Facts of the Case

Tvl. Dhananjay Traders, a timber business (GSTIN 33AAIFD2563P1Z5), challenged an order dated 19.02.2021 for assessment year 2017-18. Its premises were inspected by the Enforcement Department on 10.09.2020 and 11.09.2020. The petitioner was in default of filing GSTR-3 returns for February and March 2018, although GSTR-1 and GSTR-2 for the corresponding period had been filed. It was called for a personal hearing but failed to appear, resulting in the impugned order. The petitioner did not file a statutory appeal within limitation, and instead filed this writ petition well after the limitation period, seeking to get over both the limitation bar and the mandatory pre-deposit for an appeal.

Issues Involved

  1. Whether the impugned order was vitiated for want of a proper show cause notice in Form GST DRC-01 as required under Rules 100(2) and 142(1)(a) of the CGST Rules, 2017.
  2. Whether a writ petition filed after expiry of the appeal limitation period, essentially to bypass limitation and the mandatory pre-deposit, deserved to be entertained.
  3. The terms on which the petitioner could be granted liberty to pursue the statutory appellate remedy despite the delay.

Petitioner's Arguments

  • The impugned order was contrary to the rules as the show cause notice ought to have been issued electronically in Form GST DRC-01, as mandated by Rules 100(2) and 142(1)(a) of the CGST Rules, 2017.
  • On this procedural ground, the order deserved to be quashed and a proper SCN issued before any fresh order.

Respondent's Arguments

  • The petitioner was given an opportunity of personal hearing but failed to avail it, resulting in the impugned order.
  • The writ petition was liable to be dismissed on the ground of laches, the impugned order being dated 19.02.2021 and the petition filed well beyond the appeal limitation period.

Court Order / Findings

  • Noted that the petitioner had defaulted in filing GSTR-3 returns for February and March 2018, despite filing GSTR-1 and GSTR-2 for the corresponding period; a notice issued was not responded to, culminating in the impugned order.
  • Observed that the petitioner had squandered the statutory appellate remedy by letting limitation expire, and had filed the writ essentially to get over limitation and the mandatory pre-deposit.
  • Considering the petitioner an aggrieved person, granted liberty to file a statutory appeal before the Appellate Commissioner within thirty days of receipt of the order, on making the mandatory pre-deposit.
  • Directed the Appellate Commissioner to entertain the appeal on merits without reference to limitation and dispose of it in accordance with law.
  • Disposed of the writ petition on these terms, with no order as to costs.

Important Clarification

  • A writ petition filed after the statutory appeal period has expired, essentially to avoid the limitation bar and mandatory pre-deposit, will not ordinarily be entertained on merits; the usual High Court response is to grant conditional liberty to file a belated appeal.
  • Where this discretion is exercised, the Appellate Commissioner is typically directed to entertain the belated appeal on merits without reference to limitation once the mandatory pre-deposit is made — reviving the appellate remedy rather than deciding the underlying GST dispute.
  • A challenge to non-issuance of a proper Form GST DRC-01 notice under Rules 100(2)/142(1)(a) remains available before the Appellate Commissioner and need not be adjudicated by the High Court in writ jurisdiction once the alternate remedy is revived.

Sections Involved

  • Rule 100(2), CGST Rules, 2017 — assessment procedure requiring notice in Form GST DRC-01 before best judgment assessment.
  • Rule 142(1)(a), CGST Rules, 2017 — requires electronic communication of the show cause notice/summary in Form GST DRC-01.
  • Section 107, CGST Act, 2017 — appeal to the Appellate Authority.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — the statutory appellate remedy was revived despite the delay, subject to mandatory pre-deposit, but the Court did not decide the DRC-01 procedural challenge or the underlying tax demand on merits.

Related Case Laws

  • Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd., 2020 SCC OnLine SC 440 — on writs filed after expiry of appellate limitation.

Case Details

  • Court: Madurai Bench of Madras High Court
  • Case No.: W.P.(MD) No. 4083 of 2022 and W.M.P.(MD) No. 3487 of 2022
  • Coram: Hon'ble Mr. Justice C. Saravanan
  • Date of Order: 07.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787074009_4585compressed.pdf

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