- Adinath Rice Mill & Anr. Vs Union of India & Ors. (Gujarat High Court)
- Background of the GST Proceedings
- Appeal Rejected on Limitation
- Petitioner's Reliance on Notification No. 53/2023
- 52nd GST Council Meeting
- Revenue's Interpretation of the Notification
- Object Behind Notification No. 53/2023
- Special Procedure Under Notification No. 53/2023
- Payment Conditions
- Four Situations Covered by the High Court's Interpretation
- Petitioner Could Not Be Placed at a Lower Pedestal
- Appellate Authority Was Required to Consider the Notification
- Final Decision
Adinath Rice Mill & Anr. Vs Union of India & Ors. (Gujarat High Court)
Summary: The Gujarat High Court considered a writ petition challenging an order-in-appeal dated 11.06.2024 passed under Section 107 of the Central Goods and Services Tax Act, 2017, whereby the petitioner’s appeal had been rejected solely on the ground of delay.
The petitioner had been issued a notice dated 07.09.2021 under Section 74 alleging evasion of tax. According to the petitioner, the case involved belated filing of returns for five months and the returns were subsequently filed with applicable tax, interest and penalty. An Order-in-Original dated 27.01.2023 was thereafter passed under Section 74 and the physical copy was served on 25.03.2023. The petitioner filed its appeal on 28.12.2023.
In the intervening period, the Central Government issued Notification No. 53/2023-Central Tax dated 02.11.2023 under Section 148 of the CGST Act. The notification prescribed a special procedure for specified taxpayers whose appeals against orders passed on or before 31.03.2023 under Sections 73 or 74 could not be filed within the period under Section 107 or had been rejected solely on limitation. It permitted filing of appeals in FORM GST APL-01 up to 31.01.2024 subject to the prescribed payment conditions.
The petitioner contended that it satisfied the conditions of the notification and that its appeal, having been filed on 28.12.2023, was required to be heard on merits. Reliance was also placed on the agenda of the 52nd GST Council Meeting dated 07.10.2023 and Safal Developers & Anr V. State of Gujarat & Anr. (2017) 99 VST 461.
The Revenue argued that the notification applied only where an appeal had already been filed and rejected for delay before issuance of the notification and therefore did not cover the petitioner’s appeal filed subsequently on 28.12.2023.
The High Court rejected this interpretation. It held that the petitioner could not be placed on a lower pedestal than taxpayers whose delayed appeals had already been rejected but who were nevertheless permitted to avail the special procedure. The Court examined the notification in light of the 52nd GST Council Meeting and identified four situations covered by its beneficial framework, including appeals filed before the extended cut-off date of 31.01.2024 subject to satisfaction of the prescribed conditions.
The Court noted that the petitioner had complied with the payment conditions in paragraph 3 of Notification No. 53/2023. It held that a taxpayer who had filed an appeal before 31.01.2024 could not be deprived of the beneficial object underlying the GST Council recommendation and the notification.
The High Court further observed that when the appellate order dated 11.06.2024 was passed, the Appellate Authority ought to have considered Notification No. 53/2023. The authority could not wait for the taxpayer to specifically point out a Central Government notification governing Section 107 proceedings.
Accordingly, the writ petition was allowed, the impugned order was quashed and set aside, and the matter was remanded to the Appellate Authority for decision on merits in accordance with law within twelve weeks.
Background of the GST Proceedings
The petitioner was engaged in the supply of service and was issued a notice dated 07.09.2021 under Section 74 of the CGST Act alleging evasion of tax.
According to the petitioner, the matter involved belated filing of returns for a period of five months. The petitioner stated that the returns were subsequently filed along with applicable tax, interest and penalty and therefore contended that there was no question of tax evasion or imposition of penalty.
An Order-in-Original dated 27.01.2023 was passed under Section 74. The physical copy of the order was served upon the petitioner on 25.03.2023.
The petitioner thereafter filed an appeal on 28.12.2023.
