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M/S. S A IRON AND METAL vs THE ASSISTANT COMMISSIONER
W.P.No.15490 OF 2023, HIGH COURT OF ANDHRA PRADESH
Background:
The petitioner, a registered dealer in iron scrap, faced an order from the Assistant Commissioner (ST) after an inspection, specifying a taxable sum of Rs. 5,48,29,347 encompassing tax, penalty, and interest.
The petitioner challenged the order through an appeal before the Additional Commissioner (ST) and requested the condonation of a 25-day delay in filing the appeal due to financial constraints.
The petitioner’s bank accounts were frozen, affecting his ability to pay the mandatory 10% pre-deposit of the disputed tax required for filing the appeal.
Also, the provisional attachment orders issued to the banks as well as to the dealers to whom Petitioner has supplied goods and yet to receive the consideration disrupted the financial situation.
Respondent No.2 (Additional Commissioner) rejected the appeal on grounds that the delay was not convincingly justified.
Arguments of Petitioner:
The Petitioner’s appeal was filed within the condonable period of limitation, and the delay should be considered given the genuine reasons presented.
The freezing of the petitioner’s bank accounts and the notices issued to dealers who owed the petitioner money had severely affected his financial situation and ability to make the mandatory pre-deposit.
The Appellate Authority should have exercised its discretion to condone the delay due to the compelling circumstances preventing the petitioner from complying with the pre-deposit requirement.
The impugned order was untenable under the law, and the petitioner sought for it to be set aside.
Arguments of Respondent:
The Respondent contends that the challenged Order is well-reasoned; the authority doubts the credibility of the petitioner’s claim of facing an unforeseen financial crisis as no details were provided. Rejection of the appeal is deemed appropriate and dismissal of the petition is requested.
Judgement:
The Hon’ble Court, analyzed the provisions Section 107 that deals with appeals to the Appellate Authority including the interpretation of the term “sufficient cause” in the context of seeking condonation of delay.
The Court emphasized that while length of delay is not paramount, the cause for delay should be the crucial consideration.
It was opined that “When the bank account of the petitioner is freezed by the authorities, it is a relevant fact to consider the delay since the pre-deposit of 10% disputed tax at the time of filing of the appeal is mandatory. The view taken by the learned Commissioner appears to be forcing the horse to run after tying the legs.”
The Court held that the right of appeal is a substantive right granted by statute and cannot be denied on a pedantic basis. The provisions of the GST Act, especially Section 107(4), allow for condonation of delay when sufficient cause is shown.
The Court concluded that the reasons presented by the petitioner were sufficient to entertain the appeal and that the impugned order was incorrect in rejecting it.
