Facts of the Case

The petitioner, M/s Jai Maa Constructions and Consultancy, challenged the order passed by the Additional Commissioner of State Tax (Appeals), whereby its GST appeal was dismissed at the admission stage solely on the ground of delay.

The petitioner also challenged the ex-parte order passed by the Assistant Commissioner of State Tax cancelling its GST registration without granting a proper opportunity of hearing or allowing the petitioner to submit its reply.

The petitioner further sought restoration of its GST registration, de-freezing of its attached bank account and protection from coercive recovery proceedings.

The petitioner contended that the delay in filing the appeal occurred due to the restrictions prevailing during the COVID-19 pandemic.

 

Issues Involved

  1. Whether the appellate authority was justified in rejecting the GST appeal solely on the ground of limitation.
  2. Whether cancellation of GST registration through an ex-parte order without granting adequate opportunity of hearing violated the principles of natural justice.
  3. Whether the delay caused due to COVID-19 restrictions deserved to be condoned.
  4. Whether coercive recovery proceedings could continue while the appeal remained pending.

 

Petitioner's Arguments

  • The GST registration was cancelled through an ex-parte order without providing sufficient opportunity to file a reply or present its case.
  • The appeal was dismissed only because of delay without examining the merits of the case.
  • The delay occurred due to COVID-19 restrictions and deserved to be condoned.
  • The petitioner had already deposited the statutory pre-deposit required for hearing of the appeal.
  • The attachment of the bank account and recovery proceedings caused serious hardship.

 

Respondent's Arguments

The State submitted that it had no objection if the matter was remanded to the Appellate Authority for fresh adjudication.

The Revenue agreed that while deciding the appeal afresh, the question of limitation should not come in the way and the appeal could be examined on merits.

The department also agreed that no coercive action would be taken during the pendency of the appeal.

 

Court Order / Findings

The Patna High Court observed that the delay in filing the appeal stood sufficiently explained due to the COVID-19 restrictions.

Accordingly, the Court:

  • Quashed the appellate order rejecting the appeal on limitation.
  • Directed the Appellate Authority to condone the delay.
  • Ordered that the appeal be decided strictly on merits.
  • Directed that proper opportunity of hearing be provided to all parties.
  • Directed the authority to pass a reasoned speaking order.
  • Ordered immediate de-freezing/de-attachment of the petitioner's bank account, if attached.
  • Directed that no coercive recovery proceedings should be initiated during the pendency of the appeal.
  • Directed the petitioner to cooperate with the appellate proceedings.
  • Clarified that it had expressed no opinion on the merits of the dispute and left all issues open.

 

Important Clarification

This judgment reiterates that:

  • Genuine delay attributable to the COVID-19 period deserves liberal consideration.
  • Appeals should ordinarily be decided on merits rather than rejected on technical grounds.
  • Cancellation of GST registration without providing adequate opportunity of hearing is contrary to the principles of natural justice.
  • During the pendency of remanded proceedings, coercive recovery measures should ordinarily remain stayed.
  • Authorities are expected to pass reasoned speaking orders after granting full opportunity to the affected taxpayer.

 

Sections Involved

  • Section 29 of the Central Goods and Services Tax Act, 2017 – Cancellation of Registration.
  • Section 107 of the Central Goods and Services Tax Act, 2017 – Appeals to Appellate Authority.
  • Principles of Natural Justice.
  • COVID-19 Limitation Relief Principles recognized by Courts.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1784614306_1601compressed.pdf

 

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