2025 (3) TMI 610 - HC - GST

Rejection of petitioner s appeal only on the ground of delay - ex-parte order - opportunity to participate in the proceedings - HELD THAT - The petitioner ought to be given an opportunity to participate in the proceedings initiated under Section 73 of 2017 Act as he could not participate in the proceedings pursuant to show cause notice dated 31.12.2023 issued under Section 73 (1) of 2017 Act due to ill-health suffered by him which is established by placing medical records on record. A co-ordinate Bench of this Court in M/S. CHAMARAJNAGAR TALUK MSPC 2024 (3) TMI 1266 - KARNATAKA HIGH COURT has observed that merely because appeal preferred by the petitioner was dismissed by the Appellate Authority it cannot be said that this Court is denuded of its power and jurisdiction to examine the claim of the petitioner under Article 226 of the Constitution of India or to examine the legality validity and correctness of the order passed by the original authority. In the instant case also though the appeal filed by the petitioner is rejected solely on the ground of delay this Court is denuded of its power to examine the original order dated 30/31.03.2024 (Annexure-f) passed under Section 73 of 2017 Act. On examination of the original order passed under Section 73 of 2017 Act it is forthcoming that the said order is ex-parte order and without participation of the petitioner. The petitioner was not in a position to participate in the proceedings under Section 73 of 2017 Act due to his ill-health. The medical records placed on record would indicate that (Page 53 of writ petition) petitioner was suffering from heart ailment since 2011 and since his heart was functioning 40% subsequently on 09.12.2024 the petitioner has undergone heart surgery. The above circumstances would justify the petitioner s request for an opportunity to participate in the proceedings by filing objections. Conclusion - The petitioner ought to be given an opportunity to participate in the proceedings initiated under Section 73 of 2017 Act as he could not participate in the proceedings pursuant to show cause notice due to ill-health. The matter is remitted back to the stage of filing objections to show cause notice dated 30.12.2023 issued under Section 73 of 2017 Act - petition allowed by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal issues considered in this judgment are:

1. Whether the ex-parte order dated 30/31.03.2024 passed under Section 73 of the Karnataka Goods and Services Tax Act, 2017 (hereinafter '2017 Act') was validly issued given the petitioner's inability to participate due to medical reasons.

2. Whether the appellate order rejecting the petitioner's appeal solely on the ground of delay was justified under Section 107 of the 2017 Act.

3. Whether the High Court has the jurisdiction to review the original order under Article 226 of the Constitution of India despite the dismissal of the appeal by the Appellate Authority.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of the Ex-Parte Order under Section 73 of the 2017 Act

Relevant Legal Framework and Precedents:

Section 73 of the 2017 Act pertains to the determination of tax not paid or short paid. It provides for the issuance of a show cause notice and the opportunity for the taxpayer to present their case before any order is passed. The legal framework mandates participation of the taxpayer in the proceedings.

Court's Interpretation and Reasoning:

The Court noted that the ex-parte order was issued without the petitioner's participation, which was due to his medical condition. The Court emphasized the importance of allowing the taxpayer a fair opportunity to present objections and participate in the proceedings.

Key Evidence and Findings:

The petitioner provided medical records indicating a heart ailment, with the heart functioning at 40% since 2021, and subsequent heart surgery on 09.12.2024. These records were crucial in establishing the petitioner's inability to participate in the proceedings.

Application of Law to Facts:

The Court applied Section 73 of the 2017 Act, considering the petitioner's medical condition as a valid reason for non-participation. The Court found that the ex-parte order was issued without due consideration of the petitioner's circumstances.

Treatment of Competing Arguments:

The respondent's argument that the petitioner failed to participate despite receiving the show cause notice was acknowledged. However, the Court prioritized the petitioner's medical evidence over the procedural lapse.

Conclusions:

The Court concluded that the petitioner should be given an opportunity to participate in the proceedings under Section 73 of the 2017 Act, and the ex-parte order was quashed.

2. Justification of the Appellate Order under Section 107 of the 2017 Act

Relevant Legal Framework and Precedents:

Section 107 of the 2017 Act deals with appeals to the Appellate Authority. It specifies the time limits for filing appeals and the conditions under which delays can be condoned.

Court's Interpretation and Reasoning:

The Court recognized that the appeal was dismissed solely on the ground of delay. However, it noted that the delay was due to the petitioner's medical condition, which was substantiated by medical records.

Key Evidence and Findings:

The medical records provided by the petitioner were pivotal in demonstrating the genuine reasons for the delay in filing the appeal.

Application of Law to Facts:

The Court applied the provisions of Section 107, considering the medical evidence as a reasonable ground for the delay, thereby justifying a review of the original order despite the appeal's dismissal.

Treatment of Competing Arguments:

The respondents argued that the appeal was rightly dismissed due to non-compliance with the statutory time limits. The Court, however, found that the medical condition justified the delay.

Conclusions:

The Court determined that the appellate order dismissing the appeal on the ground of delay was not justified, given the medical circumstances of the petitioner.

3. Jurisdiction of the High Court under Article 226 of the Constitution of India

Relevant Legal Framework and Precedents:

Article 226 of the Constitution empowers High Courts to issue certain writs. It allows the Court to review administrative decisions to ensure they comply with legal standards.

Court's Interpretation and Reasoning:

The Court referred to a previous decision by a co-ordinate Bench, which held that the High Court retains jurisdiction to examine the legality of orders passed by original authorities, even if an appeal is dismissed.

Key Evidence and Findings:

The Court found that the original order was ex-parte and that the petitioner had valid reasons for non-participation, thus warranting judicial review.

Application of Law to Facts:

The Court applied Article 226 to review the original order, considering the petitioner's medical condition as a compelling reason for intervention.

Treatment of Competing Arguments:

The respondents did not contest the High Court's jurisdiction under Article 226, focusing instead on procedural compliance.

Conclusions:

The Court concluded that it had jurisdiction to review the original order under Article 226, given the ex-parte nature of the order and the petitioner's medical condition.

SIGNIFICANT HOLDINGS

The Court held that:

"The petitioner ought to be given an opportunity to participate in the proceedings initiated under Section 73 of 2017 Act, as he could not participate in the proceedings pursuant to show cause notice due to ill-health."

The Court established the principle that medical conditions substantiated by evidence can justify delays and non-participation in statutory proceedings.

The final determination was to quash the ex-parte order and remit the matter back to the stage of filing objections, with conditions for the petitioner to deposit a portion of the tax liability before proceeding.