K.P. Sugandh Limited Vs Chief Commissioner of CT and GST, Odisha (Orissa High Court)
Summary: The Orissa High Court at Cuttack allowed W.P.(C) No.31000 of 2024 filed by M/s. K.P. Sugandh Limited against the Chief Commissioner of CT and GST, Odisha and others, challenging an order containing demand under Section 129 of the Odisha Goods and Services Tax Act, 2017.
The petitioner challenged the order dated 27th September, 2024, contending that it had been made after expiry of the seven-day period prescribed under Section 129(3). According to the petitioner, the penalty notice had been served on 19th September, 2024 and the impugned order was dated 27th September, 2024, making it the eighth day from service of the notice. The petitioner also relied upon a communication dated 18th October, 2024 issued by the revenue, which, according to the petitioner, referred to 27th September, 2024 as the date of the order.
The revenue disputed this position. Its learned Standing Counsel submitted that the order had actually been made on 26th September, 2024, which was the seventh day from service of the penalty notice. Reliance was placed on clauses (c) and (d) of sub-section (1) of Section 169, concerning service by e-mail and making a communication available on the common portal. The revenue produced a print of an e-mail said to have been sent to the petitioner on 26th September, 2024 and contended that communication of the order was complete by e-mail on that date. According to the revenue, uploading the order on the portal on 27th September, 2024 did not alter the date on which the order had been made.
The Court examined Section 129(3), which required the order to be made within seven days from the date of service of the notice specifying the penalty payable. On the facts, the statutory period required the order to be made on or before 26th September, 2024. Although the order bore that date, the revenue’s case was that communication had been made by e-mail at 22:41 hours on 26th September, 2024.
The Court examined the print of the e-mail produced by the revenue. It noted that the contents referred to an attached file but contained no indication that an attachment was actually present. This circumstance, coupled with the revenue’s admission that the order appeared from annexure-1 as dated 27th September, 2024, did not persuade the Court that the order had in fact been made on 26th September, 2024.
The Court then considered the significance of communication for purposes of the seven-day requirement under Section 129(3). It observed that the provision prescribed a specific period of seven days for passing an order, reckoned from the date of service of the penalty notice. In the Court’s view, treating mere passing of the order within the prescribed period as sufficient, while permitting its communication at a later date, would effectively enlarge the statutory period.
For this purpose, the Court referred to Section 4 of the Indian Contract Act, 1872, concerning communication of a proposal. It observed that an order in the present context was to be taken as the proposal and that communication could only be complete when the order came to the knowledge of the person against whom it was made.
The Court found that the revenue had not been able to satisfy it that communication had been completed on 26th September, 2024 through the e-mail relied upon under Section 169(1)(c). According to the Court, communication of the order was completed on the following day, when it was uploaded on the portal in compliance with Section 169(1)(d).
The Court also considered other circumstances supporting 27th September, 2024 as the date of communication. The petitioner had filed an appeal in Form GST APL-01 mentioning 27th September, 2024 as the date of the order, and the appeal had been successfully uploaded. Further, the Assistant Commissioner of State Tax had issued a letter dated 18th October, 2024 which clearly mentioned 27th September, 2024 as the date of the order. The Court also noted that sub-rule (5) of Rule 142 of the Odisha Goods and Services Tax Rules, 2017 required the summary of an order issued, inter alia, under Section 129 to be uploaded electronically in Form GST DRC-07, and there was no dispute that this was done on 27th September, 2024.
On these facts, the Court concluded that the impugned order had been made on the eighth day from the date of service of the notice specifying the penalty. It therefore did not satisfy the requirement under Section 129(3) and was liable to be set aside and quashed.
The petitioner also submitted that the goods had meanwhile been sold and that it was entitled to refund of the pre-deposit relating to an appeal that had been withdrawn. The Court did not adjudicate those consequences, observing that the petitioner must find its remedy on the consequences of the judgment.
