Umair Traders Vs State Of Up And 2 Others (Allahabad High Court)

The Allahabad High Court has dismissed the writ petition filed by Umair Traders against the State of Uttar Pradesh and other respondents. This decision, issued by the Court on October 27, 2024, emphasizes the strict application of limitation periods within the Goods and Services Tax (GST) Act, as mandated under Section 107.

The petition was heard by Justice Shiv Avtar Sharma, representing Umair Traders, and Ravi Shankar Pandey, learned Additional Chief Standing Counsel (ACSC) for the respondents. The Court observed that similar issues were present in multiple writ petitions, allowing them to be addressed through a common order with all parties’ consent.

Background of the Case

Umair Traders, a registered GST dealer, filed the writ petition to contest orders issued by tax authorities in Bijnor. The Assistant Commissioner, Sector-2, Dhampur, initially issued a show-cause notice under Section 74 of the GST Act in September 2022. The notice pointed to an alleged tax liability related to excess goods supply from April 2020 to March 2021. Umair Traders claims that the order confirming the tax demand was issued without a fair hearing. Following this, the petitioner appealed to the Additional Commissioner of Appeals, Grade-2, in Bijnor, which was dismissed on February 2, 2024, on grounds of late filing.

The petitioner argued that the dismissal was improper as the GST Act mandates establishing a willful intent to evade taxes. Additionally, Umair Traders pointed to alleged procedural lapses in the issuance of the tax demand, citing Section 75(4) of the GST Act, which requires a fair hearing before passing an order. The petitioner also referenced a notification dated November 2, 2023, which provided a grace period for filing appeals until January 31, 2024, without dismissal on limitation grounds.

Petitioner’s Arguments and Court’s Response

In defense, counsel for Umair Traders presented the precedent set in Sumit Enterprises vs. State of UP & Others (2023), where a GST-related appeal was considered on its merits due to filing delays caused by genuine issues. The notification from November 2023 was also referenced, suggesting that relaxation for missed deadlines should apply.

In response, the ACSC for the state argued that the appeal was rightly dismissed, as it was filed outside the allowable period under Section 107 of the GST Act, which does not permit extending deadlines beyond the specified duration. The ACSC cited previous court judgments that upheld the finality of deadlines in tax statutes, reinforcing that delays cannot be excused if not within the statute’s condonable period. References were made to Yadav Steels vs. Additional Commissioner and Garg Enterprises vs. State of UP (2024), where similar dismissals on limitation grounds were upheld.

The Court’s Reasoning and Observations

In its judgment, the Allahabad High Court noted that the GST Act operates as a comprehensive legislative code, specifically addressing time limits for appeals. Section 107 of the GST Act specifies that any extension for filing appeals can only be granted for one additional month beyond the initial three-month period. In the present case, Umair Traders filed the appeal 66 days past this one-month extension, rendering it ineligible for further consideration.

The Court referenced Supreme Court precedents, such as Singh Enterprises vs. Commissioner of Central Excise and Hongo India Private Limited, which emphasized that special statutes with explicit limitation provisions exclude the applicability of Section 5 of the Limitation Act. This exclusion reflects the legislative intent to expedite tax disputes and ensure timely revenue collection. Similarly, the Kerala High Court in Penuel Nexus Pvt. Ltd. vs. Additional Commissioner underscored that special statutes like the GST Act are self-contained codes that prioritize prompt tax administration over flexibility in procedural delays.

The judgment addressed Umair Traders’ reliance on Sumit Enterprises and the November 2023 notification, clarifying that both were inapplicable. The Court found that the relief provided by the notification was intended for appeals filed by January 31, 2024, for orders issued before March 31, 2023. Since Umair Traders’ case involved an order from July 2023, well past the notification’s relevant timeframe, the notification was deemed irrelevant to this case.

Conclusion and Implications

The Allahabad High Court’s dismissal of Umair Traders’ petition underscores the strict limitations imposed within the GST framework. By enforcing these time constraints, the judgment aligns with the GST Act’s objective of ensuring the efficiency and finality of tax-related appeals. In emphasizing the importance of adhering to statutory deadlines, the Court highlighted that procedural leeway, often available in general law, is limited in tax statutes due to the critical need for prompt revenue administration.

This decision has implications for dealers and businesses navigating the GST system. It serves as a reminder that compliance with statutory timelines is non-negotiable, and any appeal must strictly conform to the limitations outlined in Section 107 of the GST Act. The decision also reinforces that reliance on external notifications for deadline relaxation must be contextually relevant and within the specified timeframe.

