The Gujarat High Court has reiterated that statutory appellate authorities under the Goods and Services Tax regime cannot decide matters mechanically without considering applicable government notifications. In Adinath Rice Mill & Anr. v. Union of India & Ors.1, the Court examined the applicability of Notification No. 53/2023-Central Tax2 dated 02.11.2023 to an appeal filed beyond the ordinary limitation period under Section 107 of the Central Goods and Services Tax Act, 20173 (“CGST Act”).
The Division Bench held that a taxpayer who had filed its appeal before the extended cut-off date of 31.01.2024 could not be denied the benefit of the special procedure merely because the appeal had not been rejected for delay before the notification was issued. Significantly, the Court observed that an appellate authority is presumed to know government notifications governing the statutory provisions it administers and cannot wait for the taxpayer to specifically bring such notification to its attention.
The petitioner had been issued a notice under Section 74 of the CGST Act4 on 07.09.2021 alleging tax evasion. The petitioner contended that the matter concerned belated filing of returns for five months and that the applicable tax, interest and penalty had subsequently been paid.
An order-in-original was passed under Section 74 on 27.01.2023 and was physically served on the petitioner on 25.03.2023. The petitioner thereafter filed an appeal under Section 107 of the CGST Act on 28.12.2023.
In the intervening period, however, the Central Government had issued Notification No. 53/2023-Central Tax dated 02.11.2023. The notification introduced a special procedure for specified taxpayers who had been unable to file appeals within the prescribed period against orders passed under Sections 73 or 745, as well as certain taxpayers whose appeals had been rejected solely on the ground of limitation. It prescribed 31.01.2024 as the cut-off date, subject to specified payment conditions.
Despite this notification, the appellate authority rejected the petitioner’s appeal on 11.06.2024 solely on the ground of delay. It held that its power to condone delay under Section 107 read with Rule 108 of the CGST Rules6 could not extend beyond the prescribed period.
The petitioner consequently approached the Gujarat High Court challenging the appellate order.
The principal issue before the Court was whether Notification No. 53/2023-Central Tax could benefit a taxpayer who had filed an appeal on 28.12.2023, but whose appeal had not been rejected for delay before the notification was issued.
The Revenue argued that the notification was intended to enable taxpayers whose appeals had already been rejected on the ground of limitation to file fresh appeals. Since the petitioner’s appeal was filed after the notification had been issued, the Revenue contended that the notification did not apply to it.
The petitioner, on the other hand, argued that the notification extended the opportunity to eligible taxpayers up to 31.01.2024, subject to compliance with its conditions. Since the appeal had been filed on 28.12.2023, before the extended cut-off date, it ought to have been considered in accordance with the notification.
Court’s Analysis
The High Court examined the background to Notification No. 53/2023-Central Tax by referring to the minutes of the 52nd GST Council Meeting.
The Court noted that the GST Council had considered the difficulties faced by taxpayers whose appeals were either pending or liable to be rejected because they had been filed beyond the limitation period prescribed under Section 107. The notification was subsequently issued pursuant to the Council’s recommendations.
The notification contemplated a special procedure for taxpayers falling within its scope. Among other conditions, eligible taxpayers were required to file the appeal in Form GST APL-01 on or before 31.01.2024. The taxpayer was also required to pay the admitted amount of tax, interest, fine, fee and penalty and a prescribed portion of the remaining disputed tax, subject to the monetary ceiling stipulated in the notification.
Against this background, the Court rejected the Revenue’s interpretation that the notification would apply only where an appeal had already been rejected for delay.
The Court observed that the petitioner could not be placed at a disadvantage merely because its appeal had been filed on 28.12.2023 and had not yet been rejected when the notification was issued. On a reading of the notification, the Court identified multiple situations covered by the special procedure, including appeals filed beyond limitation, appeals rejected on limitation grounds, appeals pending before the appellate authority when the notification was issued, and appeals filed within the extended period ending on 31.01.2024, subject to fulfilment of the prescribed conditions.
Duty of Appellate Authorities to Consider Notifications
The most significant aspect of the judgment concerns the responsibility of appellate authorities.
The Court found that the appellate order dated 11.06.2024 was completely silent on Notification No. 53/2023-Central Tax. It held that the appellate authority was required to consider the notification while deciding the appeal.
Importantly, the Court rejected the proposition that the taxpayer was required to specifically point out the notification before the authority could consider it. The Court observed that an appellate authority cannot wait for the taxpayer to identify the provisions of a government notification. It further held that it must be presumed that a government notification would be known to the appellate authority, particularly where the notification directly regulates the statutory provisions being administered by that authority.
This observation assumes significance in the GST framework, where frequent notifications, circulars and amendments operate alongside the provisions of the CGST Act and Rules. The ruling emphasises that adjudication and appellate decision-making must account for the applicable statutory and delegated legislative framework rather than being confined to the provisions expressly cited by the taxpayer.
Decision of the Court
Having found that the petitioner satisfied the payment conditions prescribed under paragraph 3 of the notification and had filed its appeal before the 31.01.2024 cut-off, the Court held that the petitioner could not be denied the benefit of the special procedure.
The High Court accordingly allowed the writ petition, quashed and set aside the impugned order, and remanded the matter to the appellate authority for consideration on merits in accordance with law. The Court directed that the appeal be decided within twelve weeks from receipt of a copy of its order.
Conclusion
The decision in Adinath Rice Mill reinforces an important principle of tax administration: statutory authorities must apply the law as it exists, including applicable notifications issued under the governing legislation.
The judgment does not dispense with statutory limitation requirements under the CGST Act. Rather, it recognises the specific relaxation introduced through Notification No. 53/2023-Central Tax and holds that an eligible taxpayer who complied with its conditions could not be deprived of its benefit merely because of the timing of the filing or because the appeal had not previously been rejected for delay.
For GST taxpayers, the decision also highlights the importance of monitoring notifications and transitional or special procedures affecting appellate remedies. For appellate authorities, it serves as a reminder that the responsibility of applying the applicable legal framework cannot be shifted to the taxpayer. Where a government notification directly governs the provision under consideration, the authority must take it into account while deciding the matter.
Citation
Expositor(s): Adv. Vatsala pandit
