M/S. Jeans Knit (P) Ltd. Vs Union of India

M/S. JEANS KNIT (P) LTD NO.21/E1, 2^ND PHASE PEENYA INDUSTRIAL AREA BENGALURU – 560 058 (REPRESENTED BY ITS DIRECTOR MR LAXMINARAYAN GAUR S/O NEMICHAND SHARMA AGED ABOUT 62 YEARS)

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…PETITIONER

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(BY SRI. CHIDANANDA URS B.G., ADVOCATE) AND:

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Digitally signed by CHANDANA B M Location: High Court of Karnataka

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UNION OF INDIA MINISTRY OF FINANCE REPRSENTED BY ITS SECRETARY NORTH BLOCK NEW DELHI-110 001.

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CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS MINISTRY OF FINANCE GOVERNMENT OF INDIA REPRESENTED BY ITS CHAIRMAN NORTH BLOCK, NEW DELHI-110 001.

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THE COMMISSIONER OF CENTRAL TAX BENGALURU NORTH WEST COMMISSIONERATE 2^ND FLOOR, BMTC BUS STAND COMPLEX SHIVAJINAGAR BENGALURU - 560 051.

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HC-KAR

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THE ADDITIONAL COMMISSIONER OF CENTRAL TAX BENGALURU NORTH WEST COMMISSIONERATE 2^ND FLOOR, BMTC BUS STAND COMPLEX SHIVAJINAGAR BENGALURU – 560 051.

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THE ADDITIONAL COMMISSIONER OF CENTRAL TAX (APPEALS-II) BENGALURU NORTH WEST COMMISSIONERATE 2^ND FLOOR, BMTC BUS STAND COMPLEX SHIVAJINAGAR BENGALURU-560 051.

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…RESPONDENTS (BY SRI. MADANAN PILLAI, CGC FOR R-1; SRI. JEEVAN J. NEERALGI, ADV. FOR R-2 TO R-5)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT RULE 89(4) OF THE CENTRAL GOODS AND SERVICES TAX RULES 2017 FRAMED BY R-1 IS INVALID, UNCONSTITUTIONAL AND ARBITRARY, BEYOND THE PROVISIONS OF SECTION 54(3) READ WITH SECTION 16(3)(b) OF THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017, ETC.

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IN WP NO.16372/2022:

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BETWEEN:

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M/S JEANS KNIT (P) LTD NO.21/E1 II PHASE PEENYA INDUSTRIAL AREA BENGALURU-560 058 (REPRESENTED BY ITS MANAGING DIRECTOR MR. MAHESH UDUPA S/O MANJUNATH UDUPA AGED ABOUT 56 YEARS) REGD. UNDER THE COMPANIES ACT, 1956

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...PETITIONER

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(BY SRI. ANAND N, ADVOCATE)

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AND:

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THE COMMISSIONER OF CENTRAL TAX BENGALURU NORTH WEST COMMISSIONERATE 2^ND FLOOR, BMTC BUS STAND COMPLEX

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HC-KAR

SHIVAJINAGAR

BENGALURU – 560 051.

THE ADDITIONAL COMISSIONER OF CENTRAL TAX BENGALURU NORTH WEST COMMISSIONERATE 2^ND FLOOR, BMTC BUS STAND COMPLEX SHIVAJINAGAR,

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BENGALURU-560 051.

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...RESPONDENTS

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(BY SRI. UNNIKRISHNAN M., ADVOCATE)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER PASSED BY THE R-2 DTD.01.08.2022 WHICH IS PRODUCED HEREIN ANNEXURE-E AND TAG THE W.P.NO.8128/2020 (T-RES) FILED BY THE PETITIONER CHALLENGING AND IMPUGNED OIA DTD.27.2.2020 PASSED BY THE ADDITIONAL COMMISSIONER OF GST (APPEALS) BENGALORE ALONG WITH THE PRESENT W.P. VIDE ANNX-A AND PERMIT THE PETITIONER TO ADOPT MAINTAIN AND REITERATE ALL THE GROUNDS INCLUDING THE PRAYER MADE THEREIN INCLUDING THE CHALLENGE TO VALIDITY AND VIRES OF RULE 89(4) OF THE CGST RULES 2017.

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THESE PETITIONS ARE COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP , THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR

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ORAL ORDER

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In W.P.No.8128/2020, petitioner seeks the following reliefs:

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“ (A) Declare that Rule 89(4) of the Central Goods and Services Tax Rules, 2017 framed by Respondent No.1 is invalid, unconstitutional and arbitrary beyond the provisions of Section 54(3) read with the Section 16(3)(b) of the Integrated Goods and Services Tax Act, 2017.

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(B) Denial of refund by the Appellate Authority is opposed to Section 16(3) of the IGST Act read with Section

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HC-KAR

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54(3) of the CGST Act, 2017 being violative of Article 14 and Article 265 of the Constitution of India;

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(C) Issue appropriate writ in the nature of certiorari by quashing the order of the Additional Commissioner of GST (Appeals-II) in GST A.No.20-25/2018 A-II ADC in No.0611/ADC/AII/GST/2020 dated 27.02.2020 which is produced herein as Annexure "E " as barred by limitation and lack of jurisdiction.

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(D) Issue appropriate writ in the nature of certiorari by quashing the order of the Additional Commissioner of GST (Appeals-II) in GST A.No.20-25/2018 A-ll ADC in No.0611/ADC/All/GST/2020 dated 27.02.2020 which is produced herein as Annexure "E" as filed by the Respondent No.4 before the Additional Commissioner (Appeals) when authorisation under Section 107(2) of the Central Goods and Services Tax Act, 2017 was granted to the Commissioner of Central Tax (Appeals) against orders passed for August, 2017 to December, 2017.

