Whether principles of natural justice be restricted upto time limit prescribed under GST law?

Dhaval H. Patwa, Advocate,(Surat)

              Every statute has its own purpose to implement and no statute can be succeeded after its enactment as law without adherence of principles of natural justice. In GST law also proper care has been taken to follow principles of nature justice, whether it is matter of time limit to submit reply or personal hearing or to consider reply while passing order and that is why each and every proceedings have its own prescribed time limit to comply for the tax payer and most of them have time limit to complete by the tax authorities also.

Since there is time limit prescribed to comply with the specific proceedings in GST law, can we say that principles of natural justice have been taken care by the concerned authority by allowing the tax payer to comply it within time frame permitted by GST law? Let’s try to get answer by referring some of the recent case laws pronounced by different High Courts.

• Comfort shoe components V/s. Assistant Commissioner (Madras High Court) W.P.No.34770, 34774 & 34777 of 2023.
• Facts of the case :

In this case petitioner has not filed their returns for the period December-2022, January-2023 & February-2023 within prescribed time limit due to financial difficulties. Hence proper officer has passed the best judgement assessment order in terms of the provisions of Section 62(1) of the GST Acts, 2017 on 28.03.2023 for the month of December-2022 & January-2023 and on 10.04.2023 for the month of February-2023.

As per the provision of Section 62(2) of the GST Acts, if an assessee file his returns within a period of 30 days from the date on which the assessment order has been served to him, the said assessment order passed by the department will be deemed to be withdrawn.

In the present case the petitioner had filed the returns for the month of December-2022 and January-2023 on 30.04.2023 and for the month of February-2023 on 24.06.2023 which was beyond the prescribed time limit of 30 days and hence department had denied to accept such belated returns.

• Observations & findings :

In the present case, Hon’ble Madras High Court has observed that the idea of implementation of this provision is to afford an opportunity to the registered person to furnish and file the returns within a period of 30 days from the date of service of assessment order which was passed under Section 62(1) of the GST Acts. Department can make the best judgement assessment order within a period of 5 years from the end of financial year, for which the registered person is liable to file the annual return. In this case the period of 5 years will start on 01.01.2024 and ends on 31.12.2029 hence time limit is available upto 30.01.2030 (i.e.30 days from 31.12.2029) to file the returns . If department passes the best judgement order at the earliest point of time, the legal right of the registered person cannot be taken away. If the registered person was not able to file the returns within a period of 30 days for the reasons, which are beyond his control the said delay may be condoned upon providing of sufficient reasons by the said person. The limitation of 30 days period prescribed under Section 62(2) of the acts appears to be directory in nature and the assessee was not able to file the returns for the reasons, which are beyond his control, certainly the said delay can be condoned. At any cost, the right to file the returns cannot be taken away stating that the registered person has not filed any returns within a period of 30 days from the date of best judgement assessment order. If application is filed before the authority concerned with sufficient reasons for non-filing of return within the prescribed time limit as per Section 62(2) of the Act same shall be considered on merits. If the authority is satisfied with the said reasons, they can condone the delay and permit the petitioner to file the returns.

• Held :

Hon’ble Madras High Court has disposed of the petition by directing the petitioner to file an application for condoning the delay in filing the returns and directing the department to pass order by taking into consideration of the reasons provided by the petitioner for non-filing of returns within a period of 30 days from the service of best judgement assessment order.

• Kajal Dutta V/s. Assistant Commissioner of State Tax (Calcutta High Court) 97 GST 154.\

• Facts of the case :

In this case, an issue of condonation of delay to file appeal before appellate authority was involved. Appellant was sick and therefore unable to take steps to file appeal even within grace period of 30 days prescribed under section 107(4) of CGST Act.

• Observations & findings :

Hon’ble Calcutta High Court has allowed the writ petition by taking into consideration that –

• the appellant had not deliberately presented the appeal beyond the condonable period and
• appellate remedy is a very valuable remedy and hence appellate authority can re-appreciate the factual position.

• Held :

Hon’ble court has directed the authority to condone the delay in filing appeal even if it is over and above the time period prescribed under Section 107(4) and ask the authority to take decision on merits after affording opportunity of personal hearing. Even hon’ble court has directed to the authority that if the mandatory pre-deposit of 10% of the disputed tax has been complied with by the appellant, no coercive action should be taken against the appellant till the appeal is heard. The appellate authority shall pass appropriate order for the purpose of lifting the garnishee order and the bank attachment.

On the basis of above judgement, many more judgements have been pronounced by different high courts with same view which are as under :

• K.Chakraborty & Sons V/s. Union of India and others [2024] 123 GSTR 229 – Calcutta High Court.
• Arvind Gupta V/s. Asstt. Commissioner of revenue state taxes WPA2904/2023 – Calcutta High Court.
• Great Hights developers V/s. Additional commissioner of CGST – W.P. No.1324 of 2024 – Madras High Court..

Though in above all judgements discussion was mainly focused on Section 5 of limitation act, courts have emphasized on presence of sufficient cause and directed concerned authority to take decision on merits after taking into consideration the sufficient cause and after following principles of natural justice which is in the interest of true justice. However, in the case of Yadav Scrap Traders V/s. Additional Commissioner and another Writ Tax No.977 of 2023, Hon’ble Allahabad high court has taken a different view but in totality it can be said that principles of natural justice should be an important ingredient in each and every proceedings which should be taken care of by each and every authorities liberally.

• Jayanta Ghosh and others V/s. The State of West Bengal and others (Calcutta High Court) W.P.A. 230 of 2024.

• Facts of the case :

In this case, petitioner has submitted that delay can be condoned if the principles of natural justice has been violated by not providing opportunity of hearing to the petitioner. Petitioner has challenged the order passed on the ground that he has not been afforded an opportunity of hearing as per Section 107(8) under CGST Act and West Bengal GST Act, 2017. Petitioner has challenged the order passed under Section 74 of the GST Act demanding for an amount of Rs.40,73,996.84 which is in total violation of the principles of natural justice by not affording any opportunity of personal hearing which is mandated by Section 75(4) of the GST Acts. The petitioner challenged the same before the appellate authority under Section 107 of the GST Acts. The appellate authority has dismissed the appeal on the ground of limitation.

• Observations & Findings :

Hon’ble Calcutta High Court finds that the appellate authority has violated the principle of natural justice by not affording an opportunity of hearing and therefore delay in filing of the appeal is condoned.

• Held :

Court has disposed of the petition directing the appellate authority to give personal hearing to the petitioner and directed that appeal shall be decided on merits.

          After considering view taken in above judgements by different courts, we feel that courts are always in favour to condone delay whenever any reasonable cause or any cogent reason exist for delay and therefore it is expected that adjudication authority should take judicious decision at least after allowing maximum time period prescribed under GST law in each and every proceedings in the interest of principles of natural justice.