Case Law Details
Sri. Kolapudi Enoch Washington Proprietor of M/s INXL Digital Vs. Additional Commissioner (GST And Central Tax) (Karnataka High Court)
Cancelled GST Registration as a result of Non Filing of GST Returns due to sudden demise of Auditor to be Restored
The Hon’ble Karnataka High Court in the case of Sri Kolapudi Enoch Washington v. The Additional Commissioner (GST and Central Tax), [Writ Petition No. 21269/2022 (T-RES)] directed the Goods and Services Tax (“GST”) Department to restore the cancelled GST registration as the Petitioner could not file the GST returns due to sudden demise of the auditor.
Facts:
M/s Kolapudi Enoch Washington (“the Petitioner”), contended that because of the untimely and sudden death of his auditor, GST return could not be filed on time and because of said delay the Respondents issued the Petitioner a show cause notice (“SCN”) dated February 24, 2022. The Petitioner did not receive the SCN because spam filtering setting in the Petitioner’s email account. As a result, the Petitioner was unaware of the SCN and did not respond, which led to cancelling of GST registration by the Respondent x. the Petitioner filed appeal before Additional Commissioner (“the Appellate Authority“) under Section 107 of Central Goods and Services Act, 2017 (“the CGST Act”). However, the appeal was dismissed on the ground of the delay which cannot be condoned as the Appellate Authority lacks jurisdiction for the same. Therefore, the thee Petitioner filed present writ petition seeking condonation of delay under Article 226 of the Constitution and setting aside the Orders passed against the Petitioner.
Issue:
Whether GST Registration can be cancelled due to non-filing of returns as a result of sudden demise of auditor be restored?
Held:
The High Court held as under:
- Though, Appellate Authority do not have the jurisdiction to condone the delay but the same can be condoned by the High Court under Article 226 of the Constitution.
- Explanation offered by the Petitioner for not being able to file the GST return is just.
- Therefore, the High Court Ordered as under:
- Order dated October 6, 2022 passed by Additional Commissioner is set aside.
- The Department is directed to restore the GST registration in favour of The Petitioner without any delay.
- The Petitioner is permitted to file GST returns which shall be allowed by the Respondents, subject to the Petitioner paying all outstanding dues to the Respondents.
Relevant Provisions:
Article 226 of the Indian Constitution
Power of High Courts to issue certain writs
(1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories
(3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause (1), without
(a) furnishing to such party copies of such petition and all documents in support of the plea for such interim order; and
(b) giving such party an opportunity of being heard, makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the aid next day, stand vacated
(4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme court by clause (2) of Article 32
Section 107 of the CGST Act
Appeals to Appellate Authority
(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.
(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.
(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.
(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.
(6) No appeal shall be filed under sub-section (1), 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 ten per cent. of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.
(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.
(8) The Appellate Authority shall give an opportunity to the appellant of being heard.
(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.
(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.
(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order:
Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:
Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74.
(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.
(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed: Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.
(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.
(15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf.
(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In this petition, petitioner has sought for the following reliefs:
(i) Set aside the order dated 06.10.2022 bearing Order-in-Appeal No.178/A DC-A 1/ GST/2022 passed by Respondent No.1 in Appeal No.262/2022 GST ADC A-I (GST Appeals) (Annexure-A).
(ii) Allow the appeal dated: 16.08.2022 (Annexure F) filed by the Petitioner in Appeal No.262/2022 GST ADC A-1 (GST Appeals) as prayed for and condone the delay in filing the appeal.
(iii) Set aside the order dated 15.03.2022 bearing Reference No. ZA2903220463 11Y passed by Respondent No.2 (Annexure-E) and restore GST registration of the Petitioner bearing No.29AAJPW2503M3Z5.
(iv) Award costs of the proceedings.
(v) Grant such other order(s) as this Hon’ble Court deems fit under the facts and circumstances of the case, in the interests of justice and equity.
2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that due to the untimely demise of his Auditor, he could not make GST payments on time leading to the show cause notice dated 02.2022 being issued by the respondents to the petitioner, who did not receive the same, since his e-mail account has spam filter, due to which, the petitioner was not aware of the show cause notice and did not submit his reply resulting in the respondent No.2 canceling the GST registration of the petitioner. It is also submitted that due to the aforesaid reasons, petitioner also could not attend the personal hearing nor respond to the notice issued by the respondents.
3.1 Learned counsel further submits that aggrieved by the aforesaid order dated 15.03.2022 at Annexure-E, petitioner preferred an appeal before the 1st respondent – appellate authority. In the appeal, petitioner specifically contended that the delay on the part of the petitioner to prefer the appeal was on account of the fact that the petitioner was not aware of the show cause notice or the proceedings nor the impugned order and as such, the delay in preferring the appeal deserves to be condoned by the 1st respondent – appellate authority. By the impugned order dated 06.10.2022 at Annexure-A, the 1st respondent – appellate authority dismissed the appeal refusing to condone the delay in preferring the appeal by the petitioner on the ground that he does not have jurisdiction to condone the delay beyond the prescribed period and the condonable period as stipulated in Section 107 of the CGST Act. Aggrieved by the impugned orders, the petitioner is before this Court by way of the present petition. It is contended that though it may not be permissible for the 1st respondent to condone the delay in preferring the appeal, this Court can condone the delay exercising its powers under Article 226 of the Constitution of India as held by this Court in the following decisions:-
(i) Practice Strategic Communications vs. The Commissioner of Service Tax – ILR 2016 KAR 4493;
(ii) Simplex Infrastructure Limited vs. Joint Commissioner of Central Tax – W.A.No.942/2021 dated 03.12.2021 and
(iii) M/s.Himalaya Drug Company vs. Commissioner of Central Tax – P.No. 10142/2021 dated 08.09.2022.
4. Per contra, learned counsel for the respondents – revenue submits that there is no merit in the petition and the same is liable to be dismissed.
5. As rightly contended by the learned counsel for the petitioner, though the 1st respondent – appellate authority does not have any power to condone the delay in preferring an appeal under Section 107 of the CGST Act, in a given case, it is open for this Court to condone the delay by exercising its powers under Article 226 of the Constitution of India. In the instant case, it is the specific assertion of the petitioner that due to untimely demise of his Auditor and on account of bonafide reasons, unavoidable circumstances and sufficient cause, it was not possible for him to not only file the GST returns and make payment within the stipulated time but also could not prefer the appeal within the prescribed period. In my considered opinion, the explanation offered by the petitioner in not making GST payment, filing returns and preferring an appeal deserves to be accepted and by adopting a justice oriented approach, I deem it just and appropriate to set aside the impugned orders and direct the 2nd respondent to restore the GST registration of the petitioner, subject to payment of all dues by the petitioner.
6. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
(ii) The impugned order at Annexure-A dated 10.2022 passed by the 1st respondent is hereby set aside.
(iii) The impugned order at Annexure-E dated 03.2022 passed by the 2nd respondent is hereby set aside.
(iv) The 2nd respondent is hereby directed to restore the GST registration in favour of the petitioner forthwith without any delay.
(v) The petitioner is also permitted to file GST returns which shall be allowed by the respondents, subject to the petitioner paying all outstanding dues to the respondents, who shall proceed further in accordance with law.
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