Facts of the Case

  • Assessment Order and Liability: The Assistant Commissioner of State Tax, Patna Special Central, passed an ex parte assessment order dated 07.03.2020 and a subsequent demand order in FORM GST DRC-07 for the Financial Year 2018-19. The order imposed a total tax liability of ₹5,78,375.92, which was broken down into ₹2,66,103.48 for tax, ₹46,168.96 for interest, and a penalty of ₹2,66,103.
  • Dismissal of First Appeal: Aggrieved by the ex parte assessment, the petitioner preferred a statutory appeal before the Additional Commissioner State Tax (Appeals), Central Division, Patna. However, the appellate authority issued an order in FORM GST APL-02 dated 02.02.2021, summarily rejecting the appeal solely on the ground of limitation/delay in filing.
  • Pre-Deposit Compliance: Prior to filing the appeal, the petitioner fulfilled the mandatory pre-deposit statutory condition by paying 10% of the disputed tax amount, totaling ₹26,612.
  • Writ Petition: Due to the summary rejection of the appeal and subsequent threat of recovery actions, the petitioner approached the High Court of Judicature at Patna via a Civil Writ Jurisdiction Case (CWJC No. 16107 of 2022) seeking a writ of certiorari and mandamus.

Issues Involved

  • Whether the Appellate Authority was justified in dismissing the statutory GST appeal on the grounds of limitation when the delay occurred during the COVID-19 pandemic restrictions.
  • Whether the ex parte assessment order and the subsequent recovery/attachment of the petitioner's bank accounts could be maintained given the exceptional circumstances surrounding the pandemic.

Petitioner’s Arguments

  • Condonation of Delay: The petitioner argued that the delay in filing the appeal was entirely due to the strict lockdowns and legal disruptions caused by the COVID-19 pandemic, which constituted a sufficient explanation for the delay.
  • Quashing of Rejection Order: The petitioner requested the quashing of the order in FORM GST APL-02 dated 02.02.2021, emphasizing that statutory remedies should not be choked during national medical crises.
  • Protection from Coercive Steps: The petitioner sought directions against the revenue department to prevent any coercive recovery actions from bank accounts or third parties, and prayed for the refund of the 10% pre-deposit if the case was not heard.

Respondent’s Arguments

  • No Objection to Remand: The learned counsel representing the Revenue explicitly stated that they had no objection if the matter was remanded back to the Appellate Authority for a fresh decision on merits.
  • Condonation Agreement: The Revenue conceded that the ground of limitation/delay should not be used to dismiss the appeal upon remand, provided the statutory conditions were met.

Court Order / Findings

  • Sufficient Cause Established: The Division Bench consisting of Hon’ble Chief Justice Sanjay Karol and Hon’ble Justice Partha Sarthy observed that the delay stood sufficiently explained due to COVID-19 pandemic restrictions.
  • Quashing and Restoration: The High Court quashed and set aside the appellate order dated 02.02.2021 and restored the appeal to its original file and number.
  • De-freezing of Bank Accounts: The Court explicitly directed the revenue authorities to immediately de-freeze and de-attach the bank accounts of the writ petitioner if they were attached in connection with these proceedings.
  • Direction for Merits and Hearing: The Appellate Authority was directed to condone the delay, comply with the principles of natural justice, afford an opportunity of hearing, allow the submission of essential documents, and pass a speaking order within two months. The Court ordered that no coercive steps be taken during this pendency.

Important Clarification

  • Pre-deposit Status: The Court noted that the 10% pre-deposit is a prerequisite for hearing the appeal. If found to be in excess after the final decision, it must be refunded within two months.
  • No Merits Judged: The High Court clarified that it had not expressed any opinion on the core merits of the tax liability itself, leaving all substantive legal and factual issues open for the Appellate Authority to evaluate.

Sections Involved

  • Section 107 of the CGST/BGST Act, 2017: Deals with Appeals to Appellate Authority.
  • Section 107(6)(b) of the CGST Act: Mandates the 10% pre-deposit of the disputed tax amount before filing an appeal.
  • FORM GST DRC-07: Summary of the assessment order/demand notice.
  • FORM GST APL-02: Acknowledgement/Order issued by the Appellate Authority.

Link to download the order – https://mytaxexpert.co.in/uploads/1783071296_480compressed.pdf

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