Appellate Authority should provide sufficient reasons for not considering Appeals filed after limitation period

IMS Ship Managements Pvt Ltd Vs State of Maharashtra (Bombay High Court)

Bombay HC quashes Impugned Order in M/s. IMS Ship Management Pvt Ltd vs State of Maharashtra case, citing lack of reasoning. Appeal restored; Respondent to reconsider based on Petitioner’s submissions.

The Hon’ble Bombay High Court in the case of M/s. IMS Ship Management Private Ltd. v. State of Maharashtra [Writ Petition (L) No. 3121 of 2023 dated October 17, 2023] disposed of the writ petition by quashing and setting aside the Appellate Order and holding that the Revenue Department should have given proper reasoning on the issue raised by the Petitioner in the written statement pertaining to the limitation in the Impugned Order.

Facts:

M/s. IMS Ships Management Pvt. Ltd. (“the Petitioner”) is engaged in the business of supplying floating, submersible drilling and production platforms, dredgers, and supply of crew-members. The Petitioner, on July 23, 2021, received a notice issued by the Revenue Department (“the Respondent”) for the period of July 2017 to March 2018 through which discrepancies arising in the return were intimated to the Petitioner for which reply was filed by the Petitioner on the same day. Further, on December 31, 2021, the Respondent issued an intimation of tax ascertained as payable under Section 73(5) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). Further, due to Petitioner denying the tax ascertained in intimation, the Respondent issued Petitioner Show Cause Notice dated February 25, 2022, under Section 73 of the CGST Act. The Petitioner, thereafter, received a recovery notice on email, issued by the Respondent. Therefore, it came to the knowledge of the Petitioner that an Order in Original dated April 28, 2022 (“the OIO”) has been passed against the Petitioner.

The Petitioner filed an appeal with the Respondent challenging the OIO. In the Appeal filed, the Petitioner stated the date of communication as August 20, 2022, as the date of communication, therefore there is no delay in filing the appeal. The Petitioner also filed an application for condonation of delay against which the notice was issued by the Respondent seeking an explanation on the delay of 59 days in filing the appeal by taking the date of the OIO i.e., April 28, 2022, as starting point of limitation. The Petitioner was issued a notice dated November 4, 2022, seeking an explanation for a delay of 59 days in filing an Appeal. Thereafter, the Petitioner, filed detailed submissions vide letters dated November 14, 2022, and November 24, 2022.

The Respondent vide order dated December 12, 2022 (“the Impugned Order”) dismissed the appeal as not maintainable on the ground that, the appeal has been filed after a delay of 59 days, which is beyond the period prescribed under Section 107(4) of the CGST Act.

Aggrieved by the Impugned Order, the Petitioner filed a writ petition on the ground that, the OIO was not communicated to the Petitioner, and it came to the knowledge of the Petitioner only when the Petitioner received a recovery notice issued by the Respondent. Thereafter an appeal dated September 26, 2022, was filed, and the same was filed within three months as per Section 107 of the CGST Act. Also, the detailed submission filed by the Petitioner was not taken into consideration at the time of passing of the Impugned Order.

Issue:

Whether the Appellate Authority provide sufficient reasons for not considering submission while deciding the limitation issue after the appeal is filed?

Held:

The Hon’ble Bombay High Court in the case of Writ Petition (L) No. 3121 of 2023 held as under:

• Opined that, the Impugned Order passed by the Respondent is devoid of proper reasoning and has not taken into consideration the written submissions filed by the Petitioner. The Respondent should have given proper reasoning on the issue raised by the Petitioner in the written statement pertaining to the limitation in the Impugned Order. The Respondent failed to do so and therefore the Impugned Order suffers from infirmity and is liable to be quashed and set aside.
• Held that, the Impugned Order is quashed and set aside, and the appeal filed by the Respondent on September 26, 2022, is restored. Hence, the Writ Petition is allowed.
• Directed that, the Respondent shall grant a personal hearing to the Petition, and after taking into consideration the submissions made by the Petitioner, the Respondent shall pass a speaking order, taking consideration the issues raised by the Petitioner. The Respondent should, thereafter, adjudicate on the merits of the case if it is of considered view that there is no delay in filing the appeal.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. By this Petition under Article 226 of the Constitution of India, the Petitioner has challenged an order dated 12^th December, 2022 passed by Respondent No.3 Appellate Authority whereby he has dismissed the Appeal filed by the Petitioner under Section 107 of the Central Goods and Services Tax Act, 2017 (for short “the CGST Act”) on the ground that the Appeal is delayed by 59 days and therefore, the same cannot be admitted.

2. BRIEF FACTS ARE AS UNDER :-

The Petitioner is engaged in the business of supplying of floating, submersible drilling and production platforms, dredgers and supply of crew-members. The Petitioner is registered under the CGST Act.

