Facts of the Case

The petitioner, Mittal Agro Private Ltd., through its Director Shri Sukkhu Lal Chandwani, a firm registered under the GST Act dealing in sale of goods, filed a writ petition before the High Court of Judicature at Allahabad, Lucknow Bench, challenging the original order dated 24.06.2022 passed under Section 73 of the GST Act, 2017, and the appellate order dated 04.07.2023 dismissing its appeal. A show cause notice dated 26.03.2022 had been issued alleging that the petitioner had claimed Input Tax Credit (ITC) without authorisation, on the basis that the supplying firm from whom the ITC was availed was not in existence. Despite the petitioner's detailed reply asserting that the ITC claim was based on uploaded documents and that the entire transaction was routed through banking channels, the assessing authority passed an order confirming an ITC demand along with penalty, aggregating Rs.26,95,757.40. The petitioner's subsequent appeal, though accompanied by documents and case laws, was dismissed by a non-speaking order.

Issues Involved

  1. Whether the appellate order dismissing the petitioner's appeal without considering the documents and case laws filed along with the memo of appeal was a valid, speaking order.
  2. Whether the matter warranted remand to the appellate authority for fresh consideration, given the non-constitution of the GST Appellate Tribunal in Uttar Pradesh.

Petitioner's Arguments

  • Along with the memo of appeal, the petitioner had filed documents demonstrating that the transactions on which ITC was claimed were routed through banking channels and duly uploaded on the GST portal.
  • None of this material was considered by the appellate authority, which passed a mechanical, non-speaking order dismissing the appeal despite the petitioner's detailed reply and evidence on record.
  • Since the GST Appellate Tribunal had not been constituted in Uttar Pradesh, the writ petition was the only available remedy to challenge both the original and appellate orders.

Respondent's Arguments

  • The show cause notice and subsequent order under Section 73 of the GST Act were founded on the finding that the supplying firm on whose supplies the petitioner had availed ITC was not in existence, justifying the assessment of Rs.26,95,757.40 along with penalty.
  • The appellate order recorded that despite opportunity, neither the department's representative nor the petitioner appeared, yet the appellate authority proceeded to deal with the submissions on merit and upheld the assessment order.

Court Order/Findings

  • On perusal of the record, the Court found that the petitioner had filed, along with the memo of appeal, documents demonstrating that the transactions underlying the ITC claim were routed through banking channels and duly uploaded on the GST portal, none of which had been considered in the appellate order.
  • Holding that a non-speaking order is violative of Article 14 of the Constitution, the Court quashed the appellate order dated 04.07.2023 solely on the ground that it failed to consider any of the material on record.
  • The matter was remanded to the appellate authority to pass a fresh order on the petitioner's appeal after affording an opportunity of hearing and considering the material on record, in accordance with law.
  • The writ petition was disposed of in these terms, leaving the merits of the ITC claim to be reconsidered afresh by the appellate authority.

Important Clarification

An appellate order under the GST Act that fails to consider the documentary evidence and case laws placed on record by the appellant, and merely upholds the assessment mechanically, is a non-speaking order violative of Article 14 of the Constitution and liable to be quashed, warranting remand for a reasoned decision after due consideration of the material on record.

Sections Involved

  • Section 73 of the Central/Uttar Pradesh Goods and Services Tax Act, 2017 – determination of tax not paid or short paid for reasons other than fraud.
  • Article 14 of the Constitution of India, 1950 – right to equality, invoked against the non-speaking appellate order.
  • Appellate remedy provisions under the GST Act, 2017, invoked in the absence of a constituted GST Appellate Tribunal.

Decision – In Favour of

The decision favours the Assessee. The non-speaking appellate order confirming the ITC demand of Rs.26,95,757.40 was quashed and the matter remanded for a fresh, reasoned decision after considering the petitioner's evidence, though the ultimate outcome on the genuineness of the ITC claim remains to be determined afresh.

Related Case Laws

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

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: Writ Tax No.201 of 2023
  • CNR: Not available
  • Coram: Justice Pankaj Bhatia
  • Decision Date: 17 October 2023
  • Disposal Nature: Writ petition allowed, appellate order quashed and remanded

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