2024 (7) TMI 2 - HC - VAT and Sales Tax

Validity of impugned Notice and impugned Endorsement - It is the grievance of the petitioner that despite non-expiry of the appeal period of three months ending on 22.04.2024, the respondent issued the impugned Notice dated 23.01.2024 followed by the impugned Endorsement dated 09.02.2024, which are illegal, arbitrary and same deserves to be quashed - Section 107 of the Karnataka Goods and Services Tax Act, 1971 - HELD THAT - The impugned Notice dated 23.01.2024 and the impugned Endorsement dated 09.02.2024 issued by the respondent within the appeal period is clearly illegal and arbitrary and the same deserves to be quashed and necessary directions be issued to the petitioner and the appellate authority for the purposes of the appeal to be preferred by the petitioner. It is also relevant to state that waiver of the period of three (4) months from the date of the order to prefer an appeal is permissible only under Section 78 of the KGST Act and that too for the reasons to be recorded in writing by the proper Officer as to why said period of three (3) months is to be dispensed with and by assigning reasons that the respondent would not be in a position to recover the said amount from the petitioner. In the instant case, the impugned Notice and Endorsement do not contain any such reasons for invocation of Section 78 of the KGST Act in the facts of the instant case and on this ground, also impugned Notice and Endorsement deserves to be quashed. The impugned Notice dated 23.01.2024 -Annexure-A and the impugned Endorsement dated 09.02.2024 - Annexure-B issued by the respondent, are hereby quashed - Petition allowed.

Summary

Issues:
1. Validity of the impugned Notice and Endorsement issued by the respondent.
2. Entitlement of the petitioner to prefer an appeal within the specified period.
3. Compliance with Section 107 of the Karnataka Goods and Services Tax Act, 1971.
4. Consideration of waiver under Section 78 of the KGST Act for appeal period.

Analysis:

The petitioner challenged the impugned Notice and Endorsement issued by the respondent, contending that they were illegal and arbitrary. The petitioner argued that the appeal period had not expired when the Notice was issued. The High Court observed that as per Section 107 of the KGST Act, the petitioner had the right to appeal within four months from the date of the original order. The Court agreed with the petitioner's counsel that the impugned actions were premature and warranted quashing.

The Court emphasized that the impugned actions lacked the necessary reasons for invoking Section 78 of the KGST Act, which allows for the waiver of the appeal period under specific circumstances. Since the impugned Notice and Endorsement did not provide any such reasons, the Court deemed them invalid and ordered their quashing.

In the final order, the Court allowed the petition, quashed the impugned Notice and Endorsement, and directed the petitioner to file an appeal before the Appellate Authority by a specified date. Additionally, the Court instructed that the amount debited from the petitioner's ledger be treated as a pre-deposit for the appeal, with the Appellate Authority being directed to proceed with the appeal without requiring any further pre-deposit from the petitioner.

Overall, the judgment focused on upholding the petitioner's right to appeal within the statutory period, ensuring compliance with the relevant provisions of the KGST Act, and emphasizing the necessity of providing valid reasons for any waiver of appeal timelines as per the law.