M Farooq Lone vs. Union Territory Of J And K And Others (State Taxes / Sales Tax)

Held

The Court held that the Appellate Authority's refusal to entertain the petitioner's appeal solely on the ground of limitation, without examining the explanation for the delay and without affording an opportunity to contest the merits of the cancellation, resulted in the denial of a substantive statutory remedy. This threatened the petitioner's right to carry on business and livelihood. The Court found that the delay in filing the appeal was sufficiently explained prima facie by the petitioner's medical condition and subsequent actions upon learning of the cancellation. The respondents did not point out any serious prejudice to revenue by allowing the appeal to be heard on merits. The Court, exercising its writ jurisdiction, quashed and set aside the appellate order dated 18.12.2024. The appeal was restored to the file of the Appellate Authority to be heard and decided on merits without being dismissed on grounds of limitation. The Appellate Authority was directed to afford a reasonable opportunity of hearing to both sides and pass a reasoned order. The Court clarified it had not expressed any concluded opinion on the merits of the show cause notice or cancellation order. The ratio is that in cases where a statutory appeal is dismissed solely on limitation, and the delay is plausibly explained, and the consequences of non-condonation are harsh, a High Court can direct the appellate authority to hear the appeal on merits to ensure justice and prevent civil death of genuine businesses.

Facts

The petitioner, M Farooq Lone, is aggrieved by an order dated 11.03.2026 passed by the Deputy Commissioner (Appeals II), State Taxes Department, J&K. This order dismissed the petitioner's appeal against a show cause notice solely on the grounds of being time-barred. The petitioner argued that the appellate authority dismissed the appeal without providing an opportunity to be heard on merits regarding the computation of tax and revocation of registration. The Senior AAG for the respondents fairly submitted that the appeal was dismissed only for delay and that the tax computation was not adjudicated. The petitioner undertook to contest the tax computation if the appeal was revived. The High Court noted that the case was covered by a previous judgment of the Rajasthan High Court in M/s S. Nabad Ali Mustak Ahmed vs. Union of India.

Key Issues

1. Whether the Appellate Authority, while exercising powers under Section 107 of the J&K GST Act, 2017, erred in dismissing the petitioner's appeal solely on the ground of limitation without affording an opportunity for a hearing on merits, thereby denying a substantive statutory remedy? Petitioner's contention: The petitioner argued that the dismissal of the appeal solely on limitation, without considering the merits of the tax computation and potential revocation of registration, denied them a fair hearing. They relied on the principle that cancellation of GST registration has serious civil consequences affecting livelihood and that authorities should adopt a fair and reasonable approach, not unduly technical, especially when dealing with appeals against such orders. They cited the Rajasthan High Court judgment in M/s S. Nabad Ali Mustak Ahmed vs. Union of India and Pooja Construction Company v. Union of India & Ors. Revenue/State's contention: The Senior AAG conceded that the appeal was dismissed solely on delay and that the tax computation was not adjudicated. He agreed that if the delay was condoned, the respondents would be at liberty to present their case on merits.