Revenue Department to incorporate measures to reduce litigations arisen due to the non-constitution of the GST Tribunal

[CA Bimal Jain]

The Hon’ble Bombay High Court in GULF OIL LUBRICANTS INDIA LTD., DINESH ENGINEERS LIMITED, DINESH K. KARGAL VERSUS JOINT COMMISSIONER OF STATE TAX APPEAL-V, BANDRA, DEPUTY COMMISSIONER OF STATE TAX, MUMBAI, THE UNION OF INDIA, THE JOINT COMMISSIONER OF SALES TAX (APPEALS) , MUMBAI - 2023 (2) TMI 979 - BOMBAY HIGH COURT  has directed the Revenue Department to incorporate measures to reduce the inflow of litigations in the Court, which has arisen due to the non-constitution of the GST Tribunal, by incorporating the stipulation contained in Circular No. JC (HQ)-1/GST/2020/Appeal/ADM-8 dated May 26, 2020 (“the Circular”), to put the taxpayer into notice, that the time limit for filing the appeal is extended and if a declaration is filed within the stipulated period, the protective measure would automatically come into force. Further held that, if recovery is being undertaken for failure to file a declaration within the time limit, then by way of indulgence 15 days period to be given to make such a declaration.

Facts:

Gulf Oil Lubricants India Ltd. (“the Petitioner”) had received a Show Cause Notice (“SCN”), which was adjudicated and Order-in-Original (“the OIO”) was passed by the Revenue Department (“the Respondent”). An appeal was filed against the OIO before the Appellate Authority, but it was dismissed vide the Order-in-Appeal (“the OIA”).

Being aggrieved, this petition has been filed challenging the validity of statutory provisions, on the ground that though the statute provides an appeal to an Appellate Tribunal, but such Appellate Tribunal has not been constituted yet.

Issue:

Whether the petition is maintainable on the ground that the GST Appellate Tribunal is not functional?

Held:

The Hon’ble Bombay High Court in GULF OIL LUBRICANTS INDIA LTD., DINESH ENGINEERS LIMITED, DINESH K. KARGAL VERSUS JOINT COMMISSIONER OF STATE TAX APPEAL-V, BANDRA, DEPUTY COMMISSIONER OF STATE TAX, MUMBAI, THE UNION OF INDIA, THE JOINT COMMISSIONER OF SALES TAX (APPEALS) , MUMBAI - 2023 (2) TMI 979 - BOMBAY HIGH COURT  held as under:

• Observed that, as per the Circular, the time to file appeals/application to the Appellate Tribunal would be counted from the date the President or the State President enters the office.
• Noted that, as per the Clause 5 of the Circular, a declaration has to be filed before the Respondent stating that an appeal is proposed to be filed and if such declaration is not filed, then it would be presumed that the assessee is not willing to file an appeal and recovery proceedings would be initiated. Further, if such a declaration is filed, recovery proceedings will not be initiated until the prescribed time limit as specified in the Circular. Thus, there is no prejudice to the Petitioner or any similarly situated assessee on the ground of the non-availability of the State GST Tribunal.
• Further, noted that, the Petitioner have already filed such a declaration and since the Petitioner have raised various other challenges, such a declaration would be considered as without prejudice.
• Held that, as and when the contingency in the Clause 4.3 of the Circular occurs, the Petitioner can file an appeal or writ petition as the case may be.
• Further held that, the prescribed time limit has been extended as per Clause 4.3 of the Circular and protective orders are incorporated in Clause 5 of the Circular.
• Directed the Respondent to incorporate a stipulation contained in Clause 4.3 and Clause 5 of the Circular in the OIO, to put the Petitioner to notice that the time limit for filing the appeal is extended and if a declaration is filed within the stipulated period, the protective measure would automatically come into force.
• Further directed the Respondent, that if recovery is being undertaken in terms of Clause 5 of the Circular for failure to file a declaration within the time limit, then by way of indulgence, to give 15 days period to the Petitioner to make such a declaration.

Relevant Provisions:

Section 112 of the CGST Act:

“Appeals to Appellate Tribunal-

(1) Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal.

(2) The Appellate Tribunal may, in its discretion, refuse to admit any such appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined by such order, does not exceed fifty thousand rupees.

(3) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or Commissioner of Union territory tax, call for and examine the record of any order passed by the Appellate Authority or the Revisional Authority under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act for the purpose of satisfying himself as to the legality or propriety of the said order and may, by order, direct any officer subordinate to him to apply to the Appellate Tribunal within six months from the date on which the said order has been passed for determination of such points arising out of the said order as may be specified by the Commissioner in his order.

(4) Where in pursuance of an order under sub-section (3) the authorised officer makes an application to the Appellate Tribunal, such application shall be dealt with by the Appellate Tribunal as if it were an appeal made against the order under sub-section (11) of section 107 or under sub-section (1) of section 108 and the provisions of this Act shall apply to such application, as they apply in relation to appeals filed under sub-section (1).

(5) On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of notice, a memorandum of cross-objections, verified in the prescribed manner, against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal, as if it were an appeal presented within the time specified in sub-section (1).

(6) The Appellate Tribunal may admit an appeal within three months after the expiry of the period referred to in sub-section (1), or permit the filing of a memorandum of cross-objections within forty-five days after the expiry of the period referred to in sub-section (5) if it is satisfied that there was sufficient cause for not presenting it within that period.

(7) An appeal to the Appellate Tribunal shall be in such form, verified in such manner and shall be accompanied by such fee, as may be prescribed.

(8) No appeal shall be filed under sub-section (1), unless the appellant has paid––

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and

(b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order subject to a maximum of fifty crore rupees, in relation to which the appeal has been filed.

(9) Where the appellant has paid the amount as per sub-section (8), the recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal.

(10) Every application made before the Appellate Tribunal,-

(a) in an appeal for rectification of error or for any other purpose; or

(b) for restoration of an appeal or an application,

shall be accompanied by such fees as may be prescribed.”

Clause 4.3 of the Circular:

“Hence, as of now, the prescribed time limit to make application to appellate tribunal will be counted from the date on which President or the State President enters  office. The appellate authority while passing order may mention in the preamble that appeal may be made to the appellate tribunal whenever it is constituted within three months from the President or the State President enters office. Accordingly, it is advised that the appellate authorities may dispose all pending appeals expeditiously without waiting for the constitution of the appellate tribunal.”

Clause 5 of the Circular:

“Recovery of dues after disposal of appeal –

After disposal of pending appeal u/s 107, if any demand is confirmed or appellate authority has created the additional demand then in such cases tax payer shall submit a declaration in Annexure-I before the jurisdictional tax officer stating that he is proposing to file an appeal u/s 112(1) against the appeal order. If such declaration is not submitted within fifteen days from the communication of the said order, then it will be presumed that tax payer is not willing to file appeal against the order and recovery proceedings may be initiated as per the provisions of law.”

(Author can be reached at [email protected])