Facts of the Case

The petitioner, M/s. Loyal Furniture and Interiors, a sole proprietorship concern, challenged before the Karnataka High Court an order dated 26.03.2024 passed under Section 73 of the CGST/KGST Act, 2017, as well as the Order-in-Appeal dated 24.02.2026 in GST AP No. 458/25-26. The original order had been passed in circumstances where the petitioner failed to file a response or appear for a personal hearing. The appellate authority subsequently dismissed the appeal on the ground of limitation.

The dispute related to the tax period from April 2018 to March 2019. The petitioner produced a Discharge Summary to substantiate the circumstances relied upon for non-participation in the original proceedings. The writ petition also sought lifting of the freezing of the petitioner’s bank account.

Issues Involved

The principal issues before the High Court were:

  1. Whether interference under Article 226 of the Constitution of India was warranted against the Section 73 order where the petitioner had failed to respond and participate in the personal hearing because its representative was suffering from a serious heart condition.
  2. Whether the original proceedings deserved restoration despite the appellate authority having dismissed the appeal as time-barred.
  3. Whether the petitioner’s representative suffering from triple vessel disease, treatment in Kerala, and subsequent difficulties arising from restrictions following the onset of the COVID-19 pandemic constituted sufficient reasons for granting a fresh opportunity to file a response and documentary evidence.
  4. Whether the proceedings should be restored to the first respondent for fresh consideration in accordance with law.

Petitioner’s Arguments

The petitioner contended that its representative could not participate in the proceedings under Section 73 of the CGST/KGST Act because he was suffering from triple vessel disease.

Learned counsel for the petitioner relied upon these circumstances and submitted that a case had been made out for the High Court’s interference. It was argued that the proceedings should be restored to the first respondent so that the petitioner could produce documentary evidence and obtain due consideration of its case.

The petitioner further relied upon the circumstance that immediately after the representative’s discharge, there was the onset of the COVID-19 pandemic, which created additional difficulties and restrictions. The petitioner therefore sought an opportunity to file its response and supporting documents before the original authority.

Respondents’ Arguments

The respondents were represented by the learned Additional Government Advocate.

The Court recorded that it may not take exception to the Appellate Authority dismissing the appeal on the ground of limitation, because the appeal had been delayed by 276 days beyond the condonable period.

At the same time, the Court considered it necessary to examine the circumstances brought before it as indisputable and determine the just consequence flowing from those circumstances.

Court’s Findings

The Karnataka High Court found to its satisfaction that, during the relevant period:

  • the petitioner’s representative had a heart condition;
  • he had availed treatment in his native place in Kerala; and
  • there were difficulties arising from restrictions because of the onset of the COVID-19 pandemic.

In view of these circumstances, the Court held that sufficient reasons were made out for interference, though only to the limited extent of restoring the proceedings to the first respondent.

The Court granted liberty to the petitioner to file a response and documents and directed the first respondent to consider the material and pass just orders in accordance with law.

Court Order / Final Decision

The High Court ordered as follows:

  1. The order dated 26.03.2024 passed under Section 73 and the Order-in-Appeal dated 24.02.2026 were quashed.
  2. The proceedings were restored to the first respondent.
  3. The petitioner was granted liberty to file its response and list of documents.
  4. The petitioner was directed to file such response by 30.06.2026.
  5. The first respondent was directed to consider all materials and pass just orders in accordance with law.

Important Clarification

The judgment makes an important distinction between the legality of the appellate authority’s limitation decision and the High Court’s constitutional interference in the peculiar facts of the case.

The High Court did not hold that the Appellate Authority was wrong in dismissing the appeal as time-barred. On the contrary, the Court expressly observed that it may not take exception to such dismissal because the appeal was delayed by 276 days beyond the condonable period.

However, after considering the indisputable medical circumstances, including the representative’s heart condition, treatment in Kerala, and difficulties caused by COVID-19 restrictions, the Court found sufficient reason to exercise writ jurisdiction and restore the original Section 73 proceedings for fresh consideration.

Thus, the decision should not be read as laying down a general rule that every time-barred GST appeal can be revived through a writ petition. The relief was granted on the specific and substantiated circumstances placed before the Court, and the interference was expressly limited to restoring the proceedings to the original authority.

Section Involved

Section 73 of the CGST Act, 2017 / KGST Act, 2017 — Determination of tax not paid or short paid, tax erroneously refunded, or input tax credit wrongly availed or utilised for reasons other than fraud, wilful misstatement, or suppression of facts.

Article 226 of the Constitution of India — Constitutional writ jurisdiction of the High Court, invoked for challenging the original Section 73 order and the appellate order and seeking appropriate relief.

Link to download the order -
https://www.mytaxexpert.co.in/uploads/1783067075_414compressed.pdf

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