The Allahabad High Court has in its recent ruling in the case of M/s Ansari Construction has sought the response of the Central Goods & Services Tax (CGST) Authority in a case relating to technical glitches in its software for issuing online show cause notices to alleged defaulters. The Court also decided to ascertain the liability of the person concerned whosoever he may be, for the glitches that have occasioned harassment to the petitioner and to fix cost thereafter on the person concerned.
Facts of the case:
The petitioner, M/s Ansari Construction was served show cause notice by the the Assistant Commissioner, CGST proposing to cancel the registration certificate of the petitioner mainly on the ground that the petitioner has failed to file the return for a continuous period of six months.The reason specified for the same in the notice read as under:
“Reason for revocation of cancellation – Others”
In pursuance of the notice, an ex-parte order was passed cancelling the registration of the petitioner by invoking the powers under Section 29(2)(5) of Uttar Pradesh Goods and Services Tax, 2017.
The petitioner filed an application under Section 13 of U.P. GST Act 2017 for revocation of cancellation of registration on the ground that the petitioner had submitted all the pending returns under GST-3B and GSTR-1 and, thus, the entire tax liability stood clear with the late fees.
In response to the application filed by the petitioner the respondent authority which was completely vague and did not even point out as to what ground the reply was proposed to be sought, the petitioner appeared and apprised that all the returns have already been filed, however, despite the petitioner having replied, the respondent authority rejected the application for revocation of registration.
The petitioner further seeks recall of the order to the extent that it directs for payment of cost of Rs.10,000 from the applicant as well as the observations made personally against the applicant and prays that the same may be deleted or expunged.
Order of Allahabad High Court:
A Single Bench of Justice Pankaj Bhatia noted that due to the said glitch, a concerned assessee was merely served the show cause notice via e-post, without the reasons for issuance of such notice, thereby rendering him incapable of effectively defending/ presenting his case before the authority.
“It appears that the system and the operators are solely responsible for the harassment being meted out to the poor assesses…this Court is unable to decipher whether, the harassment to the taxpayer is a personal one or the system/service provider is to be blamed,. Thus, I deem fit that the respondent no. 3 is directed to file its response with regard to the submissions made by the applicant so that this Court may fix the liability on the relevant person “ the Court said while issuing notice to the Revenue Secretary (Tax).
It may be noted here that the Court earlier vide its order dated November 21, 2020 had observed that on account of the authority’s arbitrary action in serving the notice without clearly mentioning the reasons, the assessee was forced to approach one forum after the other, wasting his considerable financial resources as well as time, despite the fact that it had submitted all the pending returns along with late fees.
It thus imposed cost of Rs. 10,000/- on the Assistant Commissioner, vide order dated November 21, 2020, for demonstrating lack of legally trained mind. It further directed that the cost shall be paid to the petitioner within 30 days by the Assistant Commissioner from his own salary.
During the hearing held on January 11, the Assistant Commissioner urged the Court to recall its November 21 order and expunge the remarks made personally against him.
The Counsel appearing for the Assistant Commissioner, submitted that while uploading the contents to be included in the show-cause notice, he had mentioned the following remarks:- “Interest due arising from late filing of return has not been paid”.
He further submitted that whereas he had duly mentioned the reason for issuing show cause notice, the same were not included in the e-post due to technical error for which the technical team is analysing and the outcome would be communicated shortly. It was argued that the service agency namely ‘Wipro’ is probably at mistake.
Based on these submissions, the Hon’ble Court decided to ascertain the liability of the person concerned whosoever he may be, for the glitches that have occasioned harassment to the petitioner and to fix cost thereafter on the person concerned.
It directed Standing Counsel to file the Government’s response on or before the next date fixed.
The Bench further proceeded to stay the November 21 order for payment of cost of Rs 10,000/- to the Petitioner till the next date, i.e. February 3, 2021.
READ / DOWNLOAD ORDER:
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
