Court allows GST appeal dismissed on technicality after rule amendment clarified filing requirements

Get the full picture - access the original judgement of the court order here

Case Name

M/s. Vinod Agarwal vs. Union of India & Others (High Court of Chhattisgarh at Bilaspur)

WPT No. 91 of 2024

Date: 20th September 2024

Key Takeaways

1. Retrospective Application of Clarificatory Amendments: The court established that clarificatory amendments to GST rules have retrospective effect, even if they come into force after the original filing
2. Digital Filing Sufficiency: When GST orders are uploaded on the common portal, there’s no need to submit separate certified copies for appeals
3. Procedural vs. Substantive Justice: Courts should not dismiss appeals on mere technicalities when the substance can be addressed, especially after clarificatory rule changes
4. Timeline Protection: The amendment protects taxpayers who filed appeals online in good faith, even before the clarification was issued

Issue

Can a GST appeal be dismissed for failure to submit a certified copy of the impugned order when that order is already available on the common portal, especially in light of the 2022 amendment to Rule 108(3) of CGST Rules?

Facts

• Background: Vinod Agarwal is a proprietor who got government contracts and filed his GST returns (GSTR-1 and GSTR-3B) for April 2019 to March 2020
• The Problem Starts: In November 2020, tax authorities noticed a mismatch of ₹67,092 between his GSTR-2A and GSTR-3A returns and imposed interest of ₹16,102.08 plus penalty of ₹67,092
• Notice and Demand: After a series of notices and replies, authorities issued a final demand on June 22, 2021, for total penalty of ₹1,29,734
• Final Order: On August 16, 2021, the Assistant Commissioner ordered Agarwal to pay tax of ₹67,092, interest of ₹26,837, and penalty of ₹67,092 - totaling ₹1,61,021
• The Appeal: Agarwal filed an appeal online on September 30, 2021, which was well within the time limit
• The Dismissal: The Joint Commissioner dismissed the appeal on March 11, 2024, saying it was filed 838 days after the limitation period because no certified copy was submitted

Arguments

Petitioner’s Arguments (Vinod Agarwal):

• The appeal was filed online on September 30, 2021, which was well within the time limit
• By the time of the appeal hearing, the requirement for hard copies had been relaxed through a December 26, 2022 notification
• The impugned order was already uploaded on the official website, making it authentic and accessible
• Dismissing the appeal on this technical ground was erroneous

Respondents’ Arguments (Tax Authorities):

• Rule 108 of CGST Rules clearly requires submission of certified copy along with the appeal
• The petitioner failed to comply with this mandatory requirement
• The appellate authority correctly applied the legal provisions

Key Legal Precedents

The court relied on two important precedents that supported the retrospective application of the 2022 amendment:

1. Otsuka Pharmaceuticals India Pvt. Ltd. Vs. Union of India - Gujarat High Court in R/Special Civil Application No.13209, 132010, 13212, 13213 and 13215 of 2023, order dated March 27, 2024
2. M/s Hitachi Energy India Pvt. Ltd. and another Vs. State of Karnataka and Others - Karnataka High Court in Writ Petition No.14881 of 2024 (T-RES), order dated June 19, 2024

Key Legal Provisions:

• Section 107 of the Central Goods and Service Tax Act, 2017 - Appeal provisions
• Rule 108 of the CGST Rules, 2017 - Appeal filing procedure
• Rule 108(3) as amended on December 26, 2022 - The crucial amendment that changed the game

Judgement

Winner: Vinod Agarwal (the petitioner) won the case.

Court’s Reasoning:

1. Amendment Analysis: The court found that the December 26, 2022 amendment to Rule 108(3) was clarificatory in nature and therefore had retrospective effect
2. Precedent Support: The court noted that both Gujarat and Karnataka High Courts had reached similar conclusions about the retrospective nature of this amendment
3. Timing: Since the amendment was in force when the appellate authority passed its order on March 11, 2024, it should have been considered
4. Injustice: The dismissal on technical grounds was not justified given the clarificatory amendment

Court’s Orders:

• The impugned order dated March 11, 2024 is quashed and set aside
• The matter is sent back to the appellate authority to decide on merits
• The appellate authority must give proper hearing opportunity to the petitioner
• Decision to be made within three months of receiving the court order
• The court clarified it expressed no opinion on the case’s merits

FAQs

Q1: What does this judgment mean for other taxpayers facing similar issues?

A: This judgment provides relief to taxpayers whose appeals were dismissed for not submitting certified copies when the orders were already available online. The 2022 amendment protects such cases retrospectively.

Q2: Does this mean Vinod Agarwal has won his tax dispute?

A: No, he’s only won the right to have his appeal heard. The court specifically said it didn’t decide on the merits of his tax case - that will now be decided by the appellate authority.

Q3: What is the significance of the 2022 amendment?

A: The amendment clarifies that when tax orders are uploaded on the common portal, taxpayers don’t need to submit separate certified copies. This makes the appeal process more digital-friendly and reduces procedural hurdles.

Q4: Can this judgment be used in other similar cases?

A: Yes, this judgment can be cited as precedent in similar cases where appeals were dismissed for lack of certified copies, especially when the orders were available on the portal.

Q5: What should taxpayers do if they face similar situations?

A: Taxpayers should file appeals online promptly and can rely on this judgment if their appeals are dismissed for not submitting certified copies of orders available on the portal. However, they should still consult with tax professionals for specific advice.

Q6: How long does the appellate authority have to decide the case now?

A: The court has given the appellate authority three months from receiving the court order to decide the case on merits after giving proper hearing to the petitioner.