The Allahabad High Court’s ruling in Umair Traders vs. State of UP stands as a firm precedent, underscoring the limited judicial flexibility in extending statutory timelines in the context of tax appeals under the GST Act.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Heard Shri Shiv Avtar Sharma, learned counsel for the petitioner and Shri Ravi Shankar Pandey, learned ACSC for the State – respondents.

2. Since the issues involved in these writ petitions are similar, therefore, the same are being decided by the common order with the consent of the parties. Writ Tax No. 749 of 2024 is taken as a leading case for deciding the controversy involved in these writ petitions.

WRIT TAX No. – 749 of 2024

3. The instant writ petition has been filed challenging the impugned order dated 20.07.2023 passed by the Assistant Commissioner, Sector – 2, Dhampur, Bijnor as well as the impugned order dated 02.2024 passed by the Additional Commissioner, Grade – 2, Appeals, Bijnor; whereby, the appeal of the petitioner has been dismissed on the ground of limitation.

4. Learned counsel for the petitioner submits that the petitioner is a dealer duly registered under the GST Act. He further submits that on 26.09.2022, an intimation was issued for tax ascertainment towards the excess supply of goods from April, 2020 to March, 2021, pursuant to which a show cause notice under section 74 of the GST Act was issued. He further submits that the original order confirming the demand under section 74 of the GST Act was passed without providing any opportunity of hearing to the petitioner and the impugned order dated 20.07.2023 has been passed. Aggrieved by the order dated 20.07.2023, the petitioner preferred an appeal, which has been dismissed vide impugned order dated 22.02.2024. Hence, this writ petition.

5. Learned counsel for the petitioner further submits that as per section 74 of the GST Act, it is mandatory to observe an intention to evade tax willfully, but while passing the impugned order, no such intention has been observed. He further submits that the impugned order has been passed in violation of section 75(4) of the GST Act. In support of his submission, he has relied upon the judgement of this Court in M/s Sumit Enterprises Vs. the State of P. & 2 Others [Writ Tax No. 167 of 2023, decided on 09.10.2023]. Learned counsel for the petitioner has further relied upon the notification dated 02.11.2023 (Annexure No. 1 to the supplementary affidavit), where relaxation has been provided if the person aggrieved could not file the appeal within the time prescribed under the Act and if the appeal filed on or before 31.01.2024, the same shall not be dismissed on the ground of limitation. He prays for allowing the writ petition.

6. Per contra, learned ACSC supports the impugned orders and submits that the appeal under section 107 of the GST Act was preferred beyond the period of limitation and therefore, the same has rightly been dismissed on the ground of limitation. He further submits that delay cannot be condoned beyond the period prescribed therein. In support of his submission, he has placed reliance on the judgements of this Court in M/s Yadav Steels Vs. Additional Commissioner & Another [Writ Tax No. 975 of 2023, decided on 15.02.2024] and M/s Garg Enterprises Vs. State of U.P. & Others [Writ Tax No. 291 of 2022, decided on 19.01.2024]. He prays for dismissal of the writ petition.

7. After hearing learned counsel for the parties, the Court has perused the records.

8. It is admitted fact that the appeal has been dismissed on the ground of limitation. Learned counsel for the petitioner has relied upon the notification dated 02.11.2023 (Annexure No. 1 to the supplementary affidavit. On close scrutiny of the said notification, it is clear that if taxable person could not file appeal against the order passed by the Proper Officer on or before 31.03.2023 under sections 73 or 74 of the GST Act and if the appeal is preferred on or before 31.01.2024, the same will be considered on merit without taking recourse to the limitation. In the case in hand, the impugned order has been passed on 20.07.2023, much after the date mentioned in the aforesaid notification, i.e., 31.03.2023. Therefore, the said notification is of no aid to the petitioner.

9. Further, the judgement cited by the learned counsel for the petitioner in the case of M/s Sumit Enterprises (supra) nowhere deals with condoning the delay; whereby the appeal has been dismissed on the ground of limitation and therefore, the same is also of no aid to the petitioner.

