and the writ court do have the power to condone delay beyond the statutory period if sufficient cause is shown, consistent with the ratio in S.K. Chakraborty and Sons v. Union of India, which remains binding despite a stay order on operation between parties.On the facts, the delay in preferring the appeal was justified by medical grounds affecting both active partners and difficulty in accessing the notice on the GST Portal's Additional Tab, thus the delay ought to have been condoned.Uploading the assessment order only on the Additional Tab of the GST Portal does not constitute proper communication under Section 73(1) of the WBGST Act, as the Additional Tab is less accessible and not clearly explained, leading to a failure in proper service.Fixing the date of personal hearing prior to the date for filing the reply to the Show Cause Notice is an irregularity that vitiates the assessment order, since a hearing must be given on the basis of the representation; a hearing before the representation is illusory and violates the principle of Audi Alteram Partem.The Proper Officer failed to comply with the statutory mandate under Sections 73(9) and 75(4) by not granting an opportunity of hearing on the representation and by proceeding ex parte, thereby violating natural justice and vitiating the assessment order.The writ court may interfere by issuing writs such as certiorari or mandamus where there is a patent miscarriage of justice or violation of natural justice principles, even if the appeal is dismissed on limitation grounds. RATIONALE: The Court applied the statutory framework of the WBGST Act, particularly Section 107 (appeal provisions), Section 73 (assessment and notice provisions), and Section 75 (general provisions relating to determination of tax and hearing), alongside the Limitation Act, 1963.Interpretation of Section 107(4) was guided by internal aids, contrasting the language of subsections (4) and (6), and external aids by analogy to the West Bengal Premises Tenancy Act, 1997, establishing that absence of explicit mandatory language means timelines are directory.Section 29(2) of the Limitation Act was invoked to determine that special or local laws exclude the Limitation Act only if expressly stated, which is absent in Section 107(4) of the WBGST Act.The Court emphasized the principle of strict interpretation of taxing statutes but distinguished that while timelines may be interpreted strictly, procedural safeguards such as opportunity of hearing and proper communication are mandatory and must be strictly complied with.The Court relied on the principle of natural justice, Audi Alteram Partem, as embodied in Sections 73(9) and 75(4), requiring that a hearing be given on the basis of the representation, and that an adverse order cannot be passed without such hearing.Precedents from various High Courts were considered regarding accessibility issues of the Additional Tab on the GST Portal and the resulting failure of proper service of notices.The Court noted the inconsistency in the impugned order where strictness was applied to limitation timelines but leniency was shown towards procedural non-compliance in service and hearing, which was held to be erroneous.The judgment reaffirmed the power of the writ court to intervene in cases of violation of natural justice or patent illegality notwithstanding limitation bars, citing established Supreme Court precedent.