2025 (9) TMI 1048 - HC - GST

Appeals filed 12 Jan 2024 held within extended limitation to 31 Jan 2024; impugned orders set aside, appeals restored.

The HC held that appeals filed on 12 January 2024 were within the extended limitation (31 January 2024) despite the adjudicating authority's orders dated ... Dismissal of appeal on the ground that they were instituted beyond the prescribed period of limitation - HELD THAT:- Admittedly, in these Petitions, the adjudicating authority made orders on 25 July 2023, i.e. beyond 31 March 2023. However, the appeals were lodged on 12 January 2024, i.e. before the extended date of limitation of 31 January 2024. An identical issue arose before the Division Bench of the Patna High Court in the case of Nexus Motors Pvt. Ltd. [2024 (2) TMI 897 - PATNA HIGH COURT]. The Division Bench, after referring to the notification dated 2 November 2023, held that there was no rationale for fixing the cut-off date of 31 March 2024 since the notification itself was brought out on 2 November 2023. The impugned orders are set aside - Petitioners’ appeals restored to the file of the appellate authority for considering the same on their own merits and in accordance with law - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Central Board of Indirect Taxes & Customs notification dated 2 November 2023 (the Notification) extends the period of limitation for filing appeals to 31 January 2024 in respect of adjudication orders passed after 31 March 2023 but before 2 November 2023. 2. Whether orders of the adjudicating authority dated 25 July 2023 (i.e., beyond 31 March 2023) fall within the benefit of the Notification when appeals were instituted on 12 January 2024. 3. Whether prior High Court decisions holding that the cut-off date of 31 March 2023 in the Notification lacks rational basis are to be followed, distinguished or treated as per incuriam. 4. Whether the appellants' compliance shortfall with the financial pre-conditions in the Notification (payment of 12.5% of disputed tax with at least 20% from Electronic Cash Ledger) can be treated as substantial compliance where only 10% was paid at the time of filing, subject to payment of the differential within a specified period. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Scope and temporal ambit of the Notification Legal framework: The Notification of 2 November 2023 purported to extend the period for filing appeals to 31 January 2024, but limited its application to orders passed by proper officers on or before 31 March 2023; appeal acceptance under the Notification is subject to specified payment conditions. Precedent treatment: Division Bench decisions of the Patna High Court and a decision of the Orissa High Court interpreted the Notification more broadly, rejecting the rationality of the 31 March 2023 cut-off and permitting orders passed within a reasonable antecedent period before the Notification to avail benefit. Interpretation and reasoning: The Court observed that the Notification was issued on 2 November 2023; fixing 31 March 2023 as the cut-off (i.e., more than seven months prior) lacks rational basis when the Notification itself came into existence only on 2 November 2023. Where an adjudicating order was passed at least approximately three months prior to issuance of the Notification (25 July 2023 in the present matters), there is no principled distinction to deny the extended limitation. The Court treated the absence of any contrary higher court authority and the absence of a challenge in the Supreme Court to the cited High Court decisions as persuasive; consequently it followed those decisions. Ratio vs. Obiter: The finding that the Notification's cut-off date lacks rational basis for denying benefit to orders passed a reasonable time before 2 November 2023, and that such orders should be allowed to avail the extended limitation if appeals were filed by 31 January 2024, constitutes the ratio of the decision insofar as it disposes of the limitation point. Conclusions: The Court held that adjudicating orders dated 25 July 2023 fall within the ambit of the Notification for the purpose of extension of limitation because the appeals were filed on 12 January 2024 (within the extended period). The Court therefore granted the benefit of the extended limitation to the appellants. Issue 2 - Reliance on and followance of Patna/Orissa High Court decisions Legal framework: Doctrine of precedent within High Court jurisdiction and persuasive value of coordinate bench decisions; proper approach to conflicting interpretations of executive notifications. Precedent treatment: The Court expressly followed the Division Bench of the Patna High Court and the Orissa High Court decisions which held that the 31 March 2023 cut-off in the Notification is not rational and that appeals against orders passed after 31 March 2023 but before 2 November 2023 may be granted benefit of extended limitation. Interpretation and reasoning: The Court found these decisions directly on point, cogently reasoned, and uncontradicted by any binding contrary pronouncement. Absent any Supreme Court guidance to the contrary, those High Court rulings are treated as persuasive and applicable. Ratio vs. Obiter: The decision to follow those authorities as controlling for the limitation issue is ratio for purposes of these petitions. Conclusions: The Court followed the Patna and Orissa High Court decisions and applied their reasoning to restore the appeals for adjudication on merits subject to compliance with the Notification's conditions (see Issue 4). Cross-reference: see Conclusions under Issue 1 and Issue 4. Issue 3 - Effect of non-compliance with the Notification's monetary conditions and prospect of substantial compliance Legal framework: The Notification conditions require (a) payment in full of admitted amounts and (b) payment of 12.5% of the remaining disputed tax (subject to caps) with at least 20% debited from Electronic Cash Ledger, as a precondition to filing under the Notification. Precedent treatment: The Patna Division Bench (as followed) clarified that restoration under the Notification is subject to fulfillment of its conditions; coordinate rulings accepted conditional restoration pending compliance. Interpretation and reasoning: The Court acknowledged that in the present matters the appellants had paid only 10% instead of the required 12.5% at time of filing. Recognizing the peculiar circumstances and in the interest of adjudicating disputes on merits, the Court permitted conditional restoration: appellants must pay the differential amount (2.5% of disputed tax) within four weeks from upload of the order. If the differential is paid within that period, the appellate authority must treat such payment as substantial compliance and decide the appeals on merits. The Court left intact the other conditions of the Notification (including the requirement that at least 20% be debited from Electronic Cash Ledger), and clarified that non-compliance with those conditions could still affect maintainability; the present relief is conditional, not absolute. Ratio vs. Obiter: The ruling that conditional restoration may be granted subject to payment of the differential (treating subsequent payment as substantial compliance) is ratio for these petitions; the broader observation that maintainability issues other than delay remain open is operative guidance but not a final determination on merits. Conclusions: The Court restored the appeals to the appellate authority for decision on merits provided the appellants pay the differential amount within four weeks; failure to comply would leave the question of limitation/maintainability open to the appellate authority. All other legal and factual contentions on merits were left open for the appellate authority to decide afresh. Issue 4 - Relief and directions Legal framework: Principles permitting restoration of proceedings where delay is excused by applicable executive relaxation and subject to compliance with conditions; courts' power to set terms for substantial compliance. Interpretation and reasoning: Applying the foregoing conclusions, the Court set aside the appellate dismissal for delay and restored the appeals to the appellate authority's file for fresh consideration on merits and in accordance with law, subject to compliance with the Notification's conditions and the specific four-week directive for payment of the differential. Ratio vs. Obiter: The order restoring appeals subject to payment and leaving merits open is the operative relief (ratio) in these matters; ancillary procedural observations are obiter to extent they do not affect final disposition. Conclusions: The appellate authority's orders dated 12 July 2024 were set aside; appeals restored; appellants to pay the differential amount within four weeks from upload to obtain final entitlement to be heard on merits; all other issues reserved to the appellate authority; no costs imposed.