The Hon’ble Bombay High Court in the case of Yogesh Rajendra Mehra v. Principal Commissioner of Central Goods and Services Tax [Writ Petition No. 1632 of 2024 dated February 20, 2024] held that the Authorities should have considered that an Assessee cannot be expected to file his return and deposit any tax under an invalid cancelled registration number. Further, any deficiency in filing the appeal/application cannot make the appeal, which was registered on the online portal within the prescribed period of limitation, barred by limitation. Any such deficiency in the appeal could be removed later on, as the law does not provide, that the proceedings have to be strictly filed without deficiency, and only then, the proceedings would be held to be validly filed. Lastly, procedural compliances can never defeat the substantive remedy/right to pursue any proceedings when filed within limitation. Thus, any procedural deficiency in the proceeding filed within the prescribed limitation cannot be labelled to be a proceeding filed beyond limitation.
Facts:
Mr. Yogesh Rajendra Mehra (“the Petitioner”) was a scriptwriter who took assignments on a contract basis. The Petitioner was granted GST registration on July 19, 2018. The Petitioner filed the GST return under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) on December 02, 2018, and thereafter, no returns were filed. By an Order dated January 01, 2019, the said registration of the Petitioner was cancelled and was rendered inconsequential.
The Petitioner started professional activities and made an application for a fresh registration which came to be granted to the Petitioner on March 26, 2022, with a new registration.
For the first quarter of the year 2022, two returns were filed by the Petitioner’s Chartered Accountant who inadvertently, deposited a tax of Rs.1,22,220/- in the cancelled registration number i.e. the old GST account, as also under the new registration number, when in fact, the returns were required to be filed and tax was to be deposited only under the new registration account, which was in vogue and not the cancelled registration.
Due to the aforesaid circumstances, the Petitioner approached the Department with an application claiming refund of Rs.1,22,220/-, being tax deposited by mistake in the returns under the cancelled registration number.
On such refund application, the Petitioner was issued a show cause notice (“the SCN”). The Petitioner stated that there was a mistake that had occurred in the filing of the returns under the cancelled registration number and depositing tax of the said amount. The Assistant Commissioner by Order dated June 08, 2022 (“the Impugned Order”), rejected the refund application.
Being aggrieved by the Impugned Order passed by the Assistant Commissioner, the Petitioner approached the Commissioner of Central Tax, the Appellate Authority (“the Respondent”) under the provisions of Section 107 of the CGST Act. By the Order dated December 28, 2022 (“the Impugned Order”), the Petitioner’s appeal was rejected on the ground of limitation stating that, although the Impugned Order was passed by the Assistant Commissioner on June 08, 2022, according to the Respondent, the appeal was filed on December 28, 2022, which was barred by the provisions of Section 107(4) of the CGST Act.
Hence, aggrieved by the Impugned Orders, the Petitioner has filed the present writ petition.
Issue:
Whether the Tax Authorities can retain the tax deposited under the cancelled registration?
Held:
The Hon’ble Bombay High Court in Writ Petition No. 1632 of 2024 held as under:
- Observed that,the approach of both the Authorities in dealing with the Petitioner’s refund application was incorrect in facts as well as in law. The Authorities should have considered that an Assessee cannot be expected to file returns and deposit any tax under an invalid cancelled registration number. Further, a legitimate and proper return was filed by the Petitioner under the new registration which was a valid registration. Thus, insofar as the tax deposited under the cancelled registration is concerned, the said registration itself is non-existent. The tax return filed thereunder and any tax deposited under such return, could not have been retained by the Respondents as it was not a deposit as per law. It also cannot be a deposit received or any collection of tax under the authority of law. Insofar as the second registration return is concerned, the same was appropriately filed and similar amount of Rs.1,22,220/- was deposited.
- Noted that,it was incorrect for the Assistant Commissioner to furnish the reasons to deny the refund claim of the Petitioner. Further, the Respondent on a purely technical reason passed the Impugned Order that the Petitioner’s appeal was barred by limitation under Sections 107 (1) and (4) of the CGST Act rejected the Petitioner’s appeal. It is not in dispute that the Petitioner had filed an appeal online on August 18, 2022, which was within the prescribed limitation i.e. within a period of four months from the Impugned Order dated June 08, 2022. Although, in the Impugned Order, the Appellate Authority has recorded the said fact, however, merely on the ground that physical copies were not furnished and/ or on some deficiencies in documents to be uploaded being not complied by the Petitioner, the Respondent taking a hyper-technical view of the matter, rejected the Petitioner’s appeal, without examining such essential facts and without touching the merits of the Petitioner’s case. Such approach of the Respondent was not only contrary to the record and illegal, but also not consistent with the provisions of Sections 107(1) and (4) of the CGST Act.
- Opined that,any deficiency in filing the appeal/application like failure to file physical documents, cannot make the appeal, which was registered on the online portal within the prescribed period of limitation, barred by limitation. Once the appeal was filed (albeit under the Online method) within the prescribed limitation, any deficiency in the appeal certainly could be removed later on, as the law does not provide, that the proceedings have to be strictly filed without deficiency, and only then, the proceedings would be held to be validly filed. If such a proposition is to be recognized as the correct position, it would not only be tantamount to a patent absurdity but also would result in a gross injustice, prejudicially affecting the legitimate rights of persons to a legal remedy (access to justice). Thus, the parties would necessarily have an opportunity to remove the deficiencies, if any, which may prevail at the time of filing of the proceedings, after the proceedings are filed. It may be observed that procedural compliances can never defeat the substantive remedy/right to pursue any proceedings when filed within limitation. Thus, any procedural deficiency in the proceeding filed within the prescribed limitation cannot be labelled to be a proceeding filed beyond limitation.
- Held that, the Impugned Order dated June 8, 2022, was confirmed by the Order dated February 27, 2023 passed by the Assistant Commissioner. The Petitioner was entitled to refund the amounts which were deposited under the erroneous return filed under the cancelled registration an amount of Rs.1,22,220/- along with the permissible interest, refunded to the Petitioner within four weeks of the Order being presented before the Assistant Commissioner.
Conclusion: The Bombay High Court’s ruling in Yogesh Rajendra Mehra’s case reinforces the principle of justice over technicalities. Tax authorities cannot retain tax deposited under an invalidated registration, and procedural deficiencies should not bar legitimate appeals. This judgment underscores the importance of upholding substantive rights within legal frameworks.
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