M/S Sourabh Rolling Mills PVT. LTD. vs. State Of Chhattisgarh

Held

The Court held that the Appellate Authority had reproduced the grounds of appeal but failed to deal with them. The subsequent paragraphs of the impugned order focused solely on factual aspects like the due dates for returns and defaults, and details of statutory provisions and demand notices, without addressing the petitioner's specific objections. The Court reiterated the well-settled legal position that an Appellate Authority is duty-bound to consider grounds of challenge and pass a reasoned, speaking order. Citing the Supreme Court's decision in East Coast Railway and Another Vs. Mahadev Appa Rao and Others, the Court stated that an order lacking reasons is indicative of arbitrariness and is legally unsustainable. Consequently, the Court found that the appeal was not justifiably decided and deserved to be remitted back to the Appellate Authority. The impugned order was set aside, and the matter was remitted to Respondent No. 3 to pass a fresh, reasoned order addressing the grounds raised by the petitioner. The petitioner would be granted an opportunity of hearing.

Facts

The petitioner, M/s Sourabh Rolling Mills Pvt. Ltd., filed a writ petition challenging an order dated August 28, 2019, passed by the Joint Commissioner (Appeals), Chhattisgarh (Respondent No. 3). This order was passed while deciding an appeal filed under Section 107(1) of the CGST Act, 2017. The petitioner's original appeal was against an order dated August 4, 2018, passed by the Assistant Commissioner (Respondent No. 4), which imposed interest of Rs. 1,41,34,356/- under Section 50 of the CGST Act, 2017. The petitioner contended that the Appellate Authority reproduced their grounds of appeal but failed to discuss or deal with them, particularly the ground that interest should be calculated after adjusting input tax credit.

Key Issues

1. Whether the Appellate Authority (Respondent No. 3) failed to pass a reasoned and speaking order by not discussing the grounds of appeal raised by the petitioner against the order of the Adjudicating Authority (Respondent No. 4) imposing interest under Section 50 of the CGST Act, 2017? Petitioner's Contention: The petitioner argued that while the Appellate Authority's order (Annexure P/1) quoted most of the grounds raised in the memo of appeal, it failed to discuss or deal with any of them. Specifically, the crucial ground that interest should be calculated after adjusting input tax credit was not addressed, leading to a substantially reduced interest liability if considered. The petitioner relied on the principle that appellate authorities must provide reasoned orders. Revenue's Contention: The State Counsel opposed the petition, referring to paragraphs 6 to 8 of the impugned order and submitting that the order was explanatory regarding the petitioner's liability, thus praying for the petition's rejection.