GST Update No 257 on extension by SC applies to condonable period

The outbreak of pandemic in the country had been a great setback for all and there was lot of disruption in compliances of the taxation laws by the assessees for which appropriate extensions were also provided by the government. It is worth mentioning that the hon’ble Supreme Court had provided suo moto extension for filing appeals and various compliances. However, the question arises is whether the condonable period available to the assessee under the statutory provisions of law needs to be considered for the purpose of determining the applicability of the suo moto order of extension of limitation by the Supreme Court. Recently, on similar footings, one case was reported before Delhi High Court in the case of M/S RAILSYS ENGINEERS PRIVATE LIMITED & ANR. V/S THE ADDITIONAL COMMISSIONER [W.P.(C) 4712/2022] dated 21.07.2022. The decision delivered in this case is subject matter of discussion of our present update.

The petitioner challenged the show cause notice passed by the authorities regarding cancellation of registration. It was submitted that the impugned SCN is not signed and the venue of appearance before the adjudicating authority was also not mentioned and hence, there was violation of principles of natural justice. It was also stated that even the order was not signed by the adjudicating authority. Moreover, it was pleaded that the period of limitation is excluded by the suo-moto extension order passed by the Apex Court. It was submitted that the petitioner was regularly filing returns until February 2019, along with late fee for the period under consideration so their registration should not have been cancelled.

The Counsel of the respondent argued that the returns for continuous period of 6 months were not filed and hence, SCN was issued as regards to cancellation of registration. It was further contended that the procedure of cancellation of registration was duly complied with. It was further argued that the Suo-moto extension of period of limitation will not be applicable in present case. As regards to unsigned order, it was argued that the orders were uploaded on common portal and hence, no signatures were appended. Further, the proceedings would be concluded in online manner through video conferencing and hence, there was no mention of venue in the impugned order.

The Court analysed and held that the date of impugned order of cancellation of registration is 25.11.2019. Although, it is not possible to serve the order on the same date, even if it is assumed that it was served on the same date, the period of limitation as per Section 107 of the CGST Act, 2017 ends on 24.02.2020 with expiry of condonable period as on 24.03.2020. The Covid-19 outbreak triggered as on 23.03.2020, therefore, it needs to be examined whether the present case is covered by Suo-moto extension of Apex Court, it was held that the period from 15.03.2020 to 28.02.20322 is to be excluded from the period of limitation including the condonation period allowed under the respective statues. After analysing the Supreme Court order, it was concluded that the extended period of Limitation is applied to even condonable period and not just period of Limitation. As regards justification offered by the counsel for the revenue regarding non-signing of order was concerned, it was stated that at least digital signature should be appended on the SCN and order even if they were uploaded on the GST common portal. Therefore, it was directed to set aside the impugned order in appeal and restore the appeal filed by the petitioners for decision afresh.

The above decision is another example wherein the show cause notice was set aside on the grounds of non-fulfilment of ingredients of proper show cause notice and order. There had been plethora of cases such as Suresh Trading Corporation V/s Assistant Commissioner wherein same view was upheld by the Court of Land thereby granting relief to the aggrieved taxpayers. This decision is also beneficial as it seeks to apply condonation benefit inspite of the fact that condonation is not automatic but is discretionary power to be exercised if there are genuine reasons for delay in filing appeal. It is high time that the departmental authorities should adhere to the guidelines of issuance of show cause notice and order and also follow the binding precedents delivered by the Supreme Court.

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GST Update No 257 on extension by SC applies to condonable period

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