High Court Restores Time-Barred Appeals for “Ends of Justice”; Imposes ₹75 Lakh Deposit Condition

Issue

Whether the High Court can exercise its extraordinary jurisdiction under Article 226 to restore statutory appeals that were dismissed by the Appellate Authority on the ground of delay (limitation), specifically when the Appellate Authority has no power to condone delay beyond the statutory period, but the original adjudication suffered from procedural defects like fixing the same date for reply and hearing.

Facts

• The Demand: The petitioner (Sudhir Kumar Ranjan) faced assessment orders for the financial years 2018-19 and 2019-20. The total demand confirmed was substantial:

  • Tax: ₹84.99 lakh

  • Interest & Penalty: ₹1.64 crore

  • Total: Approx. ₹2.49 crore.

• Procedural Defect: The petitioner highlighted a critical violation of natural justice in the original proceedings: the Adjudicating Authority had fixed the same date for filing a written reply and for the personal hearing. This effectively denied the petitioner an adequate opportunity to prepare and present their case.

• Appellate Dismissal: The petitioner filed appeals against these orders before the First Appellate Authority. However, these appeals were filed with a delay exceeding the maximum condonable period (3 months + 1 month) prescribed under Section 107 of the GST Act. Consequently, the Appellate Authority dismissed the appeals as time-barred, citing lack of statutory power to condone further delay.

• Writ Petition: The petitioner approached the Allahabad High Court, arguing that the procedural lapses and the high financial burden warranted judicial intervention despite the delay.

Decision

• The Allahabad High Court allowed the writ petition and restored the appeals.

• Limits of Appellate Authority: The Court acknowledged that under the GST Act, the Appellate Authority is statutorily barred from condoning any delay beyond the extended period (usually one month after the three-month limit). The dismissal by the authority was legally correct per se.

• Extraordinary Jurisdiction: However, the Court held that its powers under Article 226 are not fettered by the statutory limitation if “exceptional circumstances” or “peculiar facts” exist.

• Violation of Natural Justice: The Court found merit in the argument that fixing the same date for reply and hearing indicated a lack of adequate opportunity. To prevent a miscarriage of justice caused by this procedural flaw, the Court decided to intervene.

• Conditional Restoration: To balance the interest of the Revenue with the ends of justice, the Court directed the restoration of the appeals subject to a condition:

  • The petitioner must deposit ₹75 lakh with the department.

  • This amount serves as a security/pre-deposit to demonstrate bona fides given the delay.

• Outcome: Upon such deposit, the Appellate Authority was directed to hear and decide the appeals on merits.

Key Takeaways

• Article 226 vs. Section 107: While the Appellate Authority cannot condone delay beyond the statutory cap, the High Court can do so in writ jurisdiction if it finds that the original demand was passed in violation of natural justice.

• “Same Date” Hearing is Invalid: Scheduling the personal hearing on the same day as the deadline for the written reply is a procedural irregularity that courts often view as a denial of a fair hearing.

• Cost of Restoration: Taxpayers seeking restoration of time-barred appeals in High Court must be prepared to pay a significant amount (here, approx. 30% of the tax demand) as a condition for relief.

• Ends of Justice: The “ends of justice” argument is a powerful tool when a taxpayer is faced with a massive liability (₹2.5 cr) arising from an ex-parte or procedurally defective order.