Appeal Rejected on Limitation
The Appellate Authority rejected the appeal by order dated 11.06.2024 solely on the ground of delay.
The authority proceeded on the basis that it had no power under Section 107 read with Rule 108 of the GST Rules to condone the delay beyond the prescribed period.
Section 107 generally provides the statutory framework governing appeals before the first Appellate Authority. TaxGuru has separately discussed the time limit for filing GST appeals under Section 107 and the manner in which the prescribed appeal and condonable periods operate.
The petitioner challenged the rejection before the Gujarat High Court.
Petitioner’s Reliance on Notification No. 53/2023
Learned advocate Mr. Uchit N. Sheth appearing for the petitioner submitted that the Central Government had extended the opportunity to file appeals under Section 107 until 31.01.2024 subject to satisfaction of the conditions stipulated in Notification No. 53/2023-Central Tax dated 02.11.2023.
The petitioner submitted that it fulfilled both conditions contained in paragraph 3(a) and 3(b) of the notification.
Since the appeal had been filed on 28.12.2023, before the cut-off date of 31.01.2024, it was contended that the appeal ought to have been decided on merits rather than rejected on limitation.
52nd GST Council Meeting
The petitioner also relied upon the agenda of the 52nd GST Council Meeting dated 07.10.2023.
It was submitted that the intention of the GST Council was to provide relief in respect of delayed GST appeals and that the benefit was intended both for appeals already rejected on limitation and appeals required to be filed before the extended cut-off date.
The special relaxation has also been described by TaxGuru as an Amnesty Scheme for condoning delay in filing GST appeals, permitting eligible taxpayers to file appeals up to 31.01.2024 subject to the enhanced pre-deposit conditions prescribed in Notification No. 53/2023.
The petitioner relied upon Safal Developers & Anr V. State of Gujarat & Anr. (2017) 99 VST 461 in support of its submissions.
Revenue’s Interpretation of the Notification
Learned Senior Standing Counsel Mr. Jani submitted that Notification No. 53/2023 would not apply to the petitioner because its appeal was filed on 28.12.2023.
According to the Revenue, the underlying intention of the notification was to permit filing of fresh appeals where appeals had already been rejected as time-barred.
It was contended that the petitioner’s appeal was not in existence when Notification No. 53/2023 was issued on 02.11.2023. Therefore, according to the Revenue, the notification applied only to appeals filed and rejected on limitation prior to issuance of the notification.
The Revenue accordingly sought dismissal of the writ petition.
Object Behind Notification No. 53/2023
The High Court examined the minutes of the 52nd GST Council Meeting held on 07.10.2023.
The Court noted that the GST Council had been apprised of cases in which appellate authorities had rejected delayed appeals and situations where recovery proceedings under Section 79 had arisen after expiry of the appeal period.
The GST Council was conscious that many appeals filed beyond limitation were either pending or had been rejected because of the restricted power of the Appellate Authority to condone delay under Section 107.
The Council was also conscious that if delayed appeals were permitted subject to specified conditions, taxpayers would come forward and make the required pre-deposit.
The recommendations of the Law Committee were accordingly approved by the GST Council and ultimately resulted in Notification No. 53/2023 dated 02.11.2023.
Special Procedure Under Notification No. 53/2023
The notification was issued under Section 148 of the CGST Act and covered taxable persons who could not file an appeal within the time prescribed under Section 107 against an order passed on or before 31.03.2023 under Sections 73 or 74.
It also covered taxable persons whose appeals against such orders had been rejected solely because they had not been filed within the period specified under Section 107.
TaxGuru’s publication containing Notification No. 53/2023-Central Tax records that eligible persons could file an appeal in FORM GST APL-01 on or before 31.01.2024.
Payment Conditions
Paragraph 3 of the notification required that no appeal be filed unless the appellant had paid:
- in full, the admitted amount of tax, interest, fine, fee and penalty arising from the impugned order; and
- a sum equal to twelve and a half per cent of the remaining amount of tax in dispute, subject to a maximum of twenty-five crore rupees, of which at least twenty per cent was required to be paid by debiting the Electronic Cash Ledger.
