NOVEMBER 27, 2024

By Vijay Kumar

BY an Order-in-Appeal dated 20.06.2024 (issued on 03.07.2024) passed by the Commissioner (Appeals), a taxpayer's appeal was dismissed on the following grounds:

(i) That the taxpayer has not submitted any valid proof regarding payment of the mandatory pre-deposit equal to 10% of the disputed amount as required under Section 107(6) of the CGST Act, 2017.

(ii) That the taxpayer has not submitted any valid documents, such as Board Resolution, to establish that he is the authorised signatory to sign the appeals under the Companies Act, 1956.

The taxpayer is in writ petition before the Bombay High Court - 2024-TIOL-1976-HC-MUM-GST

On the First ground:

The Petitioner has claimed that they had paid a pre-deposit Amount of Rs. 4,42,55,474/- (10% of the disputed tax amount) when filing their appeal before the Commissioner (Appeals).

The High Court examined the record and found that:

1. In the memorandum of appeal i.e., Form APL-01 itself, the amount of pre-deposit paid has been specified under S.No.15 of Form APL-01.

2. Further, the petitioner submitted screenshots of the Electronic Credit Ledger, and the Electronic Cash Ledger of the Petitioner downloaded from the GSTN portal. This document shows that the Petitioner has made a payment of Rs. 3,20,22,340/- from the Electronic Credit Ledger on 12.03.2024 and a payment of Rs. 1,22,33,134/- from the Electronic Cash Ledger on 12.03.2024 totalling to Rs. 4,42,55,474/-.

3. Further, Exhibit N to the Petition is the system generated provisional acknowledgement of the appeal, which is generated automatically by the GST portal once an assessee files an appeal. This acknowledgement itself shows that the requisite pre-deposit has been made.

Hence, the High Court was satisfied that the Petitioner had complied with the necessary pre-deposit required in Section 107(6) of the CGST Act and observed,

In any case, if Commissioner (Appeals) was not satisfied with the amounts claimed to have been paid by the Petitioner, he should have intimated that to the Petitioner and provided the Petitioner with an opportunity to clarify and prove the payments made by them.

The second ground on which the appeal is dismissed is that the Appellant has not submitted any valid documents, such as a Board resolution appointing the said person as an authorised signatory to sign the appeals.

The High Court noted that,

Admittedly, the petitioner was never called upon to file the same. Further, if the Commissioner (Appeals) had brought this to the notice of Petitioner at the time of personal hearing, it would have been clarified.

The High Court observed,

We have seen Exhibit K to the Petition, a screenshot/extract from the GSTN Portal, which reflects that Mr. Deepak Kokate is duly authorised to sign the appeal documents. We are informed that to be registered on the GSTN portal as an authorized signatory, the person must submit the relevant board resolution or power of attorney authorizing him. If Commissioner (Appeals) had taken a few seconds to check the GSTN portal, he would have found that Mr. Deepak Kokate is duly authorised to sign the appeal documents.

It is not the first time that such writ petitions are before the High Court. In 2024 alone, this High Court decided five such writ petitions. In a similar case earlier, when the High Court brought the matter to the notice of the respondents, they stated that the impugned order could be quashed and set aside and the matter remanded for denovo consideration.

The High Court quashed the impugned order of the Commissioner (Appeals) and remanded it to the Commissioner (Appeals) for de novo consideration.

The Commissioner (Appeals) was given the following directions:

1. Give the petitioner a personal hearing once again,

2. Notice will be communicated at least five working days in advance.

3. The order to be passed will be a reasoned order dealing with all the Petitioner's submissions.

4. The appeal must be disposed of by 31st December 2024.

5. All rights and contentions are kept open to the parties.

The High Court clarified,

We clarify that we have not made any observations on the merits of the matter.

Even though, the Commissioner (Appeals) was informed in the appeal before him that the assessee had made the pre-deposit and that too a substantial sum of over Rs. 4 crores, he refuses to accept that and dismisses the appeal on the ground that pre-deposit was not made.

He could have asked the assessee, but no, he did not ask such small questions. Dismissing the appeal was an easier task. What if it involves the assessee going to the High Court incurring heavy expenses? – lawyers don't come cheap. That is not the concern of the Commissioner. Okay, if the honourable Commissioner (Appeals) feels that the assessee had not paid the pre-deposit, what prevented him from asking the assessee to produce the proof instead of dismissing the appeal? No, that's not the way they work. The Commissioner (Appeals) knew that the assessee just cannot accept a dismissed appeal after paying over 4 crores of rupees as pre-deposit and has to go in appeal somewhere and since the Tribunal is yet to be launched, the only place to go to is the High Court.

The High Courts are overflowing with excruciating number of dockets but that is not the Commissioner's problem. The Commissioner could have spent a few seconds to check whether the assessee has paid the amount, instead of driving the assessee to the High Court. It wouldn't have taken him eons to do this simple check and it wouldn't have cost the nation anything. But by his refusal to see the obvious, he has not only caused huge expenditure to the government and the taxpayer but has added to the distress of a High Court already suffering with a huge backlog. Who is he working for?

And the second ground for dismissing the appeal was that:

the assessee has not submitted any valid documents, such as Board Resolution, to establish that he is the authorised signatory to sign the appeals under the Companies Act, 1956.

The High Court observed that if the Commissioner had taken a few seconds to check the GSTN portal , he would have found that Mr. Deepak Kokate is duly authorised to sign the appeal documents. Or he could have simply called the person and asked for proof. But why should he?

But why does the Commissioner not take those few seconds and force the assessee to approach the High Court? Is the High Court meant for such silly litigation? A High Court can declare a law passed by Parliament as void, and here we have a High Court called upon to decide a dismissed appeal, all because somebody did not bother to check the portal. This is not what is expected from a good and simple tax.

The Commissioner could have asked for:

1. Proof of payment of pre-deposit

2. Copy of Board Resolution for the authorized person

And then dismissed the appeal on merits.

The taxpayer would have gone in appeal to the Tribunal or High Court and paid about 8 crores rupees as pre-deposit, which the government lost and the government and the party must have incurred considerable expense in pursuing the case in the High Court.

Who gains in this kind of litigation?

Government and assessees are not adversaries but partners in the great enterprise of collecting taxes. Ultimately, the taxes are borne by the last consumer, who also ends up paying for this kind of meaningless litigation without even being aware of it.

Imagine explaining this to a consumer: "Congratulations! Not only did you get to enjoy that lovely cup of coffee, but you also unknowingly funded a thrilling courtroom drama. Talk about hidden costs!"

Until next week