APPEAL TO FIRST APPELLATE AUTHORITY UNDER GST LAWS – ISSUES ON LIMITATION

[Mr. M. GOVINDARAJAN]

Appeal to Appellate Authority

Section 107(1) of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides that any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

Section 107(2) of the Act provides for filing appeal by the Department against the order of Assessment Authority.  The Commissioner on his own motion or any request received from the Commissioner of State may direct any officer subordinate to him to file application against the order of Adjudicating Authority within six months from the date of communication of his order.  This application may be treated as appeal by the Appellate Authority.

The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

Limitation

The time limit for filing appeal by the registered person is within 3 months from the date of receipt of the order and for the Department is within six months from the communication of filing application before the Appellate Authority.  The Appellate Authority may condone the delay only for one month if there is sufficient cause is shown by the applicants before the Appellate Authority and the Appellate Authority is satisfied on the reasons for belated submission of application.

During the COVID period the Supreme Court itself passed order for excluding the COVID period in limitation.  Besides there may be occasions to consider some periods may be excluded in limitation.  In this regard the following two cases are given-

In M/S BRIJ BIHARI SINGH, THROUGH ITS PROPRIETOR SHRI BIHARI SINGH VERSUS COMMISSIONER COMMERCIAL TAX LUCKNOW AND ANOTHER - 2022 (5) TMI 348 - ALLAHABAD HIGH COURT the petitioner was issued a notice dated 28.02.2019,  by the Department proposing to cancel the registration. The petitioner filed reply to the notice.  The Authority passed an ex-parte order on 09.08.2019 cancelling the registration of the petitioner.  The petitioner was served with a copy of the order at the relevant time through the GSTN portal.  The petitioner with the intention of filing appeal before the First Appellate Authority accessed the GSTN Portal. But he could not able to file appeal due to glitches in the system.  The error in the system was resolved on 20.09.2021.  The petitioner was informed of the resolution made to the work.  The petitioner filed appeal on line on 20.09.2021. 

The Appellate Authority rejected the appeal as time barred. The petitioner submitted the print of screen shots with dates the petitioner attempted to file the appeal.   Since no GST Tribunal has been constituted the petitioner filed the present writ petition challenging the order of Appellate Authority rejecting the appeal as time barred. 

The High Court observed that the petitioner has been disabled from filing appeal electronically against the order dated 28.02.2019 for the reasons attributable solely to the GSTN authority and not for reasons attributable to the petitioner.  The portal was made available to the petitioner to file appeal only on 20.09.2021 and not earlier.  This has restrained the petitioner from filing appeal within the period of limitation for filing appeal of the order dated 28.02.2019. 

The High Court held that in face of clear evidence existing on record that such technical glitches were resolved by the GSTN Authority on 17.09.2021 the period of limitation to file appeal started running from that date only.  For the period from 28.02.2019 to 17.09.2021 the period of limitation to file the appeal must always be deemed to have remained suspended for reason of appeal forum being not made available for filing appeal by the petitioner, through the prescribed mode.

The High Court further held that the statutory right of appeal is not an illusory remedy given to the registered person.  It is an effective and real remedy granted within the structure of the statute to allow for redressal of genuine grievances.  Therefore the appeal forum (whatever provided) must be seen to exist and be freely available to the person seeking to approach it.  There must exist no obstruction to access it within time and opportunity granted by the statute to institute the appeal before that authority.

The High Court allowed the appeal and held that the appeal was filed within the limitation period.