The High Court recorded that the petitioner had fulfilled the prescribed payment conditions.
Four Situations Covered by the High Court’s Interpretation
The High Court examined the language of Notification No. 53/2023 and the underlying GST Council recommendations and identified the following situations in which the conditions prescribed by the notification would operate:
- Taxpayers who could not file an appeal within the limitation period;
- Appeals which had been filed and rejected on the ground of delay;
- Appeals which were pending before the Appellate Authorities before issuance of Notification No. 53/2023 dated 02.11.2023; and
- Appeals to be filed within the extended period before the cut-off date of 31.01.2024 where the conditions in clauses (a) and (b) were fulfilled.
The petitioner’s appeal, filed on 28.12.2023, fell within the period ending on 31.01.2024 considered by the Court.
Petitioner Could Not Be Placed at a Lower Pedestal
The High Court rejected the Revenue’s argument that the notification could benefit only taxpayers whose appeals had already been rejected before 02.11.2023.
The Court observed that the petitioner could not be placed at a lower pedestal than taxpayers who had filed delayed appeals, suffered rejection on limitation and were thereafter permitted to file appeals pursuant to Notification No. 53/2023.
The Court considered the notification beneficial both to taxpayers and to the Revenue, which would receive the tax, interest and penalty amounts prescribed by paragraph 3.
Accordingly, a taxpayer such as the petitioner who had filed the appeal before the cut-off date of 31.01.2024 could not be barred from the object of the GST Council recommendation and the notification.
Appellate Authority Was Required to Consider the Notification
The High Court noted that Notification No. 53/2023 was already in force when the Appellate Authority passed the impugned order on 11.06.2024.
However, the appellate order was silent regarding the notification and had taken no cognizance of it.
The Court held that the Appellate Authority could not wait for the taxpayer to point out a notification issued by the Government of India.
It observed that such a notification had to be presumed to be known to the Appellate Authority, particularly when it regulated proceedings under Section 107 read with Sections 73 and 74 of the CGST Act.
Final Decision
The Gujarat High Court held that the writ petition deserved acceptance.
The impugned order rejecting the petitioner’s appeal on limitation was quashed and set aside.
The matter was remanded to the Appellate Authority to decide the appeal on merits in accordance with law.
The Appellate Authority was directed to decide the appeal within 12 weeks from the date of receipt of a copy of the High Court’s order.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Since a short issue is involved, the matter is taken up for final hearing.
2. The present writ petition is prayed for quashing and setting aside the impugned order-in-appeal dated 11.06.2024 passed under Section 107 of the Central Goods and Services Tax Act, 2017 (for short ‘the Act’).
FACTS OF CASE
3. The petitioner is engaged in the supply of service, was issued Notice dated 07.09.2021 under Section 74 of the Act, alleging evasion of tax. The petitioner filed reply to the Show Cause Notice pointing out that it was only a case of belated filing of returns for a period of five months and subsequently filed the returns along with applicable tax, interest and penalty. Hence, there is no question of evasion of tax or imposition of penalty. Thereafter, the order in original dated 27.01.2023 was passed under the provision of Section 74 of the Act and the copy of the physical order has been served on 25.03.2023. The petitioner thereafter filed the appeal on 28.12.2023. In the meantime, the Government of India, Ministry of Finance issued a Notification No. 53/2023-Central Tax dated 02.11.2023, regulating the procedure for filing and disposal of the appeals which were hit by limitation. 3.1Thereafter, by the impugned order dated 11.06.2024, the respondent-authority rejected the appeal filed by the petitioner solely on the ground of delay and it was observed that the appellate authority has no power to condone the delay as prescribed under Section 107 of the Act read with Rule 108 of the GST Rules, beyond the period of 120 days. As a result, the petitioner by way of present writ petition, has challenged the order in appeal.
