M/S Mangaldev Construction Company vs. The Commissioner

Held

The Court held that the cancellation of GST registration, which brings business operations to a standstill, is a significant event. The Court found the petitioner's reasons for non-compliance, including the proprietor's lack of education and technical competence, reliance on a negligent accountant/advocate, and unawareness of the show cause notice and subsequent orders, to be genuine. Following its own previous judgments in similar cases, the Court decided to allow the writ petition. The Court set aside the appellate authority's order dated 10.06.2024. The Appellate Authority was directed to consider and decide the petitioner's appeal on its merits, subject to the petitioner depositing applicable late fees, penalties, and other statutory deposits for the appeal to be entertained. The ratio decidendi is that genuine hardship and reliance on a third party's negligence can be grounds for condoning delays in statutory compliances and appeals, especially when the dismissal of the appeal prevents a consideration of the substantive issues.

Facts

The petitioner, M/s Mangaldev Construction Company, filed a writ petition seeking restoration of its GST registration, which was cancelled on 14.05.2023. The petitioner challenged the Order-in-Original dated 27.05.2023 and the Order-in-Appeal dated 10.06.2024. The petitioner, a proprietorship firm, claims its proprietor is not adequately educated or technically competent to handle online GST filings and relied on an accountant/local advocate. This representative failed to file GST returns for six continuous months and did not inform the petitioner of the filing requirements or the issuance of a show cause notice. Consequently, the petitioner learned of the Order-in-Original only later, and its subsequent appeal was dismissed by the Joint Commissioner (Appeals) solely on the grounds of delay.

Key Issues

1. Whether the appeal filed by the petitioner before the Joint Commissioner (Appeals) was rightly dismissed solely on the ground of delay, thereby precluding consideration of the merits of the case, as per Section 107 of the CGST Act, 2017? Petitioner's contention: The petitioner argued that the delay in filing the appeal was justifiable due to the proprietor's lack of technical competence and reliance on an accountant/local advocate who failed to perform their duties. The petitioner was unaware of the show cause notice and the Order-in-Original. The dismissal of the appeal on delay alone caused grave prejudice, and the authorities ought to have condoned the delay. Reliance was placed on several Division Bench judgments of the Rajasthan High Court, including M/s Molana Construction Company v. Central Goods and Service Tax Department & Ors. Revenue's contention: The respondents vehemently disputed the petitioner's submissions, contending that the appeal was correctly dismissed as being barred by limitation and that no interference with the appellate order was warranted.