Appeal restored despite substantial delay; Discrepancy between SCN and Order noted

Appeal restored despite substantial delay; Discrepancy between SCN and Order noted

Issue

Whether an appeal against the cancellation of GST registration, which was dismissed as time-barred, should be restored for a hearing on merits when the delay is substantial, but the cancellation order was based on a ground (non-existent business) never alleged in the Show Cause Notice (SCN).

Facts

• Cancellation Reason: The petitioner’s GST registration was cancelled primarily on the ground that returns were not furnished.

• The Discrepancy: The petitioner pointed out a serious legal flaw: the Cancellation Order also stated that the “principal place of business was found to be non-existent.” However, this specific allegation was never mentioned in the Show Cause Notice (SCN).

• Appellate Dismissal: The petitioner filed an appeal under Section 107, but it was dismissed by the Appellate Authority solely on the ground of limitation (barred by delay).

• Petitioner’s Plea: The petitioner approached the High Court challenging both the cancellation and the appellate dismissal, arguing that their case was never heard on merits despite the glaring error in the adjudication process.

Decision

• Reference to Precedent: The High Court took note of the recent ruling in Ganpati Polymers v. Commissioner of CGST [2025], where the Court had extended the timelines for filing appeals in certain cases.

• Merits over Limitation: Although the Court acknowledged that the delay in filing the appeal was “substantial,” it emphasized that the petitioner’s contention regarding the invalidity of the cancellation order (traveling beyond the SCN) had not been considered on merits.

• Restoration with Cost: To balance the interest of justice with the procedural lapse (delay), the Court ordered the appeal to be restored and heard on merits.

• Condition: This relief was subject to the petitioner paying a cost of Rs. 25,000.

• Outcome: The petition was allowed in favor of the assessee, giving them a second chance to defend their registration.

Key Takeaways

• Travel Beyond SCN is Fatal: An adjudication order cannot invent new charges. If the SCN says “Non-filing of returns” but the Order says “Fake Firm/Non-existent place,” the order is legally unsustainable because the taxpayer was never given a chance to defend against the second charge.

• Condonation comes at a Price: Courts may overlook statutory limitation periods to ensure substantive justice, especially when the department’s order is flawed, but they will often impose a monetary cost (in this case, Rs. 25k) to penalize the delay.

• Merit-based Review: The judiciary prefers that tax disputes be decided on their merits rather than being dismissed on technicalities like limitation, provided the delay is not malafide.