MAY 08, 2024

By Vijay Kumar

A taxpayer filed a GST refund claim. Normally Revenue officers, do not like to grant refunds. So, the first action on getting a refund claim is to issue a Show Cause Notice proposing to reject the claim. Thus, a Show Cause Notice was issued on 23.11.2023 by a Superintendent.

It seems that the Superintendent was not competent to issue Show Cause Notice and it is only officers of the rank of Assistant Commissioner and above, who could have issued the Show Cause Notice.

Though the Show Cause Notice was issued by an incompetent officer, the adjudication order has been passed by an Assistant Commissioner, whose authority is not doubted.

The issue took its usual turn and reached the Appellate Authority who observed,

Even before the merits are traversed, I find that the impugned order is not sustainable as the show cause notice was issued by Range Superintendent proposing rejection of refund and he was not a competent authority to do so. Further even the reply to the show cause notice has been considered and examined by the Range Superintendent who was not a competent authority under the Act to do so. Only the authority competent to adjudicate the show cause notice can examine the reply to show cause notice and give findings thereon. However, in this case, the Adjudicating Authority without applying his independent mind rejected the refund on the basis of report of Range Superintendent which is bad in law.

After holding that the Show Cause Notice had been issued by an incompetent authority and reply to the Show Cause Notice had also been considered by the authority not competent in law and the authority competent had not applied its independent mind while rejecting the application, the Appellate Authority proceeded to consider the case on merits and thereafter, upheld the rejection of the refund application.

The matter reached the Delhi High Court, which observed, 2024-TIOL-723-HC-DEL-GST

We are of the view that the course adopted by the Appellate Authority is not sustainable for the reason that once the Appellate Authority comes to the conclusion that the Show Cause Notice was issued by an officer who was not competent; reply was also considered by an incompetent authority and the Competent Authority had not applied its independent mind, the Appellate Authority could not have assumed original jurisdiction and proceeded further with the matter. The Appellate Authority could have only quashed the Show Cause Notice and the proceedings emanating therefrom while reserving the right of the Proper Officer to initiate appropriate proceedings in accordance with law.

In view of the above and particularly in view of the fact that the course adopted by the Appellate Authority is not acceptable in law, the impugned order dated 17.04.2023 is set aside to the extent that it decides the claim of the petitioner on merits. The finding returned by the Appellate Authority that the Show Cause Notice has been issued by an incompetent authority and the adjudication order has been passed without any application of mind are not interfered with. The sequitur to that is that the Show Cause Notice dated 25.11.2021 and adjudication order dated 14.12.2021 are not sustainable in law and are consequently set aside.

Petition is allowed in the above terms. The appropriate authority shall consider the application of the petitioner seeking refund expeditiously in accordance with law.

See the farce:

A Superintendent who is not competent to issue a Show Cause Notice issues it and considers the reply for his invalid notice.

The Assistant Commissioner adjudicates on the basis of the invalid Show Cause Notice and irrelevant findings of the Superintendent.

The learned Appellate Authority (must be a Joint Commissioner) gives clear findings that: -

1. The impugned order is not sustainable as the show cause notice was issued by Range Superintendent proposing rejection of refund and he was not a competent authority to do so.

2. Further even the reply to the show cause notice has been considered and examined by the Range Superintendent who was not a competent authority under the Act to do so.

3. Only the authority competent to adjudicate the show cause notice can examine the reply to show cause notice and give findings thereon.

4. The Adjudicating Authority without applying his independent mind rejected the refund on the basis of report of Range Superintendent which is bad in law.

Despite holding that the entire proceedings were illegal, the Appellate Authority went ahead and adjudicated the case and rejected the refund claim.

There was no way for the harried taxpayer other than approaching the High Court with the plea that since the very basis of the adjudication order was the Show Cause Notice, the entire proceedings stand vitiated. And the High Court agreed.

Why do these things happen?

Didn't the Superintendent know that he was not competent to issue that notice?

Didn't the Assistant Commissioner know that the notice was not valid? Still, he proceeded to adjudicate it.

Didn't the Appellate Authority know that he cannot proceed further based on an invalid notice? He did, but he chose to make use of his invisible power to validate a notice which he held to be bad in law.

