2021 (3) TMI 641 - HC - GST

Levy of penalty - Appellate authority reduced the quantum of penalty - petitioner treated to be the owner of the goods - proper application of mind not made by appeal authority - principles of natural justice - HELD THAT - In the present case not only the appeal authority has not made any observations to the effect that the assessee had limited his appeal to the alternate ground but the appeal authority has copiously referred to the entire submissions advanced by the petitioner including submissions advanced on the merits of the matter. Yet, it has not dealt with or decided the same. Such a course adopted by the appeal authority is not productive or useful either for the purposes of adjudication made by it or for the purposes of testing the correctness of the adjudication made by such appeal authority, by the higher forum. The grounds of appeal may be voluminous and the arguments elaborate. However, for the purposes of recording reasons, it is the exact nature of the objection or ground raised that must be recorded and noticed as may disclose to the higher forum, the precise application of mind made by the appeal authority. By referring to the entire memo of appeal or a written argument, the appeal authority not only makes it difficult for itself to decide the exact issue raised but also makes it difficult for the higher forum to examine the correctness of the adjudication made by the appeal authority. In the present case, the course adopted by the appeal authority leaves a lot to be desired. The appeal authority appears to have only considered and offered reasons to accept the alternate plea made by the petitioner but it has not made any application of mind to the main plea that there was no infraction of law and the penalty provisions were not attracted. In absence of any discussion on that issue, the order passed by the appeal authority cannot be sustained to that extent and is hereby set aside - the matter is remitted to the appeal authority to pass fresh order. Petition allowed by way of remand.

Summary

Issues:
Challenge against the order of the first appeal authority regarding penalty reduction.

Analysis:
The petitioner filed a writ petition against the order of the Additional Commissioner, Grade-2 (Appeal)-I, Commercial Tax, Kanpur, which partly allowed the assessee's appeal and reduced the penalty. The learned Standing Counsel for the State-respondents argued that the appeal authority had considered all submissions and the order was not flawed. The High Court noted that the Tribunal was not constituted, and thus, the writ petition was entertained. The Court found merit in the petitioner's argument that the appeal authority did not provide reasoning for rejecting the submissions, except for addressing the alternative plea regarding ownership of goods and liability to penalty under the Goods and Services Tax Act, 2017.

The High Court emphasized that the appeal authority must consider and decide each ground of appeal raised before it, with clear reasons recorded for its decision. It pointed out that the appeal authority failed to address the main plea of no legal violation and non-applicability of penalty provisions, despite discussing all submissions. The Court held that the appeal authority's failure to specifically address and decide each ground of appeal rendered its order unsustainable. Consequently, the Court set aside the order and remitted the matter back to the appeal authority for a fresh decision, instructing to consider all issues raised by the petitioner and provide clear reasons for its decision.

The Court directed the appeal authority to conclude the proceedings expeditiously, preferably within three months. With these observations, the writ petition was disposed of, highlighting the importance of proper application of mind, clear reasoning, and comprehensive consideration of all grounds of appeal in appellate decisions to ensure a just and legally sound outcome.