Calcutta High Court Allows GST Appeal Beyond Normal Time Limit Due to Medical Exigencies
Background of the Dispute
The matter in Protiva Vs Deputy Commissioner of State Tax (Calcutta High Court) arose from an ex parte adjudication under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act). The writ petitioner, a partnership firm registered under both the West Bengal Goods and Services Tax Act, 2017 and the CGST Act, is engaged in providing Events, Exhibitions, Conventions and Trade Shows Organization and Assistance Services (SAC:998596).
The controversy originated from an alleged excess availment of input tax credit (ITC) for the financial year 2018-19, discovered through a system-based comparison of GSTR-3B vs GSTR-2A. According to the department’s data, there appeared to be excess ITC of Rs. 12,54,913.86 claimed by the assessee.
The assessee challenged the ex parte order passed on 25.1.2024 under Section 73(9) in Form GST DRC-07, and approached the Calcutta High Court seeking relief primarily on the ground of violation of principles of natural justice and medical exigencies of the partners.
Timeline of Key Events
4.7.2019 – Discrepancy Intimation
- Respondent authority emailed the assessee pointing out mismatch in ITC as per GSTR-3B vs GSTR-2A for FY 2018-19.
- System data indicated that ITC of Rs. 12,54,913.86 had been allegedly over-availed.
Reconciliation by the Assessee
- The assessee submitted a reconciliation statement asserting that:
- Inward supplies received during January to March 2018 resulted in ITC of Rs. 13,16,816.10.
- ITC of Rs. 60,300 pertaining to FY 2017-18 had been claimed in FY 2018-19.
- After adjusting this, the assessee calculated net ITC for FY 2018-19 at Rs. 12,56,516.
- Against this figure, the assessee had actually claimed ITC of Rs. 12,54,914, leaving a difference of Rs. 1,601.64 unclaimed, and contended that there was no excess availment of ITC.
- The assessee submitted a reconciliation statement asserting that:
4.12.2023 – Show Cause Notice under Section 73(1)
- As the alleged excess ITC of Rs. 12,54,913.85 was not deposited, the department issued a show cause notice in Form GST DRC-01 under
Section 73(1)of theCGST Act.
- As the alleged excess ITC of Rs. 12,54,913.85 was not deposited, the department issued a show cause notice in Form GST DRC-01 under
25.1.2024 – Ex Parte Order in Form GST DRC-07
- The adjudicating authority passed an order under
Section 73(9)in Form GST DRC-07 on 25.1.2024, without any reply on record from the assessee, leading to a substantial demand of tax, interest and penalty. - This order became the subject matter of the writ petition before the Calcutta High Court.
- The adjudicating authority passed an order under
Arguments Raised by the Assessee
1. Medical Exigencies and Inability to File Reply
The assessee submitted that:
- The partners of the firm were facing serious medical emergencies, supported by medical records placed on the court record.
- Due to these exceptional health issues, the firm could not file a reply to the show cause notice or participate in the personal hearing.
- Consequently, the ex parte order dated 25.1.2024 was not the result of deliberate non-compliance, but an outcome of circumstances beyond the firm’s control.
2. Violation of Principles of Natural Justice
Counsel for the assessee argued:
- The adjudication proceedings were not conducted in accordance with law.
- Adequate and effective opportunity of being heard was not practically available to the assessee, especially in view of the medical exigencies.
- The ex parte order under
Section 73suffered from serious procedural irregularities and was contrary to the principles of audi alteram partem. - Such an order, being passed without a fair chance of representation, was liable to be set aside.