SUBMISSION ON BEHALF OF PETITIONER
4. Learned advocate Mr. Uchit N. Sheth appearing for the petitioner has submitted that the Government has extended the time to file appeal under the provision of Section 107 of the Act till 31.01.2024 provided that the tax payer meets the conditions as mentioned in the Notification dated 02.11.2023. It is submitted that the petitioner fulfills both conditions (a) and (b) mentioned at paragraph No.3, thus it is urged that the impugned order ought not to have been rejected on the ground of delay. He has also referred to the agenda of the 52nd GST Council Meeting dated 07.10.2023 and has submitted that the intention of the council was to entertain the appeals even if they are filed beyond the period of limitation and the notification would apply to those appeals which were already rejected on the ground of limitation and also to those appeals which were required to be filed before the cut off date of 31.01.2024. Since in the present case, the petitioner has filed the appeal on 28.12.2023, the same is required to be decided on merits.
4.1 In support of his submissions, learned advocate Mr. Sheth has relied upon the decision of this Court in the case of Safal Developers & Anr V. State of Gujarat & Anr. (2017) 99 VST 461.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
5. Learned Senior Standing Counsel Mr. Jani appearing for the respondent has submitted that the Notification dated 02.11.2023, would not apply in the case of the petitioner as the petitioner has filed the appeal on 28.12.2023 and the underlying intention of the Notification was to permit the filing of fresh appeals in case the appeals had been rejected. It is contended that since the appeal filed by the petitioner was not in existence at the time of issuance of the Notification, there was no question of deciding the same on the ground of delay and since, the Notification applies to only those appeals which are filed and rejected on the ground of delay, prior to the issuance of such Notification. Hence, it is urged that the writ petition may not be entertained.
ANALYSIS & OPINION
6. We have heard the learned advocates appearing for the respective parties. The issue which calls for deliberation before this Court pertains to applicability of the Notification dated 02.11.2023 to the appeal filed by the petitioner on 28.12.2023. It is not in dispute that against the Order-in-Original dated 27.01.2023 passed under Section 74 of the Act, the petitioner filed an appeal on 28.12.2023 under the provision of 107 of the Act appellate authority has rejected the appeal on the ground of delay as it was beyond limitation period of 120 days. It appears that in the intervening period, from 27.01.2023 till 28.12.2023, the Government of India, Ministry of Finance issued Notification dated 53/2023 dated 02.11.2023. The genesis of the Notification lies in the agenda of the GST Council Meeting.
7. We have perused the minutes of the 52nd GST Council Meeting held on 07.10.2023. The GST Council was apprised of with the decisions of the appellate authorities in rejecting the appeals on the ground of delay, in those cases where the demand or demand orders for initiation of recovery proceedings under Section 79 of the Act, were received after a lapse of time prescribed for filing of the appeals. It was noticed that the many of the appeals were filed beyond the limitation period are either pending before the appellate authorities or were rejected for non adherence to the time period specified under Section 107(1) of the Act. The Council was conscious of the facts that the appeals were likely to be rejected, in view of limited power of the appellate authority to condone any delays and if such appeals are allowed by condoning the delay, then a large number of such taxpayers are likely to come forward and would pay the pre- deposit amount. Accordingly, the recommendations of law committee were approved by the GST Council, which led to the issuance of the Notification dated 02.11.2023.
8. The Revenue has raised the dispute of the applicability of the said notification in the case of present petitioner who has filed the appeal on 28.12.2023. It is argued before us, that since the appeal of the petitioner never got rejected on the ground of delay the provisions of such Notification would not get attracted. We are unable to accept the aforesaid submissions, since the petitioner cannot be put at a lower pedestal to those taxpayers whose appeals were filed and got rejected on the ground of delay and still, they were allowed to file an appeal in view of the Notification dated 02.11.2023.
