2024 (10) TMI 376 - HC - GST

Refund claim - rejection on the ground of time limitation - scope of Section 161 of the CGST Act - dismissal of appeal by Assistant Commissioner despite Joint Commissioner's order - HELD THAT - Taking notice of the fact that the Assistant Commissioner in his order dated 24.01.2024, notices that the Joint Commissioner had rejected his application for seeking rectification/clarification of the order passed in appeal, still proceeds to again dismiss the appeal on the ground of limitation, the Commissioner is directed to file an affidavit as to what steps have been taken against his subordinate, who has challenged his authority. However, no affidavit has been filed by him. The Assistant Commissioner seems to be asserting his authority over and above the order passed in appeal by the Joint Commissioner, who has already observed that the application has to be treated within time and has to be decided on merits - Assistant Commissioner, a subordinate officer has refused to examine the case on merits and again dismissed the application as time barred. Such an approach adopted by the subordinate officer is the result of the virtual failure of system of hierarchy in the CGST. If subordinate officers do not comply with the appellate orders, it would be something sort of administrative chaos. Such officers are required to be dealt with by the Department in a strict manner, so that they may not create a precedent for others to start insubordination. It also reflects in general public faith in filing appeals, which would be wavered if the appellate orders are not complied with. Litigation is also forced unnecessarily before this Court. Such insubordination requires to be dealt with more strictness. The Commissioner is directed to take appropriate departmental action against the concerned Assistant Commissioner, Sewa Ram, for his insubordination, by initiating proceedings for major penalty - petition disposed off.

Summary

Issues:
1. Rejection of refund application on the ground of limitation.
2. Dismissal of appeal by Assistant Commissioner despite Joint Commissioner's order.
3. Assertion of authority by Assistant Commissioner over Joint Commissioner's order.
4. Failure of hierarchy system in the CGST.
5. Non-compliance with appellate orders by subordinate officers.
6. Direction for departmental action against the Assistant Commissioner.
7. Appointment of another officer to handle the refund application.

Analysis:

The petitioner filed a refund application amounting to Rs. 2,02,09,111, which was rejected by the Assistant Commissioner citing limitation under a Circular. The petitioner appealed, and the Joint Commissioner allowed the appeal, directing a reevaluation of the refund claim on its merits. However, the Assistant Commissioner, Sewa Ram, disregarded the Joint Commissioner's order and rejected the application again on the basis of being time-barred, despite seeking clarification outside his jurisdiction. This led to the petitioner challenging the Assistant Commissioner's order in the High Court.

The High Court noted the Assistant Commissioner's insubordination and his refusal to comply with the Joint Commissioner's directive. The court emphasized the importance of hierarchy within the CGST system and the need for subordinate officers to adhere to appellate orders to prevent administrative chaos and maintain public faith in the system. The court directed the Commissioner to take strict departmental action against Assistant Commissioner Sewa Ram for his insubordination and initiate proceedings for a major penalty.

In conclusion, the High Court set aside the Assistant Commissioner's order, directing the Commissioner to appoint another officer to review the refund application solely on its merits within a specified two-month period. This decision aimed to rectify the failure of hierarchy and ensure compliance with appellate orders, thereby maintaining the integrity of the system and preventing unnecessary litigation before the court.