Resinous Chemicals (INDIA) Private Limited And Anr. vs. State Of West Bengal And Ors.

WPA/16435/2024HC CalcuttaGSTCNR WBCHCA031060202428 August 2024Bench: HON'BLE JUSTICE RAJA BASU CHOWDHURY4 pages

AI SummaryRemanded

Facts

The petitioners, Resinous Chemicals (India) Private Limited & Anr., filed a writ petition challenging a communication dated April 3, 2024, rejecting their appeal in Form GST APL-02. The appeal was filed against an order dated April 6, 2023, passed under Section 73 of the WBGST/CGST Act, 2017, for the tax period July 2017 to March 2018. The petitioners contended that the initial order under Section 73 lacked reasons and was ex-parte, and their chartered accountant failed to properly inform them, causing a delay in filing the appeal. Despite belatedly filing the appeal with pre-deposit, the appellate authority rejected it solely on grounds of delay, without assigning reasons. The State argued that the petitioners did not respond to show-cause notices, making the initial order valid, and the rejection of the appeal due to delay was not irregular.

Held

The Court found that while the petitioners did not respond to the notices issued by the proper officer, leading to the determination of liability, a closer scrutiny of the order revealed that the proper officer failed to provide any reasons beyond noting the petitioners' non-response. Similarly, the appellate authority rejected the appeal solely on the ground of delay, without any appropriate consideration of the matter on merits at any stage. Given the peculiar facts, and noting that the petitioners had already deposited 12.5 percent of the disputed tax amount, the Court decided to remand the matter to the appellate authority. The appellate authority is directed to hear and dispose of the appeal on merits expeditiously, preferably within eight weeks. The demand raised by the proper officer for the tax period July 2017 to March 2018 is stayed during the pendency of the appeal. The order of rejection of the appeal dated April 3, 2024, is set aside.

Key Issues

1. Whether the rejection of the appeal by the appellate authority solely on the ground of delay, without considering the merits, is sustainable in law, particularly when the petitioners claim the initial order under Section 73 of the WBGST/CGST Act, 2017, was passed ex-parte and lacked reasons? (Question of law and mixed fact and law) Petitioner's arguments: The petitioners argued that the initial order under Section 73 was passed without disclosing reasons and was ex-parte. They also contended that a delay in filing the appeal occurred due to their chartered accountant's failure to intimate them about the order. Despite belatedly filing the appeal with the required pre-deposit, the appellate authority rejected it without considering the merits, citing only the delay. They sought the Court's intervention to hear the matter on merits. Revenue's arguments: The State argued that the petitioners failed to respond to show-cause notices (DRC-01A and DRC-01), thus the proper officer's order was not flawed. They further contended that the appeal was filed out of time, and the appellate authority was justified in rejecting it on grounds of delay.

Sections Cited

Section 73

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

28.08.24 08 Ct. No.05 Sws.M WPA 16435 of 2024 Resinous Chemicals(India) Private Limited & Anr. Vs. The State of West Bengal & Ors. Mr. Aman Agarwal Ms. Shivansi Indoria ….for the petitioners Mr. Anirban Ray, Ld. GP Mr. T.M. Siddiqui, Ld. AGP Mr. Tanoy Chakraborty Mr. Saptak Sanyal …for the State 1. Challenging a communication of rejection of appeal in Form GST APL – 02 dated 3rd April, 2024, the present writ petition has been filed. 2. Mr. Agarwal, learned advocate appearing on behalf of the petitioners submits that although the petitioners have a statutory right of appeal before the appellate tribunal, since the appellate tribunal is yet to be constituted, the present writ petition has been filed. By drawing attention of this Court to the order passed under Section 73 of the WBGST/CGST Act 2017 (hereinafter referred to as the “said Act”) dated 6th April, 2023 for the tax period July, 2017 to March, 2018, he submits that no reasons have been disclosed by the proper officer for determining the petitioners’ liability. According to Mr. Agarwal, the order passed by the proper officer under Section 73 is an ex-parte order and the petitioners were not aware with regard to the same. The concerned 2 chartered accountant did not appropriately intimate the petitioners with regard to the order passed in the proceeding which resulted in the delay in filing the appeal. The petitioners had, however, though belatedly, filed an appeal along with the pre-deposit as was required for maintaining the appeal. The appellate authority, however, has rejected the said appeal. No reasons had been assigned for such rejection excepting, recording the delay in submission of appeal in Form APL-02 dated 3rd April, 2024. In such circumstances, he submits that this Hon’ble Court may be pleased to take up this matter and hear the same on merits. 3. Mr. Siddiqui, learned Additional Government Pleader submits that in the instant case the petitioners did not respond to the show-cause. As such the order passed by the proper officer cannot be faulted. The appeal filed by the petitioners was out of time. Having regard to the same he submits that there is no irregularity on the part of the appellate authority in rejecting the appeal on the ground of delay. 4. Having heard the learned advocates appearing for the respective parties, I find that the petitioners did not respond either to the notice in DRC-01A or to the notice in DRC-01. Having 3 regard thereto the proper officer had determined the liability. Though ordinarily, such an order having regard to the conduct of the petitioners, cannot be said to be bad, however, upon a closer scrutiny of such order it would transpire that the proper officer had failed to give any reasons apart from recording that the petitioners had failed to respond to the notice issued in DRC- 01A or to the notice in DRC-01. The appellate authority had also rejected the appeal on the ground of delay. There has been no appropriate consideration of the matter on merits at any stage. 5. Having regard to the peculiar facts of the case and taking note of the fact that the petitioners have already deposited 12.5 percent of the amount to the tax in dispute, I remand the matter to the appellate authority for adjudicating on merits. The appellate authority shall hear out and dispose of the appeal on merits as expeditiously as possible preferably within a period of eight weeks from the date of

communication of this order.

Needless to note that during pendency of the appeal the demand raised by the proper officer in Form GST DRC-07 dated 6th April, 2023 for the 4 tax period July, 2017 to March, 2018 shall remain stayed.

The order of rejection of the appeal in Form GST APL-02 dated 3rd April, 2024 stands set aside.

With the above observations and directions, the writ petition is disposed of.

There shall be no order as to costs.

10.

Urgent Photostat certified copy of this order, if applied for, be given to the parties, on priority basis. (Raja Basu Chowdhury, J)

Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.