2021 (3) TMI 241 - HC - GST

Best judgement passed u/s 62 (1) of the GST Act - ex parte order of assessment - time limitation prescribed under section 107 of the Goods And Services Tax Act, 2017 - return filed by the petitioner for the tax period Of June 2019 on 04.10.2019 with delay of three days with respect to the limitation off 30 days prescribed under section 62 (2) of the act - section 16 (2), 16 (4,39 read with section 46 and 47 of the act permits filing of a monthly return after due date and imparts all characteristics of a return valid and acceptable - seeking declaration that section 62 (2) of the act is directory and not mandatory and therefore any return validly filed in terms of section 39 read with section 47 of the act shall replace the best judgement assessment made under section 62 (1) irrespective of the bar of limitation prescribed under section 62 (2) of the act. HELD THAT - It stands clarified that deposit of such amount would be without prejudice to the respective rights and contentions of the parties and the order which the authority may pass upon the matter being remanded for consideration afresh. As such, purely on a limited ground, the impugned order passed by the State Tax Additional Commissioner (Appeal), Patna, as contained in Annexure 6 and order dated 31.8.2019 passed under section 62(1) of Goods and Services Tax Act, 2017, as contained in Annexure 4, is set aside with further mutually agreeable directions imposed - the petitioner shall deposit a sum of ₹ 3 lacs with the authority on or before 9th March, 2021 - the petitioner shall appear before the assessing authority on 9th March, 2021 in his office at 10 30 A.M., on which date he shall place on record additional material, if so required and desired.

Issues:
1. Delay in hearing an appeal beyond the statutory period due to the Covid-19 pandemic.
2. Quashing of an appellate order rejecting the petitioner's appeal.
3. Quashing of an ex parte order of assessment.
4. Declaration on the appeal's limitation under the Goods And Services Tax Act, 2017.
5. Extension of limitation under the Limitation Act, 1963.
6. Waiver of delay in filing a tax return.
7. Validity of filing a monthly return after the due date.
8. Nature of an order of assessment based on best judgment.
9. Directory nature of section 62(2) of the act.

Analysis:
1. The High Court addressed the issue of delay in hearing an appeal beyond the statutory period due to the Covid-19 pandemic. The Court quashed the appellate order dated 20.8.2020, citing the current pandemic and the direction issued by the Hon'ble Apex Court regarding the extension of limitation. The order passed by the State Tax Additional Commissioner was deemed unsustainable, and the appeal was allowed in favor of the petitioner.

2. Another issue involved the quashing of an ex parte order of assessment passed under section 62(1) of the Goods and Services Tax Act, 2017. The Court found that the order was passed without following the principles of natural justice, prejudicing the petitioner. The financial liability imposed without a fair hearing was considered unjust, leading to the order being quashed and set aside.

3. The Court also considered the limitation prescribed under section 107 of the Goods And Services Tax Act, 2017. The petitioner's appeal was held to be within the limitation period, and the rejection of the appeal on grounds of delay was deemed illegal. The Court declared that the limitation could be extended under section 5 of the Limitation Act, 1963, emphasizing the applicability of the provisions of the Limitation Act.

4. The issue of waiver of delay in filing a tax return was addressed by the Court. The petitioner's delay of three days in filing the return for the tax period of June 2019 was considered negligible. The Court opined that such delays should have been waived by the respondent, and the actual figures returned by the petitioner deserved consideration for assessing liability.

5. The Court also analyzed the validity of filing a monthly return after the due date. It was held that sections 16(2), 16(4), 39, 46, and 47 of the act permit the filing of a monthly return after the due date, making it valid and acceptable in terms of the law.

6. Regarding the nature of an order of assessment based on best judgment, the Court clarified that such orders are not penal but regulatory in nature. They aim to fill gaps in tax determination when a dealer defaults in filing the prescribed return, ensuring that the actual tax liability is determined based on returns and records.

7. The Court interpreted section 62(2) of the act, emphasizing its directory nature rather than being mandatory. Any return validly filed under the relevant sections of the act could replace a best judgment assessment made under section 62(1), irrespective of the limitation prescribed under section 62(2).

8. In conclusion, the Court quashed the impugned orders, directing the petitioner to deposit a specified amount and appear before the assessing authority. The matter was to be decided on merits, ensuring compliance with the principles of natural justice. The Court reserved liberty for the parties to seek further remedies as per the law, while conducting proceedings digitally during the Covid-19 pandemic.

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