Orion Security Solutions PVT LTD vs. Sr Jt Commissioner Of Revenue And Ors

Facts

The petitioner, Orion Security Solutions Pvt. Ltd., challenged two orders: an order-in-original dated March 12, 2022, passed by the Senior Joint Commissioner of Revenue, Dharmatala Circle, and an appellate order dated April 20, 2023, which dismissed the petitioner's appeal on grounds of inordinate delay. The petitioner argued that the adjudication orders were passed ex parte because their tax consultant, Mr. A. K. Sidhwani, failed to inform them of show-cause notices sent to his email address, which was registered on the petitioner's GST portal. The petitioner only became aware of the demand when recovery notices were issued to its debtors on January 29, 2023. The revenue opposed the petition, citing the significant delay and the substantial amount of tax involved, approximately Rs. 14 crores.

Held

The Court set aside the impugned appellate order dated April 20, 2023, and the impugned adjudication orders dated March 12, 2022. The Court reasoned that the delay in filing the appeal was attributable to the lapse and laches of the petitioner's tax consultant, and in the interest of natural justice, the matter should be remanded. The Court acknowledged that while the assessee should be vigilant, the ex parte nature of the adjudication and the consultant's failure warranted consideration. The petitioner was directed to pay a cost of Rs. 5 lakhs to the authority for condonation of delay and deposit 20% of the disputed tax before the GST authority within two weeks. The matter was remanded back to the adjudicating authority to pass fresh, reasoned, and speaking adjudication orders after providing an opportunity of hearing to the petitioner within six weeks from the date of compliance. The Court explicitly stated that this order should not be treated as a precedent.

Key Issues

1. Whether the appellate authority was justified in dismissing the petitioner's appeal on grounds of inordinate delay, considering the explanation provided for the delay under Section 107 of the CGST Act. Petitioner's Argument: The petitioner contended that the delay in filing the appeal was due to the gross negligence and laches of their tax consultant, who failed to notify them of the show-cause notices and adjudication orders. They claimed ignorance of the proceedings until recovery notices were issued. The petitioner also highlighted that their GST portal's communication email was that of the consultant, leading to the non-receipt of crucial notices. Revenue's Argument: The revenue argued that the delay was inordinate and that the appellate authority's decision to dismiss the appeal was justified. They emphasized the substantial amount of revenue involved (approximately Rs. 14 crores) and the fact that the petitioner is a company, not an individual, implying a greater responsibility for diligence.