2025 (8) TMI 1054 - HC - GST

Natural justice breach found; petitioner paid disputed tax, allowed 30 days to file statutory appeal without pre-deposit

Nanguneri Radhapuram Taluks Agricultural Co-Op Marketing Society Ltd. Versus The Assistant Commissioner of Central GST and Central Excise, Office of the Assistant Commissioner of CGST and Central Excise, Tirunelveli

Nanguneri Radhapuram Taluks Agricultural Co-Op Marketing Society Ltd. Versus The Assistant Commissioner of Central GST and Central Excise, Office of the ... ISSUES PRESENTED AND CONSIDERED 1. Whether the adjudicating authority validly confirmed the demand of tax for the period 2017-2018 to January 2024 and lawfully appropriated amounts already paid. 2. Whether interest under Section 50 of the CGST/TNGST Act could be levied on the confirmed tax amounts and whether amounts paid towards interest were properly appropriated. 3. Whether penalty equal to the tax amount could be imposed under Section 74(9) read with Section 122 of the CGST/TNGST Act. 4. Whether there was any breach of principles of natural justice in the adjudication process. 5. The remedial question: effect of subsequent payments made after the impugned order on pre-deposit requirement for filing the statutory appeal and the appropriate directions regarding filing of such appeal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of confirmation of tax demand and appropriation of amounts already paid Legal framework: The adjudicating authority confirms tax demand under provisions of the CGST/TNGST Act (notably Section 74(9) for demands arising from specified cases) and may appropriate payments made by the taxable person against outstanding liabilities. Precedent Treatment: No prior judicial authorities were relied upon or discussed in the impugned order or in the Court's reasoning; therefore no precedent was followed, distinguished, or overruled in this judgment. Interpretation and reasoning: The Court examined the operative portion of the impugned order which confirms a specific tax demand and records appropriation of Rs. 72,83,866/- paid earlier against that demand. The Court did not disturb the factual findings of the adjudicating authority regarding the computation of the tax demand; rather, it focused on procedural regularity and subsequent conduct (payment). Ratio vs. Obiter: The confirmation of the tax demand as a factual and statutory exercise by the adjudicating authority is treated as operative fact in the judgment (ratio with respect to the proceedings before the Court), while broader questions about the correctness of tax computation were not re-adjudicated (obiter insofar as not challenged on merits in this order). Conclusions: The Court did not find cause to set aside the confirmation of tax demand on procedural grounds and allowed the petitioner opportunity to challenge the matter by statutory appeal since payment status changed post-order. Issue 2 - Levy of interest under Section 50 and appropriation of interest payments Legal framework: Section 50 of the CGST/TNGST Act authorises levy of interest on delayed payment of tax; payments made towards interest may be appropriated against interest liability. Precedent Treatment: No case law was cited addressing the propriety or calculation of interest in the order under review or in the Court's disposition. Interpretation and reasoning: The impugned order explicitly confirms interest demand under Section 50 and appropriates Rs. 3,74,718/- paid towards interest. The Court accepts the adjudicating authority's exercise of levying and appropriating interest as part of the composite demand; no procedural infirmity in this action was found. Ratio vs. Obiter: The acceptance of interest levy and appropriation is part of the operative resolution of the petition and forms part of the Court's disposition (ratio limited to procedural regularity and payment status), rather than a substantive re-evaluation of interest calculation. Conclusions: The Court did not interfere with the levy of interest or appropriation of interest payments; these remain subsumed in the demand available to be challenged by appeal. Issue 3 - Imposition of penalty under Section 74(9) read with Section 122 Legal framework: Section 74(9) deals with consequences where tax is demanded under specific provisions; Section 122 provides for imposition of penalties for specified offences under the CGST/TNGST Act. Precedent Treatment: The judgment does not engage with judicial authorities on the scope or quantum of penalty, nor does it critique the legal basis for imposing penalty beyond noting the imposition in the impugned order. Interpretation and reasoning: The adjudicating authority imposed penalty equal to the tax amount under the cited provisions; the Court did not find procedural infirmity in the imposition recorded in the order but did not undertake a merits reassessment of the penalty's propriety or quantum. Ratio vs. Obiter: The Court's non-interference with the penalty on procedural grounds constitutes part of its operative disposition (ratio with respect to relief granted), but no definitive pronouncement validating or invalidating the substantive imposition is made (obiter regarding substantive correctness). Conclusions: The penalty imposed remains extant as part of the adjudication and may be assailed before the appellate forum; the Court did not set aside or remit the penalty to the adjudicating authority on the material before it. Issue 4 - Compliance with principles of natural justice Legal framework: Principles of natural justice require that a person affected by an adjudicatory order be given notice and an opportunity to be heard (including written submissions and personal hearing where appropriate). Precedent Treatment: The Court relied on the record of the impugned order rather than external precedents to test compliance with natural justice. Interpretation and reasoning: The Court examined Paragraph 3.2 of the impugned order which records service of a communication, a virtual-personal hearing opportunity, the taxpayer's request for physical appearance, actual attendance at the personal hearing, written submissions, and specific points raised by the taxpayer (nature of activities, lack of knowledge, failure to claim ITC, reconciliation statement, and request for time to pay). On that basis the Court concluded there was no violation of natural justice. Ratio vs. Obiter: The finding that principles of natural justice were complied with is a ratio in respect of the procedural challenge raised in the petition. Conclusions: The Court held that the adjudicatory process satisfied natural justice requirements; absence of participation was not established. Issue 5 - Effect of subsequent payments and directions on statutory appeal and pre-deposit Legal framework: Statutory appeal provisions under the GST enactments permit challenging adjudicatory orders; ordinarily, a pre-deposit may be required to maintain an appeal unless the disputed tax has been paid or the Court directs otherwise. Precedent Treatment: No appellate authorities were cited; the decision rests on statutory scheme and the factual occurrence of payments made after the impugned order. Interpretation and reasoning: The Court noted that after issuance of the impugned order the petitioner paid a total of Rs. 1,13,96,137/- on specified dates. In view of such payments, the Court granted liberty to file the statutory appeal within 30 days from receipt of the Court's order and expressly dispensed with any further pre-deposit, since the disputed tax had been paid. Ratio vs. Obiter: The direction permitting filing of appeal within a limited period and waiver of further pre-deposit is a dispositive ratio addressing relief and procedural consequence of subsequent payment. Conclusions: The petitioner is permitted to file the statutory appeal within 30 days of receipt of the order; no further pre-deposit is required given the payments made. The writ petition is disposed accordingly and no costs were imposed.