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(E) Issue appropriate writ in the nature of mandamus directing the respondent No.4 to provide evidence of the communication of the order during July, 2018 when the office of the Adjudicating Authority who is subordinate to the respondent No.3 are situated in the same building.

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(F) Issue any other further order/orders or directions as this Hon'ble Court may deem fit and appropriate on the facts and circumstances of this case.”

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HC-KAR

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In W.P.No.16372/2022, petitioner seeks the following reliefs:

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“ (A) Issue appropriate writ in the nature of certiorari by quashing the impugned order passed by Respondent No.2 vide OIO No.14/ADC/BNW/GST/2022-23 dated 01.08.2022 which is produced herein as Annexure-“E”.

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(B) Tag the WP No.8218/2020(T-RES) filed by the petitioner challenging and impugning OIA No.0611/ADC/AII/GST/2020 dated 27.02.2020 passed by the Additional Commissioner of GST(Appeals), Bangalore along with the present petition as Annexure-“A” and permit the petitioner to adopt, maintain and reiterate all the grounds including the prayer made therein including the challenge to validity and vires of Rule 89(4) of the CGST Rules, 2017.

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(C) Issue any other further order/orders or directions as this Hon’ble Court may deem fit and appropriate in the facts and circumstances of this case”.

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Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

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A perusal of the material on record will indicate that petitioner having earlier applied for refund for the months of July, August, October, November and December 2017, the adjudicating authority / sanctioning authority proceeded to sanction refund in favour of the petitioner vide orders dated 12.01.2018 (July),

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HC-KAR

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25.01.2018 (August), 08.02.2018 (October), 26.03.2018

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(November) and 28.03.2018 (December).

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In pursuance of the said orders in relation to the aforesaid five months, appeals were preferred on 06.02.2019, 26.02.2019 and 27.02.2019, all of which were allowed by the Appellate Authority vide common order dated 27.02.2020. Aggrieved by which, the petitioner is before this Court by way of the present petitions.

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A perusal of the impugned order will indicate that though 5^th respondent – Appellate Authority in W.P.No.8128/2020 and 2^nd respondent – Appellate Authority in W.P.No.16372/2022 has referred to the specific contention urged by the petitioner that the refund sanction orders were passed in the year 2018 and the review orders were passed in the year 2019 beyond the period of six months as contemplated under Section 107(2) of the KGST Act were barred by limitation, the Appellate Authority has not rendered any finding in this regard. The Appellate Authority rejected the said contention by holding as under:

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“13. Needless to say that these very appeal has been arisen out such post audit exercise of the government. Hence the contention of the respondent that the appeal is time barred is not sustainable and unfounded. Further, their contention is not having

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HC-KAR

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any impact on the recovery of the erroneously refunded amount on the ITC availed on Capital Goods. In any case, irrespective of the appeal proceedings, the recovery of the erroneously refunded amount are still can be done by issuing notice under Section 73(1) of the Act. Moreover since the appeals are filed within condonable period, the same is condoned as per the Sub-section (4) of Section 107 of the CGST Act, 2017.”

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A perusal of the aforesaid finding recorded by the 5^th

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respondent – Appellate Authority will clearly indicate the same is contrary to the provisions contemplated under Section 107(2) of the KGST Act, which reads as under:

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“Section 107. Appeals to Appellate Authority.-

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(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

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(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of

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HC-KAR

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communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

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(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.

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(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

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(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.

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(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-

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(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

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(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order,¹ [subject to a maximum of³ [twenty] crore rupees], in relation to which the appeal has been filed.

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2[ Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty has been paid by the appellant.]

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(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.

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(8) The Appellate Authority shall give an opportunity to the appellant of being heard.

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(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:

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Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.

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(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

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(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order:

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Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing

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the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:

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Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74⁴ [or section 74A].

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(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.

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(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed:

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Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.

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(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.

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(15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf.

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(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.”

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HC-KAR

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A plain reading of the aforesaid provisions will indicate

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that the Joint Commissioner is entitled to issue directions to the Junior Officer to prefer an appeal within a period of six months from the date of communication of the order.

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In the instant case, the refund sanctioning orders having been passed in the year 2018, the Joint Commissioner took a decision to file an appeal beyond the statutory period of six months as can be seen from the undisputed material on record as stated hereinbefore and consequently, Appellate Authority clearly fell in error in coming to the conclusion that the appeal was not barred by limitation, which is contrary to the material on record and aforementioned provisions warranting interference by this Court in the present petitions.

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In the result, I pass the following:

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ORDER

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(i) The petitions are hereby allowed .

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(ii) The impugned order at Annexure – E dated 27.02.2020 passed by the 5^th respondent – Appellate Authority in W.P.No.8128/2020 and all consequent proceedings, notices, etc., are hereby quashed.

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HC-KAR

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(iii) The impugned order-in-original at Annexure – E dated 29.07.2022 / 01.08.2022 passed by the 2^nd respondent – Appellate Authority in W.P.No.16372/2022 and all further

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proceeds, notice, etc., are hereby quashed.

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Sd/(S.R.KRISHNA KUMAR)

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JUDGE

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SV

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List No.: 2 Sl No.: 1

M/S. Jeans Knit (P) Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

M/S. Jeans Knit (P) Ltd. v. Union of India

Case brief

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What the court decided

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