By Vijay Kumar

Advance Ruling - Appellate Authority Abhors Adjournment - High Court not Impressed

HEADS I win; Tails you lose - in most of the adjudication proceedings in the tax departments; Judgement - delayed or hurried usually ends up with the same result. But do you lose a case just for asking an adjournment and that too for the first time.

See the facts of this case:

'Khandelwal Extractions', hereinafter referred to as KE filed an application before the Authority for Advance Ruling. Against the order made by the Authority for Advance Ruling, the petitioner felt aggrieved and filed an appeal before the Appellate Authority for Advance Ruling on 14.07.2018.

The first notice in the appeal proceedings was issued to KE by electronic mail on 20.09.2018. The email was issued to KE at 16.19 hrs on 20.09.2018 which first came to their knowledge on 24.09.2018 since 21, 22 and 23 of September 2018, were holidays.

In such circumstances, it has been pleaded that the date fixed in the appeal was sudden; in any case, the actual time made available to them to respond to the notice and participate in the hearing fixed for 26.09.2018 was unrealistically short and in any case their counsel was in some difficulty on the date so fixed. Accordingly, an adjournment application was made by the petitioner through electronic mail, received by the Appellate Authority on 24/25.09.2018.

The adjournment application was rejected by the Appellate Authority with the following observation:

"None appeared for personal hearing. Appellant vide their e-mail letter dated 24/25.09.2018 requested for postponement of the date of personal hearing to some other date in month of October due to non-availability of their counsel.

As the Appellate Authority of Advance Ruling Uttar Pradesh consist of a member of the Central GST and a member of State GST and the appeal is to be decided in a time bound manner, it is not possible to extend the date of personal hearing to another date. So the appeal is being taken up for consideration based on the facts and documents available on record."

Thereafter, the Appellate Authority has proceeded to hear and decide the appeal on merits. Aggrieved by this order, KE approached the High Court.

The Allahabad High Court in its order dated 14.12.2018 - 2018-TIOL-2929-HC-ALL-GST observed,

-  The Authority for Advance Ruling and the Appellate Authority have been constituted principally, to nip the litigation in its bud. Any assessee who seeks an advance ruling discloses his intent to avoid possible litigation, in future. He only seeks answer on an issue/question that potentially contains the seeds of future litigation. The legislative intent appears to be to provide resolution of such issues in a time bound manner.

-  Rejection of the adjournment sought for the first date fixed by the Appellate Authority, that too when the Appellate Authority itself could not convene or could not hear the matter for the first 60 days of the period contemplated under Section 101 (2) of the Act, appears wholly harsh and unreasonable on the part of the Appellate Authority to have refused the short adjournment sought, and to have proceeded to decide the appeal itself on merits.

The High Court set aside the order of the Appellate Authority and remitted the case for fresh hearing by the Authority.

The High Court also gave certain directions on hearing dates and adjournments.

-  The legislative intent being to provide early/prompt decision in such matters, within ninety days of institution, it would be wholly desirable for the original as also the Appellate Authority to provide for a mechanism where, upon registration of the application/appeal itself, the likely date of hearing may first be indicated to the applicant in appeal, by electronic mail procedure itself, so that the concerned assessee may stay aware, both of the likely dates of sitting of authority and of hearing on his application/appeal and may arrange his affairs accordingly.

-  Communication of the date of hearing at short notice, without any prior indication of the same may often result in parties seeking adjournment for that reason itself. Therefore, a procedure providing for a prior indication of likely date of listing would be enough to put the applicants/appellants to notice in that regard, keeping in mind the spirit of the Act desiring speedy disposal of such matters. Also, the notice of exact hearing may be issued by electronic mail so as to preferably allow at least 21 days or such time as may otherwise appear proper, feasible and reasonable in the interest of justice and fair procedure.

-  In cases of repeated adjournments being sought, it may remain open to the concerned authority to impose appropriate costs while rejecting any adjournment application, in appropriate case, for just circumstances. However, to decide the appeal itself on merits, ex-parte, should really be the measure of last resort and should not be undertaken by way of first response to an adjournment application in such cases. Such a course, if followed would only result in avoidance of needless litigation and better serve the statute.

It is hoped that the CBIC issues a Circular communicating the guidelines contained in this decision to all concerned.

And in order to prove that the GST is a really a Good and Simple Tax, as is claimed to be, the authorities concerned should shun their die-hard habits of passing ex parte orders that were rampant, well… almost, during the pre-GST era.

I hereby solemnly affirm: Recently a chartered accountant told me that it is scary to certify the GST Return 9C; it is better to have no practice than to certify such returns. In the GSTR-9C, the auditor is required to give a certificate

I hereby solemnly affirm and declare that the information given herein above is true and correct to the best of my knowledge and belief and nothing has been concealed there from.

The ICAI, in a letter to the Finance Minister submitted that the certification wordings place the entire responsibility of reporting on the Auditor whereas the information is provided by the Auditee (Registered Person) and the Auditor can only verify information to the extent provided and certify the same. So the Institute has suggested that the verification wordings be suitably modified as -

"I hereby solemnly affirm and declare that the information given herein above is true and correct as per the information provided to us by the Registered Person and to the best of my knowledge and belief and nothing has been concealed there from."

The Institute of Chartered Accountants of India (ICAI) has sought clarification from the government on several issues like:

-  Calculation of Turnover of Rs. 2 Crore for the applicability of GST Audit

-  Expense wise reconciliation

-  Classification of turnover between Nil, exempted, non-GST and no-supply turnover. (like alcohol)

The Government has ample time to clarify. Let us wait.

Input tax credit in GST is black money: Amit Mitra, West Bengal Finance Minister