2025 (8) TMI 1052 - HC - GST

Delay condoned; order rejecting GST appeal quashed, matter remitted to Deputy Commissioner to decide on merits; bank attachment vacated

Tvl. Delux Super Market, Rep by its Proprietor John Archibald Donald J. Archibald Versus The State Tax Officer, The Deputy Commissioner (GST Appeals) (State Tax), Tirunelveli.

Tvl. Delux Super Market, Rep by its Proprietor John Archibald Donald J. Archibald Versus The State Tax Officer, The Deputy Commissioner (GST Appeals) ... ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment order can lawfully demand an amount in excess of the amount specified in the show cause notice, having regard to Sub-section (7) of Section 75 of the GST enactment. 2. Whether an appeal filed before the Appellate Authority under Section 107 with a marginal delay (15 days beyond the condonable period) can be rejected in limine on limitation grounds. 3. Whether a direction that the impugned assessment order be restored if no reply is filed within a specified short period is appropriate, and whether such a direction should be set aside or extended. 4. Appropriate relief where the appellate rejection is quashed: scope of remand, effect on limitation, and ancillary reliefs including vacatur of attachment and impleading of the Appellate Authority. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Scope of show cause notice and limits on assessment demand (Section 75(7)) Legal framework: Sub-section (7) of Section 75 (as cited) constrains the demand in an assessment order to the amount specified in the show cause notice. Section 73 (as cited) deals with time-barred recovery of tax. Precedent Treatment: A Division Bench decision of the High Court on substantially identical facts was relied upon by the Court. That decision recognized that an assessment cannot validly exceed the demand set out in the original show cause notice and observed that where the impugned order assesses a significantly larger sum on a different legal basis (for example, by recharacterising the assessee as an 'Intermediary'), a fresh show cause notice would normally be required, subject to limitation under Section 73. Interpretation and reasoning: The Court accepted the principle that the demand confirmed in an assessment order must ordinarily be within the scope of the show cause notice. Where the assessing authority proceeds on a different legal theory or raises additional heads of tax not encompassed in the original notice, the proper course is to issue a fresh show cause notice so that the assessee has an opportunity to meet the new case; otherwise the assessment risks being beyond the statutory notice. The Court noted that questions of limitation and jurisdiction arising from such a fresh notice are factual and may be canvassed before the authority on remand. Ratio vs. Obiter: Ratio - assessment cannot validly exceed the amount or grounds specified in the show cause notice; fresh notice required for additional or different grounds. Obiter - procedural observations about the time-bar that a fresh notice may face under Section 73, which depend on factual inquiry. Conclusion: The Court endorsed the principle that demands beyond the scope of the show cause notice are impermissible without a fresh notice; limitation issues attendant to any fresh notice remain open for consideration on facts. Issue 2 - Rejection in limine of an appeal for marginal delay (Section 107 and limitation principles) Legal framework: Appeals to the Appellate Authority under Section 107 are subject to prescribed limitation; condonation rules permit extension within parameters. Administrative rejection in limine is a possible consequence of non-compliance with time limits. Precedent Treatment: The Division Bench decision and the present Court treated marginal delay (15 days beyond condonable period) as a factor warranting remedial interference rather than automatic dismissal, especially where substantive issues (scope of notice, jurisdiction, limitation) require adjudication. Interpretation and reasoning: The Court balanced the statutory need for adherence to limitation with principles of substantial justice. Given the marginal nature of delay (15 days) and the existence of arguable substantive issues that go to jurisdiction and excess of demand, the Court found it appropriate to quash the in limine rejection and require a merits adjudication. The Court directed that the Appellate Authority dispose of the appeal on merits and in accordance with law, expressly without reference to limitation. Ratio vs. Obiter: Ratio - where delay is marginal and substantive jurisdictional questions exist, appellate rejection in limine may be quashed and the appeal remitted for merits; the Appellate Authority should consider the appeal notwithstanding limitation in such circumstances. Obiter - broader policy observations about tolerance for delays are fact-sensitive. Conclusion: The Appellate Authority's in limine rejection for marginal delay was quashed; the appeal must be heard on merits without reference to limitation. Issue 3 - Validity of direction restoring impugned order if no reply filed within set time (procedural fairness) Legal framework: Principles of natural justice and procedural fairness require adequate opportunity to respond to a notice or show cause, and courts supervise interlocutory directions that may foreclose meaningful adjudication. Precedent Treatment: The Division Bench decision addressed a similar direction and held that automatic restoration of an assessment if a reply is not filed within a short window may be inappropriate where appellant has filed an appeal or where additional time is warranted. Interpretation and reasoning: The Court viewed the Single Judge's direction permitting restoration of the impugned order if no reply was filed within three weeks as potentially harsh and inappropriate. Considering that the appellant had filed an appeal (and thus did not file the directed reply), the Court set aside that portion of the order. The Court allowed the appellant a fresh four-week period to file a reply before the authority and preserved the appellant's right to raise limitation and jurisdictional defenses in that reply. Ratio vs. Obiter: Ratio - procedural directions that effectively reinstate adverse orders for failure to file a short-term reply are subject to judicial review and may be set aside to preserve fair adjudication. Obiter - the precise quantum of appropriate time is discretionary and fact-sensitive. Conclusion: The restoration-if-no-reply direction was set aside; the appellant is granted four weeks to file a reply and may raise limitation and jurisdictional issues. Issue 4 - Relief on quashing appellate rejection: remand, limitation, impleading authority, and vacatur of attachment Legal framework: When a judicial body quashes an administrative order for procedural impropriety or error, standard relief includes remand for fresh consideration in accordance with law; courts may also grant ancillary reliefs necessary to give effect to the main order (e.g., vacating attachments) and may implead parties necessary for effective adjudication. Precedent Treatment: The Court followed its Division Bench approach in remitting the matter for fresh consideration and permitting limitation to be set aside in the exercise of equitable discretion where marginal delay exists and substantive issues are present. Interpretation and reasoning: The Court quashed the appellate rejection order and directed the Deputy Commissioner (GST Appeals) to dispose of the appeal on merits and in accordance with law without reference to limitation. The Court suo motu impleaded the Appellate Authority as a necessary party because it had not been joined, and directed amendment of the cause title. As ancillary relief, because the petitioner had pre-deposited 10% of the disputed tax, the Court ordered immediate vacatur of the bank account attachment effected pursuant to the impugned order. Ratio vs. Obiter: Ratio - upon quashal of an in limine rejection for marginal delay and substantive arguable issues, the appropriate relief is remand for merits without reference to limitation; necessary parties may be impleaded; consequential attachments may be vacated where conditions for vacation exist (e.g., pre-deposit). Obiter - directions on impleading as a general practice are fact-specific. Conclusion: The appellate rejection was quashed; matter remitted for merits adjudication without reference to limitation; the Appellate Authority was impleaded; bank attachment ordered vacated given the pre-deposit; no costs awarded.