Chandrasekaran vs. The Deputy Commissioner Of GST And Central Excise

Held

The Court held that while the petitioner had indeed "slept over his rights" by failing to respond to the show cause notice and filing a time-barred appeal, it was inclined to grant relief due to two critical factors. Firstly, the petitioner had already paid the disputed tax amount prior to the issuance of the show cause notice, evidenced by challans. Secondly, the petitioner was raising "fundamental issues" that went to the "root of the issue," implying potential errors in jurisdiction and the very basis of the tax demand. Consequently, the Court quashed the impugned Order in Original and remitted the case back to the respondent for fresh consideration. The respondent was directed to pass fresh orders within 90 days of receiving a copy of this order, subject to the petitioner filing a detailed reply to the show cause notice. The impugned order was to be treated as a corrigendum upon the filing of the reply. The order attaching the petitioner's bank account was vacated. The ratio decidendi is that where fundamental issues regarding jurisdiction and taxability are raised, and the tax has already been paid, a High Court may, in its writ jurisdiction, grant relief even if procedural lapses have occurred, provided the petitioner cooperates with the fresh proceedings.

Facts

The petitioner, an individual proprietor of a hotel, challenged an Order in Original No.12/DC/ST/2021 dated 13.07.2021 passed by the Deputy Commissioner of GST and Central Excise, Tirunelveli. The impugned order confirmed a demand proposed in a show cause notice dated 15.10.2020. The petitioner claimed he was in Dubai during the COVID-19 lockdown and was unaware of the proceedings as the notices were received by his manager. He later filed an appeal, which was rejected by the Commissioner of GST and Central Excise (Appeals) on grounds of being time-barred under Section 85(3A) of the Finance Act, 1994. The petitioner also contended that the tax demand related to rental income from a property in Chennai, initiated by an officer in Tirunelveli, constituting a jurisdictional error, and that residential house rental income was wrongly taxed.

Key Issues

1. Whether the impugned Order in Original No.12/DC/ST/2021 dated 13.07.2021, which confirmed a demand proposed in show cause notice No.07/ST/AC-TVL/2020 dated 15.10.2020, is liable to be quashed on grounds of jurisdictional error and incorrect taxation of residential rental income, despite the petitioner's failure to participate in the proceedings and the subsequent rejection of his appeal as time-barred. Petitioner's arguments: The petitioner argued that there was a jurisdictional error as the proceedings were initiated by an officer in Tirunelveli concerning a dispute arising in Chennai regarding rental income. Furthermore, he contended that taxing rental income from a residential house was contrary to the Finance Act, 1994, and relevant notifications. He also claimed he was unaware of the proceedings due to being in Dubai during the COVID-19 lockdown and the notices being received by his manager. Respondent's arguments: The respondent argued that the writ petition was devoid of merits as the petitioner had abandoned his statutory rights by not responding to the show cause notice and by filing a time-barred appeal. Reliance was placed on the Supreme Court decision in Singh Enterprises Vs. Commissioner of C.Ex., Jamshedpur and another decision to argue that the writ petition was not maintainable at such a late stage.