2025 (8) TMI 1198 - HC - GST

Appeal under Section 107 CGST can't be dismissed solely for delay if statutory conditions, including pre-deposit, are met

HC held that an appeal under section 107 CGST cannot be dismissed merely on limitation if it otherwise complies with section 107 conditions, including ... Extension of time limit of issuing SCN and adjudicating order - Challenge to N/Ns. 09/2023-Central Tax dated 31st March, 2023, 56/2023-Central Tax dated 28th December, 2023 on the ground that the same is ultra vires to the Central Goods and Service Tax Act, 2017 and Delhi Goods and Service Tax Act, 2017 - appeal filed by petitioner has been dismissed by the appellate authority on the ground of being barred by limitation - HELD THAT:- In the opinion of this Court, the appeal filed by the Petitioner u/s 107 of the Central Goods and Service Tax Act, 2017 shall be heard on merits by the Appellate Authority and shall not be dismissed on limitation, so long as the appeal complies with the other conditions under Section 107 of the said Act including pre-deposit. In view of the fact that the challenge to the impugned notification is pending before the Supreme Court, this Court is inclined to provide the Petitioner another opportunity to present its case on merits. Accordingly, the order dated 2nd December, 2024 is set aside and the appeal is restored to its original number. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether Notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 extending time-limits for adjudication under Section 73 are intra vires the CGST/SGST enactments where requisite GST Council recommendation and/or procedural prerequisites are disputed. 2. Whether an appeal filed under Section 107 of the CGST/DGST Act, 2017, which was dismissed by the Appellate Authority as time-barred, ought to be restored for adjudication on merits where (a) constitutional writ challenge to the underlying notifications is pending before the Supreme Court and (b) the appellant alleges inability to file replies/pursue hearings leading to ex parte adjudication. 3. What interim reliefs and directions are appropriate pending final determination of the vires of the impugned notifications by the Supreme Court, including access to appellate process, personal hearing, and GST portal access. ISSUE-WISE DETAILED ANALYSIS - Issue 1: Vires of Notifications under Section 168A Legal framework: Section 168A (also referenced as Section 168-A) of the CGST Act empowers extension of time-limits for certain adjudicatory actions, purportedly upon recommendation of the GST Council; adjudication under Section 73 (demand and recovery) is time-limited unless extended by notification under the statutory scheme. Precedent Treatment: Multiple High Courts have taken divergent views: some upheld specific notifications; others quashed them. The Telangana High Court made observations adverse to Notification No.56/2023; that matter is pending before the Supreme Court by Special Leave Petition. Other High Courts (Allahabad, Patna, Bombay, Punjab & Haryana, Guwahati) have taken varying positions or reserved opinion, and several matters have been stayed or disposed subject to Supreme Court outcome. Interpretation and reasoning: The Court recognises a clear cleavage of opinion among High Courts on whether the mandated procedure (prior GST Council recommendation and other prerequisites) was complied with before issuance of the impugned notifications. The Court notes specific factual objections (e.g., ratification after issuance; incorrect recording of recommendation; issuance after expiry of prior State notification) which bear on procedural validity. Given these substantive and procedural disputes and the fact of a pending Supreme Court determination, the Court refrains from finally adjudicating the vires, leaving the issue open. Ratio vs. Obiter: It is obiter in this judgment to the extent the Court records prima facie views about procedural irregularities in particular notifications because no final adjudication of their vires is undertaken; the definitive legal ratio on validity is expressly reserved for the Supreme Court. Conclusion: The question of the validity of the impugned notifications under Section 168A is left open and will be subject to the ultimate decision of the Supreme Court. The Court declines to decide the vires in the present petition given the pending higher forum adjudication and divergent High Court precedents. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Dismissal of Appeal on Ground of Limitation and Restoration Legal framework: Section 107(1) of the CGST/DGST Act prescribes that an appeal from an adjudicating authority's order must be filed within three months from communication; Section 107(4) permits condonation of delay up to one month for sufficient cause. The appellate authority has power to dismiss appeals which are time-barred subject to statutory condonation limits. Precedent Treatment: The Court notes no binding conflict on interpretation of Section 107 in this judgment; however, the broader context of notifications under Section 168A and procedural irregularities affecting the ability to file appeals or replies is relevant. Other courts have in interconnected proceedings granted interim reliefs or left remedies open pending Supreme Court decision. Interpretation and reasoning: The appellate authority dismissed the appeal solely on limitation because the appeal was filed beyond three months (and beyond one month condonation). The Court finds that where the vires of the statutory notifications which affect limitation, adjudication timelines and the appellants' ability to prosecute appeals are under challenge before the Supreme Court, a mechanical dismissal on limitation without affording an opportunity to be heard on merits may produce manifest injustice-particularly where alleged inability to file replies/pursue hearings led to ex parte orders and where the appeal otherwise complied with conditions (e.g., pre-deposit) requisite under Section 107. In such circumstances, restoration for merits adjudication is appropriate so long as other statutory conditions are satisfied. Ratio vs. Obiter: The direction to set aside the dismissal on limitation and to restore the appeal for hearing on merits is ratio in this case as it constitutes the Court's operative decision for the petition before it. The observation that limitation cannot be the sole ground for dismissal where broader questions of validity and fair opportunity arise is a binding principle in the context of this adjudication. Conclusion: The appellate order dismissing the appeal in limine on the ground of limitation is set aside; the appeal is restored to its original number and shall be adjudicated on merits after affording personal hearing, provided the appeal satisfies other statutory conditions under Section 107 (including pre-deposit). The appellate authority must notify the appellant by email and ensure procedural access. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Interim Directions Pending Supreme Court Determination Legal framework: Judicial powers under Article 226 allow interim reliefs to secure effective adjudication and prevent prejudice; where higher court review is pending, subordinate courts may tailor interim measures subject to binding fora outcomes. Precedent Treatment: Several High Courts have either stayed proceedings, disposed petitions subject to Supreme Court decision, or continued interim orders pending resolution in the SLP; judicial discipline favours deferring final pronouncements on vires to the apex court while preserving parties' procedural rights. Interpretation and reasoning: Recognising that many appellants suffered inability to participate leading to ex parte adjudications and significant demands/penalties, the Court formulates reliefs that preserve appellate rights without pre-empting the Supreme Court. This includes restoration of appeal, direction for personal hearing by the appellate authority, ensuring access to the GST Portal and notices (to prevent procedural default), and leaving all rights and remedies open. The Court emphasises that any appellate order will remain subject to the Supreme Court's eventual decision on the notifications' validity. Ratio vs. Obiter: The procedural directions (restoration, personal hearing, portal access) are ratio insofar as they resolve the immediate controversy before the Court. The broader statement that orders shall be subject to the Supreme Court outcome is declaratory and necessary to circumscribe the scope of relief; such reservation is part of the operative disposition. Conclusion: Interim relief is granted to restore and adjudicate the appeal on merits with a personal hearing and guaranteed portal access; all substantive questions regarding the validity of the impugned notifications are reserved for the Supreme Court, and appellate decisions made pursuant to these directions are to remain subject to that ultimate determination. CROSS-REFERENCES AND EFFECTS 1. The Court's restoration direction is without prejudice to any findings the appellate authority may make on limitation where Section 107 requirements are not met; the present relief is conditional on compliance with statutory conditions (including pre-deposit). 2. The Court expressly leaves open the central vitiating question (validity of notifications under Section 168A) for the Supreme Court; the interlocutory reliefs are calibrated to prevent irreparable prejudice pending that decision and do not constitute a pronouncement on the merits of the notifications.