2025 (11) TMI 366 - HC - GST

Delay in filing appeal under Section 107(4) KGST Act excused on equity; appellate order set aside and remitted

HC held that the appeal, though filed after the three-month period under Section 107(4) KGST Act, warranted equitable directions; the appellate order ... Time limitation - appeal not filed within the prescribed period of 3 months as contemplated under Section 107(4) of the KGST Act - HELD THAT:- It is deemed just and appropriate to dispose of both the petitions by issuing certain directions. The respondent No.3, i.e., Joint commissioner of Commercial Tax (Appeals) in W.P.No. 12307/2025 is directed to dispose of the appeal filed by the petitioner in accordance with law, within a period of 2 months from 14.11.2025 - The petitioner shall appear before the respondent No. 3, the Appellate Authority, without awaiting further notice on 14.11.2025. The order dated 24.01.2025 passed by respondent No.3 in Appeal No. AD290224017133I (Annexure-A) is hereby set aside - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the appellate order impugned should be set aside and the appeal remitted for fresh disposal where the appeal against an adjudication under Section 73(9) of the KGST Act was filed beyond the prescribed three-month period but within the extendable/condonable one month. 2. Whether amounts recovered pursuant to the adjudication under Section 73(9) may be treated as subject to the final outcome of the appeal and whether a specific sum recovered in excess should be refunded with interest. 3. Whether directions to the appellate authority to afford reasonable opportunity and to dispose of the appeal within a specified time are appropriate where issues of delay and recovery are interlinked and the appellate process has not been completed. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of impugned appellate order and propriety of setting it aside where appeal was filed after the prescribed three-month period but within the extendable period. Legal framework: The adjudication was under Section 73(9) of the KGST Act. The time limit for preferring an appeal is governed by the statutory provision corresponding to Section 107(4) of the KGST Act (three months ordinarily, with a further period of one month which is extendable/condonable). Interpretation and reasoning: The Court noted that the appeal against the adjudication was filed beyond the three-month period but within the additional extendable/condonable month. The appellate authority had proceeded in a manner that warranted intervention. In view of the factual matrix and the submissions made by both sides, the Court found it just and appropriate to set aside the impugned appellate order and direct fresh adjudication of the appeal by the appellate authority. Precedent treatment: No specific precedents were cited or relied upon in the oral order; the Court disposed of the matter on the basis of the statutory time-limit framework and the parties' submissions. Ratio vs. Obiter: The direction setting aside the impugned appellate order and remitting the matter for fresh disposal is ratio decidendi for these petitions, grounded in the need for the appellate authority to consider the appeal afresh within statutory bounds and after affording due opportunity. Conclusion: The impugned appellate order was set aside and the appellate authority was directed to dispose of the appeal in accordance with law within a stipulated period, thereby ensuring the appeal is adjudicated on its merits after providing reasonable opportunity. Issue 2: Treatment of amounts recovered pending appeal and refund of excess amount. Legal framework: Recovery of tax, interest and penalty following an adjudication under Section 73(9) is permissible in accordance with the KGST Act and ancillary rules. The remedies available to a taxpayer aggrieved by an adjudication include appeal; however, statutory provisions determine the effect of filing an appeal on recovery proceedings unless a stay/suspension is obtained. Interpretation and reasoning: The Court observed that respondents had proceeded with recovery because the appeal was not filed within the primary three-month period. Taking into account the parties' submissions and the equities of the case, the Court directed that amounts already recovered shall be treated as subject to the final outcome of the appeal. The Court also accepted the joint submission that a specific excess sum (Rs. 4,83,294/-) had been recovered/appropriated and directed its refund with applicable interest contingent on the petitioner appearing before the designated officer on the specified date. Precedent treatment: The order did not cite or distinguish any binding precedents; the ruling rested on equitable treatment pending appellate adjudication and on the parties' agreed position regarding the specific recovered sum. Ratio vs. Obiter: The binding part (ratio) is the direction that recovered amounts are to be held subject to the final outcome of the appeal and the specific refund order for the identified excess recovery. Statements about general entitlement to stay or the merits of recovery are obiter, as the Court expressly abstained from expressing any opinion on the merits/demerits of rival contentions. Conclusion: Recovery effected after expiry of the primary appeal period but prior to decision on the condonation/extension aspect is ordered to be treated as provisional (subject to appeal outcome); the specific excess amount recovered is ordered to be refunded with interest upon compliance with the Court's directions. Issue 3: Appropriateness of directions to the appellate authority to afford reasonable opportunity and fix time for disposal. Legal framework: Appellate authorities are required to adjudicate appeals in accordance with law, providing reasonable opportunity of hearing and observing principles of natural justice. Courts possess supervisory jurisdiction to secure effective remedy and to ensure expeditious disposal where delay or procedural defects affect rights. Interpretation and reasoning: Given the pendency of appeal, the procedural history, and the recovery action taken by respondents, the Court found it appropriate to prescribe a clear timetable for presentation and disposal: the petitioner to appear without awaiting further notice on a specified date and the appellate authority to dispose the appeal within two months thereafter, after affording sufficient and reasonable opportunity to be heard. This was directed to secure expeditious adjudication and to enable practical relief (refund) where appropriate. Precedent treatment: The order did not reference prior judicial decisions; it exercised the Court's remedial powers to set a timetable and to protect the parties' rights pending appellate determination. Ratio vs. Obiter: The instructions directing appearance, hearing, and disposal within a fixed period are part of the operative ratio insofar as they remedy the procedural defects identified and frame the remedy to be complied with by the appellate authority. Conclusion: Directions to the appellate authority to provide reasonable opportunity and to decide the appeal within a fixed period were warranted and issued; the Court refrained from expressing any view on the substantive merits of the underlying disputes. Cross-references and interrelationship of issues The Court's disposition of Issue 1 (setting aside the impugned appellate order and ordering fresh disposal) is directly linked to Issue 3 (directions for hearing and timeline), and both influence Issue 2 (treatment/refund of amounts recovered). The order treats recovery as provisional pending appellate adjudication and ties the refund of a defined excess sum to the petitioner's compliance with scheduled appearance, thereby harmonizing reliefs whilst reserving opinion on substantive merits.