8.1 We may extract the relevant provisions of the Notification the same are as under:- “S.O….(E). In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies taxable persons who could not file an appeal against the order passed by the proper officer on or before the 31″ day of March, 2023 under section 73 or 74 of the said Act (hereinafter referred to as the said order), within the time period specified in sub-section (1) of section 107 read with sub-section (4) of section 107 of the said Act, and the taxable persons whose appeal against the said order was rejected solely on the grounds that the said appeal was not filed within the time period specified in section 107, as the class of persons (hereinafter referred to as the said person) who shall follow the following special procedure for filing appeals in such cases: 2 The said person shall file an appeal against the said order in FORM GST APL-01 in accordance with sub-section (1) of Section 107 of the said Act, on or before 31 day of January 2024:- Provided that an appeal against the said order filed in accordance with the provisions of section 107 of the said Act, and pending before the Appellate Authority before the issuance of this notification, shall be deemed to have been filed in accordance with this notification, if it fulfills the condition specified at para 3 below.
3. No appeal shall be filed under this notification, unless the appellant has paid-
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and
(b) a sum equal to twelve and a half per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed, out of which at least twenty percent should have been paid by debiting from the Electronic Cash Ledger.”
9. A careful reading of the aforesaid Notification imply that a taxpayer who could not file an appeal against the order passed by the proper officer on or before 31.03.2023 under Section 73 or 74 of the Act, within a specified period mentioned under Section 107(4) of the Act and the taxpayer and those taxable persons whose appeal against the said order have been rejected on the ground of that the appeal was not filed within the period specified under Section 107(1) read with Section 107(4) of the Act. 9.1The proviso to paragraph No. 2 of the said Notification manifests that an appeal which is pending before the appellate authority prior to issuance of the Notification dated 02.11.2023, fulfills the conditions mentioned in paragraph No. 3. The case of present petitioner, is to be examined in light of the outer cut-off date i.e. 31.01.2024, which enables the taxpayer to file an appeal, if the appeal has been rejected on the ground of delay. The conditions prescribed under paragraph No. 3 of the Notification dated 02.11.2023, would operate in following contingencies:-
(1)for those tax payers, who could not file an appeal within limitation, period, (2)and the appeals which are filed and rejected on the ground of delay.
(3) where the appeals which are pending before the appellate authorities, before the issuance of the Notification dated 02.11.2023.
(4) and those appeals which were to be filed within the extended period i.e. before the cut-off date 31.01.2024 in case the conditions mentioned in clause (a) and (b) are fulfilled.
10. In the present case, it is not in dispute that the conditions mentioned in paragraph no.3 about the payment of tax is fulfilled by the petitioner. Thus, upon overall analysis and examination of the GST Council read with the provisions of the said Notification, it manifests that the Notification has been issued in favour of the taxpayers and also in the favour of the Revenue which can collect the tax, interest as well as penalty as mentioned in paragraph no.3 of the Notification. The taxpayer like the petitioner who have filed the appeal before the cutoff date i.e. 31.01.2024, cannot be barred from the laudable object of the GST Council, which has resulted the issuance of the Notification. When the impugned appellate order dated 11.06.2024 was passed, the appellate authority was supposed to consider the Notification dated 02.11.2023, however we find that the appellate authority is blissfully silent on the notification dated 02.11.2023 and no cognizance of the notification has been taken by the appellate authority. The appellate authority cannot wait for the taxpayer to point out the provisions of the
notification issued by the Government of India and it is to be presumed that any Notification issued by the Government of India will be known to the appellate authority, more particularly, when it regulates the provision under Section 107 of the Act read with Sections 73 and 74 of the Act.
11.Thus, the writ petition deserves acceptance, accordingly, the present writ petition succeeds. The impugned Notice and Order are hereby quashed and set aside. The matter is remanded to the appellate authority to decide the same on merits in accordance with law. The said appeal shall be decided within a period of 12 (twelve) weeks from the date of receipt of the copy of this order.
