No Order On Merits Can Be Passed If Appeal Is Defective For Non-Production Of Certified Copy: Bombay High Court

The Bombay High Court has held that if the appeal is defective for non-production of a certified copy, failure to deposit, or incorrect signatures, no order on merits can be passed. The appellate authority erred in law in passing an order on the merits.

The bench of Justice G. S. Kulkarni and Justice Jitendra Jain has observed that the Commissioner (Appeal), having not given an opportunity to the Petitioner to cure the procedural defect, was not justified in rejecting the appeal. It would be contrary to the principle of natural justice.

"In our view, justice cannot be denied for failure to comply with the procedure without giving an opportunity to the Appellant to rectify the procedural defects. In our view, the Commissioner (Appeal) ought to have issued a defect memo calling upon the Petitioner to produce the proof of pre-deposit of tax as per section 107(6) of the CGST Act, 2017, for filing the certified copy of the order and for authentication of the appeal memo as per rule 26(2)(a)," the bench observed.

The petitioner/assessee is in the business of exporting mobile handsets. The Petitioner is registered under the CGST Act, 2017 as a sole proprietor. It filed a claim for a refund of input tax credit in terms of Section 54(3) of the CGST Act. Instead of dealing with the refund claim, a show cause notice under Section 74 came to be issued, proposing cancellation of registration and denial of input tax credit on the ground that it was a case of fake ITC.

The Commissioner (Appeal) observed that, as per the investigation report, the persons from whom IJM Exporters had purchased the goods were non-existent. Therefore, the IJM Exporters had claimed a fake ITC, and since the Petitioner's purchases are from IJM Exporters, the Petitioner has also wrongfully availed of the ITC and made a claim for a refund.

The petitioner contended that the procedure has also not been followed and the registration cannot be cancelled by issuing a notice under Section 74 of the CGST Act. The Petitioner has stated that no demand could have been raised while processing the refund application, but at the most, an order could have been passed rejecting the refund application.

The department contended that the petitioner has failed to comply with the mandatory pre-deposit of 10% for entertaining the appeal under Section 107(6) of the CGST Act, 2017. The appeal memo was not signed by the proprietor of the petitioner, and, therefore, the Appellate Authority was justified in rejecting the appeal on merits.

The department contended that the petitioner has purchased goods from IJM, and the suppliers of IJM have been found to be non-existent. Therefore, the ITC claimed by the Petitioner is not genuine, and consequently, the Petitioner is not entitled to a refund.

The court has held that if the appellant is not directed to supply a certified copy of the adjudication order, then such an order would be in violation of the principle of natural justice.

Case Title: JEM Exporter Versus Union of India

Case No.: Writ Petition (L) No.25142 Of 2022

Date: 02/08/2023

Counsel For Petitioner: Bharat Raichandani

Counsel For Respondent: Jitendra B. Mishra

Click Here To Read The Order