2024 (12) TMI 783 - HC - GST

Violations under Section 16(2)(c) and Section 73 of the GST Act - demand of of tax, interest and penalties - procedural irregularities and substantive errors in tax demands - HELD THAT - Upon a thorough examination of the documents presented to the Court and taking into account the arguments put forth by the parties, this Court allows the writ petition as statutory provisions on limitation should be interpreted liberally in cases where genuine hardships are demonstrated, particularly in light of judicial precedents supporting such relief. In S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. 2023 (12) TMI 290 - CALCUTTA HIGH COURT , the Hon ble Division Bench comprising Justice Debangsu Basak and Justice Md. Shabbar Rashidi held that ' since provisions of Section 5 of the Act of 1963 have not been expressly or impliedly excluded by Section 107 of the Act of 2017 by virtue of Section 29(2) of the Act of 1963, Section 5 of the Act of 1963 stands attracted. The prescribed period of 30 days from the date of communication of the adjudication order and the discretionary period of 30 days thereafter, aggregating to 60 days is not final and that, in given facts and circumstances of a case, the period for filling the appeal can be extended by the Appellate Authority.' In light of the procedural irregularities and the arbitrary nature of the actions, this court finds the petitioner s case to be meritorious. Accordingly, the writ petition is allowed, and the appellate order dated June 28, 2024 is quashed - Application disposed off.

Summary

Issues:
1. Validity of the audit report and subsequent tax demands under GST Act.
2. Failure to respond to show-cause notice and subsequent ex-parte adjudication order.
3. Appeal filed beyond statutory period due to director's illness.
4. Allegations of procedural irregularities and substantive errors in tax demands.
5. Relief sought under Article 226 of the Constitution against actions by Respondents.
6. Interpretation of statutory provisions on limitation and applicability of judicial precedents.

Detailed Analysis:
1. The petitioner received a notice for audit of its accounts under the GST Act, leading to a final audit report directing disputed tax amounts. Subsequently, a show-cause notice was issued demanding significant sums under various heads, citing violations under the Act. The petitioner disagreed with the tax demands, claiming they were erroneous as all due taxes were paid and input tax credit was claimed lawfully. The petitioner argued that liabilities of suppliers cannot be transferred to purchasers, highlighting procedural irregularities in the issuance of tax demands.

2. Due to a mix-up by the petitioner's advocate, there was a failure to respond to the show-cause notice, resulting in an ex-parte adjudication order confirming tax demands. The petitioner filed an appeal beyond the statutory period due to the serious illness of its director, who handles financial matters. Despite providing detailed explanations and supporting documents for the delay, the appeal was rejected on grounds of limitation.

3. The petitioner contended that the unsigned show-cause notice, summary order, and adjudication order were void and unenforceable. Additionally, the proceedings under Section 73 of the Act were argued to be time-barred. The petitioner approached the High Court under Article 226 of the Constitution seeking relief against the actions and proceedings initiated by the Respondents.

4. The High Court, after examining the documents and arguments presented, allowed the writ petition, emphasizing the need to interpret statutory provisions on limitation liberally in cases of genuine hardships. Referring to a previous judgment, the Court highlighted the applicability of Section 5 of the Act of 1963 in extending the period for filing an appeal. The Court found the petitioner's case meritorious due to procedural irregularities and arbitrariness in the actions taken.

5. Consequently, the High Court quashed the appellate order and directed the Appellate Authority to consider and decide the application for condonation of delay on its merits. The Court disposed of all pending applications and ordered no costs to be paid by any party. All parties were instructed to act on the server copy of the order downloaded from the official website of the Court.