Facts of the Case

The appellants, Sarada Construction & Another, challenged an assessment order dated 20.06.2019 by filing a statutory appeal before the Appellate Authority under the GST law. However, the Appellate Authority dismissed the appeal ex parte on 07.12.2020, observing that the appellants had failed to respond to the notice or appear during the proceedings. The appellants thereafter approached the Calcutta High Court, contending that they had not received the notice and were therefore denied an effective opportunity of hearing. During the pendency of the writ proceedings, recovery action was initiated and there was apprehension of blockage of the electronic credit ledger.

Issues Involved

  1. Whether an appellate order passed ex parte without granting an effective opportunity of hearing is sustainable in law.
  2. Whether the High Court should restore a GST appeal dismissed for non-appearance where the appellant claims non-receipt of notice.
  3. Whether the interest of the Revenue can be protected by imposing an additional pre-deposit while restoring the appeal.

Petitioner’s Arguments

  • The appellants submitted that they had never received the notice issued by the Appellate Authority.
  • The notice allegedly sent through e-mail did not come to their knowledge.
  • Their absence before the Appellate Authority was neither deliberate nor intentional.
  • Since it was the first occasion of non-appearance, the Appellate Authority ought to have granted another opportunity instead of dismissing the appeal ex parte.
  • Recovery proceedings during the pendency of the writ petition would cause serious prejudice without adjudication on merits.

Respondent’s Arguments

  • The department defended the appellate proceedings and opposed interference.
  • It was pointed out that recovery proceedings had already been initiated in accordance with the appellate order.
  • The Revenue sought protection of its interest during the pendency of the dispute.

Court Order / Findings

The Calcutta High Court observed that the statutory appellate remedy under the GST Act is a valuable right available to every taxpayer and ordinarily should not be defeated by an ex parte dismissal where the matter can be decided on merits.

The Court further held that:

  • The appellants had already complied with the statutory requirement of depositing 10% of the disputed tax while filing the appeal.
  • The interests of the Revenue could adequately be safeguarded by directing an additional deposit of 10% of the disputed tax.
  • Upon such additional deposit within 15 days, the appellate order dated 07.12.2020 would stand set aside.
  • The appeal was restored to the file of the Appellate Authority for fresh adjudication strictly on merits.
  • The Appellate Authority was directed to issue a fresh notice of hearing, provide reasonable opportunity to the appellants and decide the appeal preferably within six weeks after conclusion of personal hearing.
  • The Court clarified that the appeal should be decided independently without being influenced by the earlier ex parte order.

Important Clarification

  • An ex parte dismissal of a statutory GST appeal should not ordinarily deprive a taxpayer of the valuable appellate remedy where sufficient cause for non-appearance exists.
  • High Courts may restore such appeals by balancing principles of natural justice with protection of Revenue, including by directing an additional pre-deposit.
  • Compliance with statutory pre-deposit requirements is an important factor while granting equitable relief.
  • Fresh adjudication must be made on merits after providing reasonable opportunity of hearing.

Section Involved

  • Section 107 of the Central Goods and Services Tax Act, 2017 – Appeals to Appellate Authority.
  • Corresponding provisions of the West Bengal Goods and Services Tax Act, 2017 relating to appellate proceedings and statutory pre-deposit.

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785403054_2373compressed.pdf

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