2024 (4) TMI 105 - HC - GST

Validity of Order for Demand Notice - Without considering any submission, the adjudication authority passed order - petitioner was under the bona fide belief that the 1st respondent is satisfied with the reply - filled appeal on online forum - sufficient cause from non-presenting the appeal within the period of three months as per Section 107(1) - HELD THAT - In the instant case, though the petitioner has submitted his reply dated 17.05.2023 to the show cause notice in which the date was mentioned as 18.05.2023 and the petitioner was not aware of the order passed by the adjudication authority on 02.08.2023 and a DRC-07 notice on 03.08.2023. The petitioner was under the bona fide belief that the 1st respondent is satisfied with the reply dated 17.05.2023 and the proceedings are kept in abeyance. Only after the receipt of oral communication with regard to the recovery by the department the petitioner came to know about the proceedings of the 1st respondent. Thus , this Court is of the considered view that the delay of 2 months and 21 days is condoned on condition that the petitioner shall pay 15% of the disputed tax on or before 25.03.2024 and on payment of the same, the petitioner may prefer the appeal before the 1st respondent. The Deputy Commissioner (ST), GST Appeal, Chennai, within a period of two weeks thereof. In the result, the writ petition stands disposed of.

Summary

Issues involved:
The issues involved in this case include denial of Input Tax Credit (ITC) to the petitioner due to the non-filing of returns by the supplier, delay in filing an appeal against the demand notice issued by the Department, and the condonation of delay in filing the appeal.

Denial of Input Tax Credit (ITC):
The petitioner, engaged in the business of iron and steel materials, faced denial of Input Tax Credit (ITC) by the Department based on the alleged failure of the supplier, M/s.SLO Industries Limited, to furnish GSTR-3B returns and pay taxes. The petitioner contended that they had taken ITC in good faith based on the supplier's valid registration and supplies reflected in GSTR-2A. The petitioner argued that innocent purchasers like them should not be penalized for the supplier's lapses. The petitioner highlighted the challenges faced by small businesses in verifying suppliers' tax compliance and emphasized the unfairness of denying ITC solely due to the supplier's non-compliance.

Delay in Filing Appeal:
The petitioner, upon receiving oral communication regarding recovery proceedings by the Department, discovered the actions taken by the 1st respondent. Subsequently, the petitioner filed an appeal before the Appellate Authority, accompanied by a pre-deposit of 10% of the demand. However, the appeal was returned by the 1st respondent citing a delay of 2 months and 21 days in filing. The petitioner argued that they were unaware of the order passed by the adjudication authority and believed that the matter was in abeyance after submitting a reply to the show cause notice.

Condonation of Delay:
The Court, after considering the factual matrix of the case, decided to condone the delay of 2 months and 21 days in filing the appeal. The Court imposed a condition for the petitioner to pay 15% of the disputed tax by a specified date and allowed the petitioner to prefer the appeal before the Deputy Commissioner (ST), GST-Appeal, Chennai within two weeks of the payment. The Court's decision aimed to provide relief to the petitioner while ensuring compliance with the procedural requirements.