2025 (10) TMI 369 - HC - GST

Appeal dismissed for delay; taxpayer must deposit 40% disputed GST via ECR and file consolidated reply in 30 days

HC found the appeal filed beyond the condonable limitation and noted the applicant's failure to reply, and remitted the matter to the 1st Respondent for a ... Filing of appeal beyond the condonable period of limitation of about 24 days - Petitioner failed to file a Reply and suffered the impugned Order - HELD THAT:- This Court is inclined to dispose of this Writ Petition by remitting the case back to the 1st Respondent to pass a fresh order de novo subject to the Petitioner depositing 40% of the disputed tax in cash through the Petitioner's Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order. The Petitioner shall also file a consolidated reply to the Show Cause Notice in GST DRC-01 dated 14.08.2023 together with requisite documents to substantiate the case by treating the impugned Order dated 30.12.2023 as an addendum to the same, within a period of thirty days from the date of receipt of a copy of this order - Subject to the Petitioner complying with the above stipulated conditions, the 1st Respondent shall proceed to pass a final order de novo on merits and in accordance with law as expeditiously as possible, preferably, within a period of three months thereafter. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether delay and inaction by the petitioner (including failure to reply to Show Cause Notice and protracted litigation/withdrawal) amount to laches warranting dismissal of the writ petition. 2. Whether the Court may remit the matter to the adjudicating authority for de novo adjudication when the original order was passed without the petitioner's participation. 3. Whether the Court may impose conditional relief (deposit of a portion of disputed tax and filing of consolidated reply within a fixed time) as a precondition for remittal and to keep recovery proceedings in abeyance. 4. The consequences of non-compliance with conditions imposed by the Court (i.e., whether the adjudicating authority may proceed to recover tax as if the writ were dismissed). ISSUE-WISE DETAILED ANALYSIS - 1. Effect of delay and laches Legal framework: Principles of writ jurisdiction include that delay and inaction may bar equitable relief by laches; courts may consider conduct of parties and prejudice to State interests in exercising discretionary relief. Precedent Treatment: The judgment does not invoke or distinguish any specific precedents; the Court applies equitable discretion drawn from established writ jurisdiction principles. Interpretation and reasoning: The Court notes multiple dilatory acts - failure to reply to the Show Cause Notice, appeal filed beyond condonable period, withdrawal of earlier writ with liberty to challenge, and a further delay of approximately 8 months and 28 days before re-filing. The Respondent contends these show abandonment of statutory rights and laches. The petitioner's explanation of financial crisis is recorded but not accepted as an absolute bar. Ratio vs. Obiter: Ratio - delay and non-participation are relevant factors but are not necessarily decisive to deny all relief; equitable discretion permits conditional relief despite laches where other conditions are met. Conclusion: Laches weighed against the petitioner but did not lead to outright dismissal; Court exercised discretion to afford a further opportunity subject to strict conditions. ISSUE-WISE DETAILED ANALYSIS - 2. Remittal for de novo adjudication when order passed without participation Legal framework: Principles of natural justice and fair adjudication require that an affected party be given an opportunity to be heard; administrative orders passed without participation may be reopened to satisfy procedural fairness, subject to discretionary considerations and statutory limitations. Precedent Treatment: No specific authority is cited; the Court proceeds on general principles of natural justice and remittal powers inherent in judicial review. Interpretation and reasoning: The impugned order was passed without petitioner's participation; petitioner expresses willingness to participate. Balancing the respondent's objection based on laches and the petitioner's right to be heard, the Court finds remittal for a fresh de novo order appropriate, conditional upon compliance by the petitioner with safety measures imposed by the Court. Ratio vs. Obiter: Ratio - where an order was passed without participation, a court may remit the matter for fresh adjudication to uphold natural justice, but may attach conditions to protect revenue and prevent misuse of process. Conclusion: Court remits the matter to the adjudicating authority for de novo adjudication subject to compliance with procedural and financial conditions imposed below. ISSUE-WISE DETAILED ANALYSIS - 3. Power to impose conditional relief (deposit and time-limited reply) and stay of recovery Legal framework: Courts can grant conditional relief (including deposits) to balance competing interests - ensuring procedural fairness to parties while safeguarding State revenue. Such conditions often include specified deposits, timelines for furnishing replies, and directions to adjudicating authorities to proceed expeditiously. Precedent Treatment: No cases cited or distinguished; Court applies standard equitable practice of imposing conditions to furnish an opportunity without prejudicing revenue recovery. Interpretation and reasoning: Considering the respondent's contention of laches and the need to protect revenue, the Court prescribes two primary conditions: (i) deposit of 40% of disputed tax in cash via the electronic cash register within thirty days (the petitioner had earlier deposited 10% at the appellate stage), and (ii) filing a consolidated reply with requisite documents treating the impugned order as an addendum within thirty days. The Court directs the adjudicating authority to pass a final order de novo on merits within approximately three months thereafter, and keeps recovery proceedings in abeyance during compliance. Ratio vs. Obiter: Ratio - conditional remittal with specified deposit and strict timelines is an appropriate and lawful exercise of judicial discretion to reconcile the right to fair adjudication with protection of public revenue. Conclusion: Conditional relief fashioned by the Court is lawful: stay of recovery is granted subject to deposit and diligent participation; prior deposit of 10% is noted but additional deposit of 40% is imposed as a condition. ISSUE-WISE DETAILED ANALYSIS - 4. Consequences of non-compliance and procedural safeguards Legal framework: Courts may provide conditional relief but retain authority to permit respondents to proceed if conditions are not met; natural justice requires notice before adverse action is taken in de novo proceedings. Precedent Treatment: No authorities referenced; Court relies on ordinary procedural fairness and jurisdictional powers to manage litigation and ensure compliance. Interpretation and reasoning: The Court explicitly provides that failure to comply with the stipulated conditions entitles the adjudicating authority to proceed to recover tax in accordance with law 'as if this Writ Petition was dismissed in limine today.' The Court also requires that before passing any such order (i.e., recovery action), the adjudicating authority shall give due notice to the petitioner. The petitioner is separately enjoined to cooperate in the de novo proceedings. Ratio vs. Obiter: Ratio - non-compliance with court-imposed conditions justifies respondent resuming recovery measures; but procedural fairness requires notice before such action. Conclusion: Non-compliance will result in resumption of recovery as if petition dismissed, but the adjudicating authority must still provide due notice; cooperation by petitioner is mandated. ADDITIONAL OBSERVATIONS AND CROSS-REFERENCES The Court's order balances competing equities: it acknowledges delay and previous litigation conduct (see Issue 1) but nevertheless grants remedial opportunity (see Issue 2) subject to conditions (see Issue 3) and sets clear consequences for non-compliance (see Issue 4). The prior deposit of 10% at appellate stage is recorded but not treated as fulfilling the new deposit requirement; the new condition requires 40% to be deposited within thirty days. All further recovery proceedings are stayed/kept in abeyance conditional upon compliance. The adjudicating authority is directed to conclude the de novo adjudication preferably within three months after compliance.