10. This Court in M/s Yadav Steels (supra) has held as under:-

“4. This Court in M/s Abhishek Trading Corporation vs. Commissioner (Appeals) and another [(Writ Tax No.1394 of 2023, decided on 19.1.2024) Neutral Citation No. 2024: AHC: 9563], after relying on the Supreme Court judgments in Singh Enterprises v. Commissioner of Central Excise, Jamshedpur and others reported in (2008) 3 SCC 70 and Commissioner of Customs and Central Excise v. Hon go India Private Limited and another reported in (2009) 5 SCC 791 has categorically held as follows:-

“7. The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. Accordingly, one cannot apply Section 5 of the Limitation Act, 1963 to the aforesaid provision.”

5. In Penuel Nexus Pvt. Ltd. -v- The Additional Commissioner Headquarters (Appeals) and Ors., reported in MANU/KE/3276/2023, the Kerala High Court held that the GST Act is a special statue and a self-contained code by itself and hence, Limitation Act will not apply. Relevant paragraph has been extracted below:

“10. The Central Goods and Services Tax Act is a special statute and a self-contained code by itself. Section 107 has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite, that the Limitation Act will apply only if it is extended to the special statute. It is also rudimentary that the provisions of a fiscal statute have to be strictly construed and interpreted.”

6. The aforementioned principle was reiterated by this Court in Garg Enterprises -v- State of U.P. and Ors, reported in MANU/UP/0197/2024. Relevant paragraph has been reproduced below:

“7. The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. Accordingly, one cannot apply Section 5 of the Limitation Act, 1963 to the aforesaid provision.”

7. Upon a perusal of Section 107 of the Act, it is clear that the appellate authority can only allow extension of a period of one month as provided in sub section (4) of Section 107 of the Act. In the present case, the appeal was filed approximately 66 days subsequent to the expiry of one month that was condonable under Section 107(4) of the Act. To make it more clear, the period within which the appeal could have been filed was three months plus a period of one month. However, in the present case the appeal was filed beyond the period of four months, and therefore, the appellate authority could not have condoned the delay even if sufficient cause was made out.

8. The significance of limitations in taxing statues, such as the GST Act, cannot be overstated. These statutes govern the collection of taxes, which are vital for the functioning of a state or country. Limitation provisions ensure timely resolution of disputes and promote efficiency and fairness in tax administration. Tax laws are complex and often subject to interpretation, leading to disputes between taxpayers and tax authorities. Limitation provides a framework within which such disputes must be resolved, thereby preventing undue delays and ensuring that tax liabilities are determined within a reasonable time frame. This is crucial for both taxpayers and tax authorities as it promotes legal certainty and facilitates effective tax compliance.

9. Section 107 of the GST Act prescribes a specific limitation period within which appeals against certain decisions must be filed. This limitation period is integral to the functioning of the appellate mechanism under the GST Act and reflects the legislative intent to expedite the resolution of tax By imposing a time limit on the filling of appeals, Section 107 aims to prevent undue delayed in the adjudication process and promote the efficient administration of the GST regime. On the other hand, Section 5 of the Limitation Act provides for the extension of prescribed periods in certain exceptional circumstances, such as when sufficient cause is shown for the delay.

10.In analyzing the conflicting interpretations concerning the exclusion of Section 5 of the Limitation Act as far as Section 107 of the GST Act is concerned, it is essential to consider the rationale behind the exclusion of the Limitation Act in certain special statues, particularly in the context of Tax laws are often characterized by strict procedural requirements and time-bound deadlines, reflecting the need for expeditious resolution of tax disputes to ensure revenue certainty and fiscal stability.

11. The judgment rendered by the Calcutta High Court in the matter of S.K. Chakraborty & Sons (supra) fails to adequately consider the authoritative pronouncements of the Supreme Court in the cases of Singh Enterprises (supra) and Hon go India (supra) and hence the said judgment is of no precedential value, and accordingly, the view expressed therein is not accepted by this Court.

12. Taxing statutes like the GST Act embody a comprehensive framework with specific limitation provisions tailored to expedite the resolution of tax-related matters. Section 107 of the GST Act, operates as a complete code in itself, explicitly delineating limitation periods for filing appeals and implicitly excluding the application of general limitation provisions such as Section 5 of the Limitation Act.”

11. In the above judgement, it has been specifically held that delay in filing the appeal cannot be condoned beyond the prescribed period of limitation in the Act.

12. In view of the aforesaid facts & circumstances of the case as well as the law laid down by this Court in the judgements cited above, this Court does not find any merit in these writ petitions.

13. The writ petitions fail and the same are hereby dismissed.