Acknowledging the order-in-original issued by non-competent authority does not make it good in law

[CA Bimal Jain]

The Hon’ble Delhi High Court in M/S. RAHUL PACKAGING VERSUS UNION OF INDIA & ORS. - 2024 (4) TMI 997 - DELHI HIGH COURT held that the appellate authority cannot proceed in the matter wherein the order in original was passed by the non-competent authority.

Facts:

M/s. Rahul packaging (“the Petitioner”) filed a refund application which was rejected by the Superintendent and a show cause notice was issued by him on November 23, 2021.

Later, the same Superintendent vide order dated December 14, 2021 (“Order in Original”) rejected the refund application of the Petitioner.

Aggrieved by the Order in Original, the Petitioner filed an appeal before the Appellate Authority who vide order dated April 17, 2023 (“Impugned Order”) rejected the appeal on merits, however the appellate authority considered the fact the adjudicating authority was not a competent authority to issue and adjudicate show cause notice.

Aggrieved by the Impugned order the Petitioner filed a writ before the Hon’ble Delhi High Court contending that the Show Cause Notice was issued by an incompetent officer and since the very basis of the adjudication order was the show cause notice, the entire proceedings stand vitiated.

Issue:

Whether acknowledgment by Appellate authority that non-competent authority passed order in original would make the proceedings good in law?

Held:

The Hon’ble Delhi High Court in M/S. RAHUL PACKAGING VERSUS UNION OF INDIA & ORS. - 2024 (4) TMI 997 - DELHI HIGH COURT held as under:

• Noted that, the Order in original was passed by Range Superintendent who was not a competent authority under the CGST Act to do so.
• Further noted that, the Appellate Authority in an Impugned Order has considered the fact that show cause notice had been issued and adjudicated by an incompetent authority which is bad in law. However, the Appellate Authority proceeded to consider the case of the Petitioner on merits and thereafter, upheld the rejection of the refund application.
• Held that, the course adopted by the Appellate Authority is not sustainable as the show cause notice issued and adjudicated by the incompetent authority and therefore, the Appellate authority could not have proceeded further with the matter and have quashed the Show Cause Notice and the proceedings.
• Set aside the impugned order and the order in original.

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