3. On 23^rd July, 2021, the Petitioner received a notice for the period July, 2017 to March, 2018 intimating discrepancies in the return. The said notice was replied on 23^rd July, 2021 itself by giving detailed reasons refuting the alleged discrepancy. On 31^st December, 2021, Respondent issued an intimation of tax ascertained as being payable under Section 73(5) of the CGST Act. The tax ascertained as per the said intimation was denied by the Petitioner which led to the issuance of show a cause notice under Section 73 on 25^th February, 2022. On 20^th August, 2022, an email was received by the Petitioner for recovery of demand and it is at this point of time that the Petitioner came to know that an Order In Original (O-I-O) dated 28^th April, 2022 has been passed.

4. On 14^th September, 2022, the Petitioner informed Respondent No.4–Deputy Commissioner that they have not received O-I-O and that they were under a bonafide belief that the order would be passed only after personal hearing and since there was no personal hearing granted in the matter, they did not expect the order to be passed. It is only on receipt of recovery notice that it came to the knowledge of the Petitioner that the O-I-O dated 20^th August, 2022 has been uploaded on the portal of the Respondents without any communication of the same to the Petitioner either by email or otherwise.

5. On 26^th September, 2022, the Petitioner filed an Appeal with Respondent No.3 challenging the aforesaid O-I-O dated 20^th August, 2022. In the Appeal to Respondent No.3, the Petitioner stated the date of communication of O-I-O as 20^th August, 2022 and therefore, there is no delay in filing the Appeal. By way of abundant caution, the Petitioner also filed an application for condonation of delay explaining the aforesaid facts leading to knowledge of the Petitioner of the O-I-O having been passed by taking the date of O-I-O for purpose of limitation.

5. Respondent No.3 issued a notice on 4^th November, 2022 seeking explanation on the delay of 59 days in filing the Appeal as per Section 107(1) read with Section 107(4) of the CGST Act. The said delay appears to have been calculated by taking the date of O-I-O 28^th April, 2022 as the starting point of limitation. The Petitioner filed detailed submissions vide letters dated 14^th November 2022 and 24^th November 2022 giving the detailed reasoning as to why there is no delay in filing the Appeal. The Petitioner also relied upon the decision of the Madras High Court in support of its contention to the case of Nirmala Menon vs. The Assistant Commissioner (ST) Writ Petition No.24634 of 2022.

6. On 12^th December 2022, Respondent No.3 passed the impugned order dismissing the Appeal as not maintainable, since same has been filed late by 59 days which is beyond the period specified in Section 107(4) of the CGST Act.

7. It is on this backdrop and coupled with the fact that the CGST Tribunal has not been setup, the present Petition is filed challenging the order dated 12^th December, 2022 passed by Respondent No.3-Appellate Authority.

8. Heard learned counsel for the Petitioner and learned counsel for the Respondent and with their assistance, have perused the documents annexed to the Petition.

9. The Petitioner submitted that the O-I-O dated 28^th April, 2022 was not communicated to them and they came to know about this order only on receipt of recovery notice dated 20^th August, 2022. Immediately, thereafter an Appeal was filed under Section 107 of the CGST Act on 26^th September, 2022 and therefore, the same was within the period of 3 months as per Section 107 of the CGST Act and therefore, there is no delay in filing the Appeal. The Petitioner also submitted that the O-I-O was not communicated to them nor served and merely posting on common portal would not amount to the Petitioner having knowledge of the said order for the purpose of calculating the limitation period for filing the Appeal. The Petitioner stated that they had filed detailed submissions dated 14^th November, 2022 and 24^th November, 2022 on the issue of there being no delay, which have not been considered in the impugned order passed by Respondent No.3 and therefore, the impugned order dated 12^th December, 2022 is required to be set aside.

10. Per contra, learned counsel for the the Respondent submitted that the O-I-O have been served and the limitation period would start from the date of uploading the said order and therefore, Respondent No.3 was justified in dismissing the Appeal as time barred.

11. Having heard the learned counsel for the Petitioner and the Respondent, we are of the view that the impugned order dated 12^th December, 2022 passed by Respondent No.3 is certainly bereft of any reasons. Respondent No.3 has not considered the written submissions filed by the Petitioner dated 14^th November, 2022 and 24^th November, 2022 and the form in which the Appeal is filed, wherein it was specifically pleaded that the limitation would start from 28^th August, 2022, that is the date of the petitioner receiving knowledge of the passing of O-I-O. In our view, Respondent No.3 Appellate Authority ought to have considered the submissions of the Petitioner on this issue and ought to have given his reasons in the impugned order while deciding the limitation issue. There is no consideration of these submissions by Respondent No.3 in the impugned order. Having not done so, the impugned order suffers from infirmity and therefore, requires to be quashed and set aside.

12. We therefore, pass following order:-

ORDER

(i) The impugned order dated 12^th December, 2022 passed by Respondent No.3 is quashed and set aside.

(ii) The Appeal filed on 26^th September, 2022 is restored to the file of Respondent No.3, with a direction that Respondent No.3 would give a personal hearing to the Petitioner and after considering all the submissions would pass a speaking order dealing with all the contentions of the Petitioner with respect to the issue relating to the limitation and thereafter passed a speaking order.

(iii) If Respondent No.3 comes to a conclusion that there is no delay in filing the Appeal, then Respondent No.3 would adjudicate on the merits of the case.

(iv) Writ Petition is disposed of in above terms. No order as to costs.

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