Tribest Fine Yarns Limited vs Union of India

1. This petition is filed under Article 226 of the Constitution of India for following substantive relief :

“(a) that this Hon’ble Court may be pleased to issue a writ, order or direction in the nature of mandamus or any other appropriate writ thereby declaring that the impugned Orders-in-Appeal No. AKS/ADC/83/APPEALS-II/ME/2023-24 dated 19th May, 2023, Exhibit M, having been passed in complete violation of principles of natural justice and fair play, deserves to be quashed and/or set aside.”

Brief facts :

2. On 20th March, 2019, the Petitioner obtained registration under Goods and Service-tax Act. On 7th January, 2021, a show cause notice was issued to the Petitioner by the Respondents proposing to cancel the above referred registration on the ground of noncompliance of provisions of the GST Act and the Rules. The said notice was made returnable on 31st December, 2020 and the registration was provisionally suspended w.e.f. 7th January, 2021. On 27th April, 2021, the Petitioner filed its reply to the aforesaid show cause notice.

3. On 30th April, 2021, the Respondents passed an order of cancelling the registration stating that the cancellation is as per direction received from Anti Evasion, Mumbai-East and the registration is cancelled for fraud.

4. On 30th June, 2021, the Petitioner made an application seeking revocation of the aforesaid cancellation of registration. The Petitioner also requested for copies of the documents on the basis of which registration was cancelled.

5. Meanwhile, the Petitioner challenged the order of cancellation by filing Writ Petition No. 704 of 2022 before this Court.

6. On 14th March, 2022, an order was passed disposing of the above writ petition directing Respondent No. 3 to take decision on the application made by the Petitioner for revocation of cancellation.

7. On 31st March, 2022, the Respondents in pursuance to the above order of this Court, passed an order confirming the cancellation of the registration w.e.f. 21st March, 2019 on the ground that the company is found to be non-existent at its registered principal place of business and the taxpayer has failed to submit any books of accounts either in the physical form or in the electronic form. It is the case of the Petitioner in the present petition that they were not aware of this order till same was received by them on 20th September, 2022.

8. On 9th September, 2022, the Petitioner addressed a letter to the Respondent seeking compliance of the order of this Court in Writ Petition No. 704 of 2022 since Petitioner’s application for revocation was not decided by the Respondents as per the time limit specified in the order of the High Court.

9. Pursuant to the above letter dated 9th September, 2022, the Petitioner became aware and was furnished with a copy of the order dated 31st March, 2022 whereby the Petitioner came to know that its registration has been cancelled w.e.f. 21st March, 2019.

10. On receipt of the aforesaid rejection order, the Petitioner filed an appeal before the First Appellate Authority on 20th December, 2022 praying for setting aside the cancellation order dated 31st March, 2022.

11. On 16th January, 2023, the Appellate Authority sought various details from the Petitioner in connection with the aforesaid appeal and the said requisition was complied with by the Petitioner.

12. On 19th May, 2023, the Appellate Authority dismissed the appeal inter alia on the grounds which are thus :-

a) The appeal is time-barred since the appeal is filed on 20th December, 2022 against the order in original dated 31st March, 2022 that is the appeal is filed after the expiry of 4 months from the date of receipt of the order in original.

b) On merits also, the Appellate Authority rejected the contention of the Petitioner on the ground that the leave and license agreement for the principal place of business is not genuine; the directors are only paper directors and they do not know anything about the business of the company etc.

13. Being aggrieved by the said appellate order dated 19th May, 203 and the GST Tribunal having not been constituted, the Petitioner has challenged the appellate order in the present petition.

14. The Petitioner contended that the order in appeal is bad and erroneous when it rejects the Petitioner’s appeal on limitation, for the reason that the order of cancellation was received by the Petitioner on 20th September, 2022, pursuant to the letter of the Petitioner dated 9th September, 2022, and the appeal was filed on 20th December, 2022, hence the same was withing the time limit provided under Section 107 of the CGST Act. It is submitted that this fact has not been considered by the Appellate Authority. The Petitioner has also contended that the order in appeal deserves to be interfered by this Court in as much as after having observed that the appeal is time barred, the Appellate Authority has in fact decided the appeal on merits. The Petitioner also assailed the findings of the Appellate Authority on the merits.

15. Per-contra the Respondent contended that the order cancelling the registration dated 31st March, 2022 was sent by speed post which was returned unserved. The Respondent has also stated that the order was also emailed to the registered E-mail ID of the Petitioner and therefore the Petitioner cannot contend that the order was not received and the same was received on 20th September, 2022 when the request was made by the Petitioner. The Respondents, therefore, submitted that the present petition be dismissed since the original appeal was filed belatedly.

16. We have heard learned counsel for the Petitioner and learned counsel for the Respondent and with their assistance have persued the records.

17. Having perused the impugned order as also the record, the primary reason for rejecting the petitioner’s appeal is that the appeal is filed after the expiry of four months as prescribed. This apart, the Appellate Authority having come to a conclusion that the appeal deserves to be dismissed on limitation has also considered the merits of the petitioner’s case. In considering the issue of limitation by the Appellate Authority, the law would require several factors to be considered like receipt/service of the impugned order by the petitioner as assailed before the Appellate Authority. We find an appropriate consideration on such issue is lacking. Thus, as to whether in the facts and circumstances of the case, a conclusive finding could be rendered that the appeal of the petitioner was time-barred, was required to be decided as per law. In our view, the Appellate Authority was not justified in recording findings on merits after having come to a conclusion that the appeal was not filed in time and was not maintainable.

18. In view of the above discussion, we are of the clear opinion that the impugned order deserves to be set aside and the proceedings be remanded to the Appellate Authority for consideration of the appeal afresh on all counts including on limitation, so that on appropriate consideration the appeal of the petitioner can be decided. Needless to observe that if the Appellate Authority is of the opinion that the appeal in manner known to law is time-barred, then the merits need not be dealt, if the appeal is not time-barred, the appeal would then be required to be effectively adjudicated on merits on elaborate findings being rendered on the merits of the petitioner’s case.

19. The order passed in the present petition not to be treated as precedent and same is restricted only to the facts of the present petition.

20. In the light of the above discussion, we pass the following order ;

ORDER

a) The order in appeal No. AKS/ADC/83/APPEALS-II/ME/ 2023-24 dated 19th May, 2023 is set aside. The Petitioner’s appeal is restored to the file of the Additional Commissioner (Appeals)-II, Mumbai.

b) The Additional Commissioner (Appeals)-II would dispose of the appeal in accordance with law after giving adequate opportunity of hearing to the Petitioner.

c) All contentions of the parties are kept open.

d) The Appeal be decided as expeditiously as possible and in any event, within a period of 8 weeks form the day a copy of this order is presented before the Appellate Authority.

e) No order as to costs.

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