In M/S. ATLAS PVC PIPES LIMITED VERSUS STATE OF ODISHA & OTHERS - 2022 (7) TMI 130 - ORISSA HIGH COURT the proceedings were initiated by the Department against the writ petitioner.  The Department passed an order dated 20.01.2021 raising a demand to the tune of Rs.8,20,042/- (including tax Rs.3,99,630/- ; interest – Rs.53,212/- and penalty Rs.3,67,200/-) pertaining to the period from 01.04.2019 to 31.03.2020.  The petitioner filed an appeal against the order before the Appellate Authority.  The petitioner, in order to complying with the provisions for filing of the appeal, deposited an amount of Rs.39,964/- being 10% of the tax but could not submit the certified copy of the impugned order along with the appeal memo.  The petitioner received a notice dated 13.05.2022 with the direction that the petitioner was required to submit the certified copies within 7 days of filing of the appeal.  The petitioner received the said notice on 20.05.2022.  The petitioner applied for certified copy on 21.05.2022.  The certified copies were obtained by the petitioner only on 23.05.2022 being 22.05.2022 was a Sunday.  The petitioner offered to submit the certified copies to the Appellate Authority.  The said Authority refused to receive the same on the plea that order has already been passed by the Authority.  The appeal of the petitioner was rejected and the order was uploaded in GST portal on 23.05.2022. The Appellate Authority rejected the appeal.  Against which the petitioner filed the present petition before the High Court.

The petitioner contended that in addition to filing of the appeal by electronic mode, self attested hard copies of the documents including copy of the impugned order as made available to it in the GST Web portal were furnished to the Appellate Authority.  The Department contended that the petitioner was required to furnish the certified copy of the impugned order dated 20.01.2021 within 7 days of filing appeal.  The petitioner took step to obtain certified copy only on 21.05.2022 i.e. the last date to comply with the direction contained the notice dated 13.05.2022.  Therefore the order of Appellate Authority is correct and according to the provisions of law and the said order has been passed after adhering the principles of Natural Justice by affording opportunity specifying the date for compliance. 

The High Court observed that the petitioner had only one day left for compliance from the date of service of the notice dated 13.05.2022.  The petitioner applied for certified copy of the impugned order on the very next day of the receipt of the notice.  The Appellate Authority ought to verify the date of service of notice on the petitioner before passing the order which rejected the appeal.  Further it is not clear from the material on record as to whether the authority had ever informed the appellant about the next date of proceeding.  This obligation is sine qua non for compliance of the rules of natural justice.

The High Court further observed that on the altar of default in compliance of such a procedural requirement, merit of the matter in appeal should not have been sacrificed.  The petitioner has enclosed the copy of the impugned order as made available to it in the GST Portal while filing the Memo of appeal.  Therefore there is no case of non submission of certified copy.  The appeal has been filed within the limitation period. 

The High Court set aside the order of the Appellate Authority.  The High Court directed the petitioner to appeal before the Authority along with the certified copy of the order and submit to him and in that event the Appellate Authority shall proceed to decide the appeal on merits and make endeavor to dispose of the same by a reasoned order in accordance with law.

Discussions to this article

[muthuswamy sundararman]

The time for appeal mentioned in the Act is 3 months from date of communication of the order and further one month delay can be condoned by the appellate authority.

Sec 167 says the modes of communication of the orders by the adjudicating authority i.e.

By Registered Post or Courier

By e mail registered on the GST Portal

By uploading on the GST Portal

The first mode namely Registered post or Courier is understandable and acceptable..

The deemed service by sending to e mail id and uploading on the portal may not be a fair provison as many of the small traders who are filing returns may not be computer literate and may not be regular in watching understanding and following their e mail messages.. In fact all the old messages do not properly appear on smart phones which can be clearly read only if one verifies the same on a Lap Top or a Desk top computer. Because of this lacuna, some one should challenge this mode of deemed service. As the demand for GST, Penalty and interest are for substantial amounts, the orders should be sent manually as in Civil courts who send process servers or at lease by registered post or Speed Post which can make sure that the concerned notices for hearing are received by the Assessee and otherwise the ex parte orders should not operate till the Orders come to the notice of the Assessee and Limitation for Appeal should commence only when the Assessee actually comes know of the order on demand being raised which is normally sent by registered post. This is a mute point which can be subject of a writ petition or PIL that may be filed by a professional Body of Tax Practitioners.3

M.Sundararaman,Advocate Pune Mob: 9371013899