Introduction
The case of Touchwin Complex (P.) Ltd. v. Assistant Commissioner of Revenue[i] critically examines the judicial stance on the powers of the Appellate Authority under the Goods and Services Tax (‘GST’) framework concerning the condonation of delays in filing appeals. This judgment by the Calcutta High Court offers a significant interpretation of procedural compliance within the context of GST disputes, focusing on the rights of taxpayers to receive a fair hearing and the discretion of appellate bodies in managing minor procedural lapses.
Brief Facts
Touchwin Complex (‘Petitioner’) was issued a show cause notice (‘SCN’) under s. 73 of the Central Goods and Services Act, 2017 (CGST Act), alleging certain discrepancies/mismatches between GSTR 3B and GSTR 2A for the financial year 2017-18.
The Petitioner duly filed his response to the SCN and explained the discrepancies. However, the proper officer subsequently passed a tax determination order, affixing the petitioner's tax liability at approximately Rs. 2.95 lakhs.
Aggrieved by such determination, the Petitioner filed an appeal under s. 107 of the West Bengal GST Act, 2017 (‘Act’), along with the required pre-deposit. The appeal was, however, filed after a 6-day delay, and the application seeking condonation of such delay on the grounds of medical exigency was also submitted.
The Appellate Authority proceeded to reject the appeal solely on the basis of the delay, failing to assess the merits of the request for condonation. Aggrieved by such disposal, the Petitioner approached the High Court vide the present writ.
Held
The High Court, observing that there was only a marginal delay in filing the appeal, which was also sufficiently explained by the Petitioner, set aside the rejection order and remanded the matter back to the Appellate Authority for reconsideration on the merits, instructing a fresh hearing within 8 weeks.
The Court further observed that the Appellate Authority has the power to condone delays beyond one month if there appears to be sufficient cause explaining the delay. The High Court reprimanded the Appellate Authority for not considering the substantive explanation provided by the Petitioner and for the subsequent mechanical dismissal of the appeal.
The Court emphasised that unless expressly excluded, the provisions of s. 5 of the Limitation Act, 1963, apply to GST appeals. This means the Appellate Authority retains its power to condone delays beyond the prescribed period when justified.
Our Analysis
The recent ruling significantly bolsters procedural fairness within the GST appellate process by emphasising the importance of judicial discretion in addressing procedural delays. By overturning the Appellate Authority’s rigid rejection of an appeal due to minor delays, the Court has underscored the necessity of balancing strict procedural timelines with principles of fairness and justice. This decision not only affirms the need for appellate bodies to consider the substantive reasons behind any delays carefully but also promotes a more equitable legal process for taxpayers, ensuring that procedural technicalities do not unjustly hinder their right to appeal.
Furthermore, the ruling will likely have a broader impact on GST litigation and policy, encouraging a more flexible administrative approach towards justified delays. This could help reduce unnecessary litigation, fostering a more taxpayer-friendly environment in line with the GST regime’s objectives of simplifying and streamlining tax compliance. By reinforcing the principle that taxpayers should not be penalised for minor procedural lapses when the explanation(s) provided is bonafide, the judgment serves as a crucial reference for future cases, setting a precedent for a fair and more just approach in tax dispute adjudication across various legal forums.
End Note
[i] [2024] 165 taxmann.com 511 (Calcutta).
Authored by Pranav Dabas, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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