Who loses?

Not the taxpayer alone, but the Nation too.

And what did the Department gain? A dead Show Cause notice after moving mountains!

Shouldn't somebody tell the mighty officers that following the law is a good policy not only for the taxpayers but the officers too?

Judicial Humour: The Case of the Ghostly Petitioner

I came across an interesting case in the High Court of Punjab & Haryana last week.

A petition was filed in the High Court on 24.01.2024. When the case came up for hearing on 01.05.2024, the State counsel filed death certificate of the petitioner showing that the petitioner expired on 27.12.2023, that is one month before he filed the petition in the High Court. The Court found it strange that Power of Attorney of a dead person could have been procured and annexed with the instant petition. Furthermore, an affidavit has also been signed by the petitioner.

The counsel for the petitioner has not disputed the contents of the death certificate. He, however, submitted that he had been misled by 'some person' who had approached him for filing the instant petition. He has tendered an unqualified and unconditional apology.

In an order laced with superlative judicial humour, Justice Manjari Nehru Kaul observed:-

1. Learned counsel for the petitioner has managed to stir up quite the legal potpourri by filing the instant petition on behalf of the petitioner, almost a month after his celestial departure. A feat that would make even Houdini raise an eyebrow!

2. Seemingly, learned counsel for the petitioner filed a petition on behalf of his departed client, complete with a posthumous Power of Attorney, bearing a signature from beyond the grave.

3. It's as if the petitioner was orchestrating the ultimate legal prank from beyond the grave. And if that weren't enough to raise a Courtroom chuckle, behold! An affidavit bearing the signature of none other than the departed petitioner.

4. Undoubtedly, all this injected some much-needed entertainment into the otherwise dull Courtroom proceedings, this Court would like to warn the learned counsel for the petitioner to exercise a tad more caution in his future legal escapades. After all, we would not want to inadvertently summon anymore ghostly clients or find ourselves entangled in a legal mess of supernatural proportions.

5. However, it is imperative for this Court to issue an explicit warning. Therefore, let it be clear: learned counsel for the petitioner should take this warning seriously and avoid getting involved in such "otherworldly activities" in the future lest he becomes entangled in a complex situation beyond the ordinary.

6. Besides, considering the learned counsel for the petitioner's relative inexperience in the legal profession, this Court would not want to see him squander his promising career on such.... shall we say, otherworldly endeavours.

7. Trust, the Courtroom can still be a wild enough place without summoning spirits from beyond the grave.

8. In view of the unconditional and unqualified apology tendered by the learned counsel for the petitioner, and prayer made, the instant petition is permitted to be withdrawn.

Has the President of GSTAT entered office?

As per the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019, dated 03rd December 2019, the three months period to appeal to the Tribunal will start from the date on which the President of the Appellate Tribunal, enters office.

The PIB in its Press release dated 06 May 2024, stated,

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman administered the oath of integrity and secrecy to Justice (Retd.) Sanjaya Kumar Mishra as the President of the GST Appellate Tribunal (GSTAT), in New Delhi, today.

So, has the President entered office? And has the time limit for filing appeals started?

Can FM administer oath to the President of GSTAT?

A very learned friend asked me this question. There seems to be no law for administering the oath to the President of the Tribunal. In fact, this may perhaps be the first time that a President of a tax tribunal was sworn in. Earlier Presidents used to just assume office - no swearing! I asked a former President of a Tribunal whether he was sworn in. He replied that he just went in and signed some papers and assumed office. "If at all anybody had sworn me in, it could be my Registrar", he said!

"But how can the Finance Minister, the political head of the Ministry which is a litigant in all cases before the Tribunal swear in its President?", my friend insisted.

The US Constitution does not mandate that anyone in particular should administer the presidential oath of office. George Washington was sworn into office on April 30, 1789, by Chancellor of New York. William Cranch, Chief judge of the U.S. Circuit Court, administered the oath to Millard Fillmore on July 10, 1850. Calvin Coolidge was sworn in as president by his father, John Calvin Coolidge Sr., a notary public. Federal Judge Sarah T. Hughes administered the oath of office to Lyndon B. Johnson aboard Air Force One after John F. Kennedy's assassination on November 22, 1963.

Until next week