2025 (12) TMI 80 - HC - GST

Unreasoned WBGST s.74, s.74(12) adjudication upheld without independent review; order quashed under Article 226, remanded

Indrani Dhar & Anr. Versus The State of West Bengal & Ors.

HC set aside the appellate order affirming an adjudication under s. 74 of the WBGST Act, 2017, on the ground of non-application of mind and absence of ... Dismissal of petitioner's appeal against the order passed u/s 74(9) of WBGST Act 2017 - Non Application of Mind - petitioners’ contention that the petitioners were merely the agents of the supplier and not the supplier itself. - petitioners submits that the adjudication order passed under Section 74 of the said Act, 2017 could not have been passed against the petitioners inasmuch as the petitioners were not suppliers and that being so incidence of tax could not have been on the petitioners - HELD THAT:- Section 74(12) of the said Act of 2017 now mandates that reasons must be provided to support the ultimate decision. Even otherwise, reasons have been held to be the live link between the narrative and the directive. Absence thereof can render an order a nullity. A perusal of the appellate order impugned herein reveals that the appellate authority has not applied his mind to the matter at all and has dittoed the order passed by the adjudicating authority without delving into the facts of the case before him. The statement of facts and the grounds of appeal presented by the petitioner before the appellate authority have been annexed at pages 150 to 159 of the writ petition. The same do not appear to have been considered by the appellate authority at all in reaching the conclusion that he has by the order impugned. The order impugned is wholly unreasoned and the same therefore cannot sustain scrutiny of this Court under Article 226 of the Constitution of India. The order dated June 26, 2025 is set aside and the matter is remanded to the appellate authority for fresh consideration of the appeal, in accordance with law. It is clarified that this Court has not gone into the merits of the matter and all points will be left open to be decided by the appellate authority in accordance with law. Petition disposed off by way of remand. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the appellate authority, while deciding an appeal under Section 107 of the WBGST Act, 2017 against an order passed under Section 74(9), is required to pass a reasoned order in terms of Section 74(12) of the Act and general principles of law. 1.2 Whether the impugned appellate order, being unreasoned and reflecting non-application of mind to the facts and grounds of appeal, can withstand judicial scrutiny under Article 226 of the Constitution of India. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Requirement of a reasoned order by the appellate authority under the WBGST Act Legal framework 2.1 The Court referred to Section 74(12) of the WBGST Act, 2017, noting that it mandates that reasons must be provided to support the ultimate decision. 2.2 The Court reiterated the general legal principle that reasons constitute the 'live link between the narrative and the directive', and that absence of reasons can render an order a nullity. Interpretation and reasoning 2.3 The appellate order, extending over only two pages, was examined. The Court found that the bulk of the order merely recited the history of the case, statement of facts, grounds of appeal, and the prayer. 2.4 The only operative paragraph of the appellate order simply recorded that the appellate authority had gone through the statement of facts, grounds of appeal, the adjudication order, and the documents submitted, and then concluded that there was no reason to interfere, as the proper officer had passed the order 'properly as per the provision of law'. 2.5 The Court held that such a paragraph fell 'short of even a modicum of reasoning' and did not disclose any independent analysis or examination of the facts, documents, or grounds urged in appeal. Conclusions 2.6 The Court concluded that Section 74(12) of the WBGST Act, 2017, read with general principles requiring recording of reasons, obligates the appellate authority to pass a reasoned order, which was not complied with in the present case. Issue 2: Sustainability of the impugned appellate order under Article 226 of the Constitution of India Interpretation and reasoning 2.7 On perusal of the impugned appellate order, the Court found that the appellate authority had not applied its mind to the matter and had effectively 'dittoed' the adjudication order without delving into the facts of the case. 2.8 The Court noted that the statement of facts and grounds of appeal, annexed to the writ petition, did not appear to have been considered by the appellate authority while arriving at its conclusion. 2.9 The Court characterised the impugned order as 'wholly unreasoned' and held that such an order cannot sustain scrutiny in exercise of the Court's jurisdiction under Article 226 of the Constitution of India. Conclusions 2.10 The impugned appellate order dated June 26, 2025 was set aside on the ground of being unreasoned and reflecting non-application of mind. 2.11 The matter was remanded to the appellate authority for fresh consideration of the appeal in accordance with law, with all points kept open and without any adjudication on the merits of the underlying tax dispute.