Time-barred GST assessment appeal after no SCN reply, remanded for fresh decision on 25-50% tax deposit

Where the statutory appeal under s.107 of the GST enactments, 2017 had become time-barred and the assessee had not replied to the SCN, the HC held that relegation to the alternative appellate remedy was impracticable because limitation had expired, but equitable interference could be granted on conditions consistent with prior orders. Applying the approach of conditional remand proportionate to delay, the HC quashed the impugned assessment orders and remitted the matters for fresh adjudication, subject to the assessee depositing 25% of the disputed tax for one year and 50% for the earlier years in cash within 30 days.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the Court should exercise writ jurisdiction to interfere with ex parte GST adjudication orders passed after the assessee failed to reply to GST DRC-01 show cause notices, notwithstanding that the statutory appeal remedy under Section 107 was available but had become time-barred by the time the writ petitions were filed.

(ii) If interference is warranted, on what conditions (including proportionate cash pre-deposit, filing of reply with documents, and consequential relief regarding bank account attachment) the matters should be remitted for fresh adjudication on merits, and what consequences should follow upon non-compliance.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Maintainability and scope of writ relief despite alternate remedy and expiry of appeal limitation

Legal framework (as discussed): The Court noted that an appeal lies under Section 107 of the GST enactments against the impugned orders, and that the limitation for such appeal had already expired when the writ petitions were filed. The Court treated the matter as one where statutory appellate remedy was not practically available due to lapse of limitation.

Interpretation and reasoning: The Court considered that the impugned orders were preceded by GST DRC-01 show cause notices, to which the petitioner had failed to reply, resulting in the impugned orders. While the respondent argued that writ petitions should be dismissed for alternate remedy and for failure to respond and substantiate with documents, the Court took note of its approach in similar circumstances where orders have been quashed and matters remitted on terms, especially when delay and non-participation led to the adverse orders.

Conclusion: The Court decided to quash the impugned orders and remit the matters for fresh decision, instead of dismissing the writ petitions on the ground of alternate remedy/time-bar, subject to strict protective conditions to secure the revenue.

Issue (ii): Conditions for remand, procedure on remand, bank attachment, and consequences of non-compliance

Legal framework (as discussed): The Court referred to its practice in comparable cases of imposing conditional deposits ranging from 25% to 100% depending on the length of delay in approaching the Court, to balance an opportunity of hearing with protection of revenue.

Interpretation and reasoning: Taking into account that the petitioner sought one opportunity to explain the case and expressed willingness to be put on reasonable terms, and that the appeal limitation had expired, the Court imposed differentiated pre-deposit percentages based on the respective impugned orders/tax periods. The Court also required the petitioner to file replies with supporting documents, and treated the impugned orders as an addendum to the show cause notices to enable a consolidated and substantive adjudication.

Conclusions and directions: The Court ordered: (a) cash deposit from the electronic cash ledger within 30 days of receipt of the order-25% of the disputed tax for the order relating to the 2020-2021 tax period and 50% each for the two orders relating to the 2018-2019 tax period; (b) within the same time, filing replies to the respective GST DRC-01 show cause notices along with requisite supporting documents, treating the impugned orders as an addendum to the notices; (c) upon compliance, the authority must pass a final order on merits in accordance with law, preferably within three months; (d) subject to compliance, the petitioner's bank account attachment shall stand automatically vacated, provided the petitioner is not in arrears of any other amount apart from the amounts demanded under the impugned orders; (e) on failure to comply with any stipulation, the respondents may proceed to recover tax in accordance with law as if the writ petitions were dismissed in limine, after giving due notice before taking such steps.

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