Case Law Details
Proxima Steel Forge Pvt. Ltd. Vs Union of India and others (Punjab and Haryana High Court)
Proxima Steel Forge Pvt. Ltd., based in Punjab, is embroiled in a legal dispute with the tax authorities over a refund claim totaling Rs. 2,02,09,111. The case, now before the Punjab and Haryana High Court, raises significant questions about procedural adherence within the Central Goods and Services Tax (CGST) framework.
Background of the Case
Proxima Steel initially submitted a refund application, which was denied by the Assistant Commissioner on grounds of time limitations as per a July 2021 circular. This decision prompted Proxima Steel to appeal to the Joint Commissioner, who ruled in favor of the company. In an order dated August 29, 2023, the Joint Commissioner noted that the refund claim should not have been dismissed solely on the basis of time limits. He directed the proper officer to reassess the refund claim based on its merits, emphasizing adherence to principles of natural justice.
Assistant Commissioner’s Response
Following the Joint Commissioner’s order, the Assistant Commissioner, identified as Sewa Ram, revisited the application. In December 2023, Ram corresponded with the Joint Commissioner, seeking clarification regarding the appeal order. However, on December 29, the Joint Commissioner rejected this request for clarification, deeming it outside the permissible scope of Section 161 of the CGST Act. Subsequently, on January 24, 2024, the Assistant Commissioner again dismissed Proxima Steel’s refund application, citing time-barred status as the reason.
Proxima Steel’s Petition in the High Court
Frustrated by the repeated dismissals, Proxima Steel filed a writ petition in the Punjab and Haryana High Court, challenging the Assistant Commissioner’s January 2024 decision. The company contended that the Assistant Commissioner’s repeated refusal to address the refund on merit contradicted the appellate ruling from the Joint Commissioner.
High Court’s Observations
During the hearing, the High Court noted an apparent disregard for the appellate order by the Assistant Commissioner. The Court observed that despite the Joint Commissioner’s clear directive to consider the refund claim within the applicable time frame, the Assistant Commissioner, a subordinate official, failed to do so. The Court remarked that such actions suggest a breakdown of hierarchical compliance within the CGST system.
The Court expressed concerns that if appellate orders are not honored by subordinate officers, it could lead to administrative disorder and diminished public trust in the appeals process. The Court also indicated that insubordination could lead to increased litigation, putting undue strain on judicial resources.
Court’s Directives for Departmental Action
In light of these findings, the High Court issued instructions for the Commissioner to initiate disciplinary actions against the Assistant Commissioner, Sewa Ram, citing his apparent insubordination. The Court directed the Commissioner to initiate a major penalty proceeding to ensure adherence to the appellate decisions.
Additionally, the High Court ordered that another officer be appointed to assess Proxima Steel’s refund application. The newly appointed officer must evaluate the refund application solely on its merits and render a decision within two months.
The Court further disposed of any miscellaneous applications related to the case, effectively closing the current chapter of this protracted legal matter.
Implications of the Case
This case underscores the need for procedural compliance within tax administration and adherence to appellate directives. As more taxpayers navigate the complexities of CGST provisions, consistent enforcement and clear communication within the departmental hierarchy remain critical. The outcome of this case may impact how refund applications are handled in the future, especially those dismissed on procedural grounds, and could set a precedent for disciplinary measures against non-compliant officials.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. A refund application was filed by the petitioner claiming refund of Rs.2,02,09,111/-. Said refund application was rejected by the then concerned Assistant Commissioner, on the ground of limitation stating that the refund application has been filed after a period of two years, as provided under the Circular dated 20.07.2021.
2. The appeal was preferred by the petitioner, which came to be allowed by the Joint Commissioner vide order dated 29.08.2023 and it was held as under:-
“…. Thus, I hold that the refund claim should not have been rejected on the grounds of being time barred. Therefore, I remand back the instant matter to the proper officer to examine the refund application of the appellant afresh and on merits alone. The proper officer shall pass a detailed speaking, order after going through the submissions of the appellant and he shall adhere to the principles of Natural Justice..
4. In view of the above, I pass the following order:-
ORDER
This impugned order is set aside and the appeal filed by the appellant is allowed conditionally mentioned in Para 3.2 supra.”
3. The Assistant Commissioner, one Sewa Ram, again heard the application and passed an order, wherein, he mentions a letter sent to the Joint Commissioner seeking clarification or order in appeal, dated 14.12.2023. The Joint Commissioner answered his letter dated 14.12.2023 on 29.12.2023, and rejected the same treating it as beyond the scope of Section 161 of the CGST Act. Thereafter, the concerned Assistant Commissioner has again rejected the refund application being time barred vide his order dated 24.01.2024.
4. In the circumstances, the petitioner has approached this Court challenging the order passed by the Assistant Commissioner dated 24.01.2024.
5. Taking notice of the fact that the Assistant Commissioner in his order dated 24.01.2024, notices that the Joint Commissioner had rejected his application for seeking rectification/clarification of the order passed in appeal, still proceeds to again dismiss the appeal on the ground of limitation, we directed the Commissioner to file an affidavit as to what steps have been taken against his subordinate, who has challenged his authority.
However, no affidavit has been filed by him.
6. We find that the Assistant Commissioner seems to be asserting his authority over and above the order passed in appeal by the Joint Commissioner, who has already observed that the application has to be treated within time and has to be decided on merits.
However, Assistant Commissioner, a subordinate officer has refused to examine the case on merits and again dismissed the application as time barred. Such an approach adopted by the subordinate officer is the result of the virtual failure of system of hierarchy in the CGST.
7. If subordinate officers do not comply with the appellate orders, it would be something sort of administrative chaos. Such officers are required to be dealt with by the Department in a strict manner, so that they may not create a precedent for others to start insubordination. It also reflects in general public faith in filing appeals, which would be wavered if the appellate orders are not complied with. Litigation is also forced unnecessarily before this Court. Such insubordination requires to be dealt with more strictness.
8. Accordingly, we direct the Commissioner to take appropriate departmental action against the concerned Assistant Commissioner, Sewa Ram, for his insubordination, by initiating proceedings for major penalty.
We dispose of this writ petition by setting aside the order of Assistant Commissioner dated 24.01.2024 and at the same time, direct the Commissioner to appoint another officer to deal with the application relating to refund of the petitioner, who would decided it purely on merits within a stipulated period of two months.
Misc. application(s), if any, also stand disposed of.
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