Sufficient Cause holds more weight than length of delay

[CA Bimal Jain]

The Hon’ble Andhra Pradesh High Court in M/S. S.A. IRON AND METAL VERSUS THE ASSISTANT COMMISSIONER (ST) , THE ADDITIONAL COMMISSIONER (ST) AND APPELLATE AUTHORITY, THE CHIEF COMMISSIONER OF STATE TAX, STATE OF ANDHRA PRADESH - 2023 (8) TMI 577 - ANDHRA PRADESH HIGH COURT set aside the order refusing to entertain appeal on the ground of delay in filing of appeal and held that it is not the length of the delay, but cause for delay which would be paramount consideration.

Facts:

M/s. S A Iron and Metal (“the Petitioner”) is engaged in the business of purchase and sale of iron scrap.

The Revenue Department (“the Respondent”) conducted inspection on January 21, 2023 at the business premises of the Petitioner and ascertained demand of INR 5,48,29,347 including tax, penalty and interest vide an Order issued under DRC-07 (“the Order”) and further instructed banks to provisionally attached account of the Petitioner and instructed dealers to whom the Petitioner supplied goods and not to release the payment.

Aggrieved by the Order, the Petitioner filed an appeal before Appellate Authority under section 107 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and requested to condone the delay of 25 days in filing the appeal as the Petitioner account were frozen by the Respondent and could not mobilize the funds which are required for pre-deposit of 10% of the disputed tax for filing appeal.

The Appellate Authority vide an order dated June 03, 2023 (“the Impugned Order”) rejected the appeal on untenable grounds.

Aggrieved by the Impugned Order passed by the Appellate Authority, the Petitioner filed writ before the Hon’ble Andhra Pradesh High Court.

The Petitioner submitted that appeal was filed within condonable period of limitation and the Appellate Authority ought to have considered the reason for the delay since he was prevented by sufficient cause and entertained the appeal.

The Petitioner further submitted that appeal was filed with a delay of 25 days after expiry of three months of statutory period of limitation for filing appeal before the Appellate Authority due to an unforeseen and severe financial crisis that his business has been facing and bank account was freezed by the Respondent and ITC was also blocked. Hence, the Petitioner was unable to pay the 10% of disputed tax as pre-deposit which is required to file the appeal.

Issue:

Whether delay in making pre-deposit due to attachment of bank account, is a sufficient cause to condone the delay to entertain appeal?

Held:

The Hon’ble Andhra Pradesh High Court in M/S. S.A. IRON AND METAL VERSUS THE ASSISTANT COMMISSIONER (ST) , THE ADDITIONAL COMMISSIONER (ST) AND APPELLATE AUTHORITY, THE CHIEF COMMISSIONER OF STATE TAX, STATE OF ANDHRA PRADESH - 2023 (8) TMI 577 - ANDHRA PRADESH HIGH COURT held as under:

• Observed that, the expression 'sufficient cause' is adequately elastic to enable the Court to apply the law in a meaningful manner which subserve the ends of justice, while considering application for condonation of delay, it is not the length of the delay, but cause for delay which would be paramount consideration.
• Further Observed that, when the bank account of the Petitioner is attached by the Respondent and it is a relevant fact to consider the delay since the pre-deposit of 10% disputed tax at the time of filing of the appeal is mandatory.
• Held that, the language employed under Section 107(4) of the CGST Act and in the back drop the factual and legal background of the case, the impugned order is to be set aside.

(Author can be reached at [email protected])