Facts of the Case

The petitioner, M/s Humancare Pharma Private Limited, challenged the order dated 05.09.2022 passed by the Additional Commissioner of State Tax (Appeals), whereby the appeal seeking revocation of cancellation of GST registration was rejected solely on the ground of limitation.

The petitioner also challenged the earlier ex-parte order dated 01.12.2018 passed by the Joint Commissioner of State Tax cancelling the GST registration without granting any effective opportunity of hearing.

The petitioner contended that the delay in filing the appeal occurred due to extraordinary circumstances, including the COVID-19 pandemic and the death of one of the Directors of the company. It was further submitted that the cancellation order had been passed ex-parte, thereby violating the principles of natural justice.

The petitioner also sought restoration of GST registration, de-freezing of the bank account attached by the department, and protection against coercive recovery proceedings.

 

Issues Involved

  1. Whether the appellate authority was justified in rejecting the appeal solely on the ground of limitation.
  2. Whether the delay caused due to COVID-19 restrictions and the death of the company's Director deserved condonation.
  3. Whether an ex-parte cancellation of GST registration without granting an opportunity of hearing violated the principles of natural justice.
  4. Whether the matter required remand for fresh adjudication on merits.

 

Petitioner's Arguments

  • The petitioner submitted that the appellate authority rejected the appeal merely on technical grounds without examining the merits of the case.
  • It was argued that the cancellation order had been passed ex-parte without providing adequate opportunity to file a reply or to be heard.
  • The petitioner explained that the delay in filing the appeal was caused due to the unprecedented COVID-19 pandemic and the unfortunate death of one of its Directors.
  • It was further submitted that the petitioner had already deposited the statutory pre-deposit required for maintaining the appeal.
  • The petitioner requested restoration of GST registration, release of the attached bank accounts, and protection from coercive recovery during pendency of the appeal.

 

Respondent's Arguments

The Revenue fairly submitted before the High Court that it had no objection if the matter was remanded to the appellate authority for fresh consideration.

The State also agreed that:

  • the delay in filing the appeal should not come in the way of adjudication;
  • the appeal may be decided strictly on merits;
  • no coercive action should be taken against the petitioner during pendency of the appeal.

 

Court Order / Findings

The Patna High Court accepted the consensus between the parties and held that the delay stood sufficiently explained because of the COVID-19 restrictions and the death of the petitioner's Director.

Accordingly, the Court:

  • Quashed the appellate order dated 05.09.2022 rejecting the appeal.
  • Directed the Appellate Authority to condone the delay.
  • Directed that the appeal be decided strictly on merits after granting proper opportunity of hearing.
  • Directed the petitioner to appear before the Appellate Authority on the specified date.
  • Ordered immediate de-freezing/de-attachment of the petitioner's bank account(s), if attached in connection with the impugned proceedings.
  • Directed that no coercive action shall be taken during pendency of the appeal.
  • Directed the Appellate Authority to pass a reasoned speaking order after following the principles of natural justice.
  • Clarified that the Court had not expressed any opinion on the merits of the dispute and left all issues open for fresh adjudication.

 

Important Clarification

This judgment reiterates several important legal principles under GST law:

  • Genuine delay arising from extraordinary circumstances such as the COVID-19 pandemic can be condoned.
  • Appeals should ordinarily be decided on merits rather than rejected on technical grounds.
  • Cancellation of GST registration through an ex-parte order without granting adequate opportunity of hearing violates the principles of natural justice.
  • Courts generally favour restoration of appellate remedies where sufficient cause for delay is established.
  • During pendency of remanded proceedings, coercive recovery should ordinarily be avoided where the Court grants protection.

 

Sections Involved

  • Section 29 – Cancellation of Registration (GST Act, 2017)
  • Section 30 – Revocation of Cancellation of Registration
  • Section 107 – Appeals to Appellate Authority
  • Section 160 – Protection of actions taken in good faith (where applicable)
  • Principles of Natural Justice

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1784614405_1606compressed.pdf

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