Accordingly, the impugned order was set aside and quashed, and the writ petition was disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. Mr. Kar, learned senior advocate appears on behalf of petitioner and submits, impugned is order dated 27th September, 2024 containing demand as issued under section 129 in Odisha Goods and Services Tax Act, 2017. It was made following detention of the vehicle and after receipt of notice of penalty, on the 8th day. The notice was served on 19th September, 2024. As such, impugned order made on 27th September, 2024 was beyond prescribed time of 7 days from service of the notice as under section 129 (3). He draws attention to communication dated 18th October, 2024 made by revenue on subject of intimation in furtherance of the proceeding, to demonstrate that according to the demand itself, impugned order was passed on 27th September, 2024. He seeks interference for quashing of the demand.
2. Mr. Mishra, learned advocate, Standing Counsel appears on behalf of revenue and submits, the order was made on 26th September, 2024, being 7th day from date of service of the notice on the penalty payable. This is the requirement in sub-section (3) of section 129. He then draws attention to clauses (c) and (d) under sub-section (1) in section 169. The clauses are reproduced below.
“169 (c) by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or
(d) by making it available on the common portal; or”
He hands up his instruction bearing print of mail, said to be sent to petitioner on 26th September, 2024. As such, communication of the order was complete by sending it to e-mail address of petitioner as under section 169(1)(c). The order was uploaded in the portal the next day being 27th September, 2024. The uploading does not change date of the order, as made within seven days from issuance of the penalty notice. He submits, the order was duly made. The writ petition be dismissed.
3. Section 129(3), when applied to facts and circumstances of the case required the order to be made on or before 26th September, 2024. The order made, bears that date. Revenue says communication of it was made by e-mail sent on 26th September, 2024 at 22:41 hours to e-mail address of petitioner. We have looked at the print. Contents of the print talks about attached file but there is no indication of any attachment. This, added to admission on part of revenue that the order was dated 27th September, 2024 as appearing from annexure-1 does not inspire us to conclude that the order was made on 26th September, 2024.
4. Sub-section (3) in section 129 provides for a specific period of seven days for passing of an order. The seven days is to be reckoned from date of service of the notice, specifying the penalty payable. Issuance and receipt of the penalty notice is not in dispute. For us to take a view that mere passing of the order within the time prescribed is sufficient for compliance with the provision in section 129(3) would imply that the order could thereafter be communicated at any later date. This view would then effectively enlarge the period prescribed. Indian Contract Act, 1872 provides for communication. Communication of a proposal is said to be complete, under section 4, in said Act, when it comes to knowledge of the person to whom it is made. Here the order is to be taken to be the proposal and communication of it can only be complete, when it comes to knowledge of the person against whom it is made. Revenue has not been able to satisfy us about the communication made on 26th September, 2024, by mail sent to e-mail address of petitioner on fulfilling the requirement under section 169(1)(c). Communication of the order was complete the next day, when it was uploaded in the portal as in compliance with requirement under section 169(1)(d).
5. To us it appears the print of sent mail is doubtful because petitioner filed appeal on Form GST APL-01 giving date of order as 27th September, 2024. The appeal was successfully uploaded. There is also said letter dated 18th October, 2024 written by Assistant Commissioner of State Tax to petitioner, in which there is clear mention of 27th September, 2024 as date of the order. Furthermore, sub-rule (5) in rule 142 of Odisha Goods and Services Tax Rules, 2017 requires summary of the order issued, inter alia, under section 129, to be uploaded electronically in Form GST DRC-07. There is no dispute that this was done on 27th September, 2024.
6. In view of aforesaid, impugned order is found to have been made on the 8th day from date of service of the notice specifying penalty. It does not meet the requirement under sub-section (3) of section 129. It is therefore liable to be and is set aside and quashed.
7. Mr. Kar submits, the goods have been sold in the meantime. His client is also entitled to refund of pre-deposit on the appeal withdrawn. Petitioner must find its remedy on consequences of this judgment.
8. The wit petition is disposed of.
