Facts of the Case

The petitioner, Orion Security Solutions Pvt. Ltd., challenged ex-parte orders-in-original dated 12.03.2022 passed under Section 73 of the CGST Act, 2017, confirming a demand of tax, penalty, interest and late fees, and the subsequent appellate order dated 20.04.2023 dismissing its appeal on the ground of an inordinate 9-month delay. On the GST portal, the email ID registered for communication was that of the petitioner's tax consultant, Mr. A.K. Sidhwani. The consultant failed to notice the show cause notices dated 01.02.2022 and the reminder dated 05.03.2022, so the petitioner remained unaware of the proceedings until its debtors were served recovery notices in Form DRC-13 on 29.01.2023 for an outstanding liability of about Rs.14 crores. The consultant had also lost the GST portal login credentials, further delaying the petitioner's response.

Issues Involved

  1. Whether an ex-parte adjudication order under Section 73, passed without the assessee's actual knowledge due to its tax consultant's lapses, could be sustained.
  2. Whether the 9-month delay in filing the first appeal, attributable to the consultant's default, could be condoned beyond the statutory period under Article 226.

Petitioner's Arguments

  • The show cause notices and reminder were sent only to the tax consultant's email and were never brought to the petitioner's notice due to the consultant's lapse and laches.
  • The petitioner only became aware of the demand when its own debtors were served recovery notices in January 2023, well after the adjudication order was passed.
  • The consultant's unprofessional conduct, including losing portal login credentials, was the real cause of both the ex-parte order and the delay in appeal, and the petitioner was ready to pay costs for condonation.

Respondent's Arguments

  • The appeal was rightly dismissed given the inordinate delay in filing it, well beyond the condonable period.
  • Huge revenue of approximately Rs.14 crores was involved, and the petitioner being a company with access to tax professionals could not claim the same leniency as an individual.

Court Order/Findings

  • The Court accepted, on the specific averments in the writ petition, that the ex-parte adjudication and the delay in appeal were attributable to lapses of the tax consultant, even while observing that the assessee company ought also to have been vigilant.
  • Both the appellate order dismissing the appeal for delay and the ex-parte adjudication orders were set aside, conditional on the petitioner paying 20% of the disputed tax and a cost of Rs.5 lakhs within two weeks.
  • The matter was remanded to the adjudicating authority to pass a fresh, reasoned and speaking order after granting a hearing, within six weeks of compliance with the payment conditions.
  • The Court expressly clarified that the order was passed on the exceptional facts of the case and should not be treated as a precedent.

Important Clarification

A writ court may set aside an ex-parte Section 73 order and a delay-barred appeal dismissal where the default is genuinely traceable to the taxpayer's professional consultant rather than the taxpayer itself, but such relief is typically granted only on stringent monetary conditions (part-payment of disputed tax plus costs) and is expressly confined to the facts of that case, not as a general precedent for condoning appeal delays.

Sections Involved

  • Section 73, CGST Act, 2017 — governs demand and recovery of tax not paid, short paid or ITC wrongly availed for reasons other than fraud.
  • Section 107, CGST Act, 2017 — prescribes the limitation for filing a first appeal against an adjudication order.
  • Form DRC-13, CGST Rules, 2017 — used for issuing recovery notices to a taxpayer's debtors for outstanding GST liability.

Decision – In Favour of

The decision is disposed of with directions, in part in favour of the Assessee. Both the ex-parte demand and the delay-barred appellate dismissal were set aside and remanded for fresh adjudication, but only on the assessee accepting significant monetary conditions, and without any finding on the merits of the underlying tax demand.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Calcutta
  • Case No.: WPA 23005 of 2023
  • CNR: Not available
  • Coram: Justice Md. Nizamuddin
  • Decision Date: 5 October 2023
  • Disposal Nature: Disposed of; adjudication order and appellate order set aside, remanded

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