2018 (12) TMI 891 - HC - GST

Seeking Adjournment before AAR - Short period fixed for personal hearing - Classification of goods - Mahua De-oiled Cake - De-oiled Rice Bran - Input Tax Credit - purchase of Mahua Oil Cake/Rice Bran Oil cake used in the manufacturer of solvent extracted oil - Held that - Rejection of the adjournment sought for the first date fixed by the Appellate Authority, that too when the Appellate Authority itself could not convene or could not hear the matter for the first 60 days of the period contemplated under Section 101 (2) of the Act, appears wholly harsh and unreasonable on the part of the Appellate Authority to have refused the short adjournment sought, and to have proceeded to decide the appeal itself on merits. The frequency and length of the sitting/s may be facts known only to the concerned authorities depending on the number of pending applications/appeals and availbility of the members on certain dates. Communication of the date of hearing at short notice, without any prior indication of the same may often result in parties seeking adjounment for that reason itself. Therefore, a procedure providing for a prior indication of likely date of listing would be enough to put the applicants/appellants to notice in that regard, keeping in mind the spirit of the Act desiring speedy disposal of such matters. In cases of repeated adjournments being sought, it may remain open to the concerned authority to impose appropriate costs while rejecting any adjournment application, in appropriate case, for just circumstances. Petition disposed off.

Summary

Issues:
Challenge to order of Authority for Advance Ruling and Appellate Authority for Goods and Services Tax - classification of Mahua De-oiled Cake and De-oiled Rice Bran, eligibility for tax input credit, procedural lapse in hearing appeal.

Analysis:
The petitioner, a manufacturer of vegetable oil, challenged the orders of the Authority for Advance Ruling and the Appellate Authority for Goods and Services Tax. The petitioner sought clarification on the classification of Mahua De-oiled Cake and De-oiled Rice Bran, and eligibility for tax input credit under the Goods and Services Tax Act, 2017. The Authority for Advance Ruling ruled that the products were byproducts used in animal feeds and partially allowed tax input credit due to the use of raw materials for both taxable and exempted goods. The petitioner appealed this decision on 14.07.2018.

The Appellate Authority scheduled a hearing for 26.09.2018, which the petitioner found to be sudden and unrealistic due to holidays. An adjournment request was made, but it was rejected by the Appellate Authority. The Appellate Authority proceeded with an ex-parte hearing and decided the appeal on merits, leading to the present writ petition.

The petitioner argued a procedural lapse by the Appellate Authority in conducting an ex-parte hearing on the first date itself. The petitioner contended that insufficient time was granted to respond to the hearing notice, issued only six days before the scheduled date. The respondent's counsels defended the proceedings, stating that the petitioner had adequate notice and failed to respond to the hearing notice.

The High Court found the Appellate Authority's refusal of adjournment and ex-parte decision harsh and unreasonable, given the legislative intent of timely resolution of tax matters. The Court emphasized the need for a mechanism to notify applicants of hearing dates in advance to allow for proper preparation. It recommended electronic mail communication for hearing notices and suggested a minimum notice period of 21 days for hearings.

The Court set aside the Appellate Authority's decision and remitted the matter for fresh consideration, directing the Appellate Authority to decide the appeal expeditiously, preferably within two months. The petitioner agreed not to seek unnecessary adjournments, and the Court's observations on notice issuance were directed to be implemented in the proceedings. The judgment aimed to streamline the appeal process and ensure fair and timely resolution of tax disputes.