In Writ Petition (L) No. 25142 of 2022 -BOM HC- Bombay High Court grants relief to JEM Exporter, says justice should not be denied solely due to procedural lapses without affording the petitioner an opportunity to rectify such defects
Justice G. S. Kulkarni & Justice Jitendra Jain [02-08-2023]

Read Order: JEM Exporter v. Union of India and Ors

Chahat Varma

New Delhi, August 8, 2023: The Bombay High Court recently ruled in favour of JEM Exporter (petitioner), emphasizing that an appeal cannot be summarily dismissed or rejected based solely on procedural shortcomings. The Court stressed the importance of upholding principles of natural justice, stating that petitioners must be granted a fair opportunity to rectify defects or omissions before facing dismissal or rejection.

In this case, the petitioner had filed the petition to challenge the Order in Appeal issued by the Commissioner of Goods and Service Tax and Central Excise (Commissioner of Appeals), whereby, the Appellate Authority had upheld the rejection of the petitioner's application for revocation of the cancellation of their registration. Additionally, the Appellate Authority had upheld the Order-In-Original that imposed a demand of Rs.1,01,02,741 on the petitioner for violating the provisions of Section 16(2) of the Central Goods and Services Tax Act (CGST Act) and further levy of interest under Section 50 of the Act and penalties under Section 122(1) read with Section 74 of the CGST Act, 2017, and Section 125 of the CGST Act, 2017.

The two-judge bench of Justice G. S. Kulkarni and Justice Jitendra Jain took note that in his order, the Commissioner (Appeal) had observed that the petitioner had not furnished any challan or proof of pre-deposit. The Commissioner (Appeal) further observed that the submission of a certified copy of the order against which the appeal was filed had not been complied with, and additionally, the appeal lacked the signature of the proprietor. The petitioner had also failed to provide an authority letter from the signatory. However, despite this finding, the Commissioner (Appeal) went on to address the merits of the case and upheld the cancellation of registration.

The bench opined that the Commissioner (Appeal) acted unjustifiably by proceeding to make a decision on the merits of the case, despite having concluded that the grounds of no proof of pre-deposit, failure to submit a certified copy of the order, and non-compliance with authentication rules, warranted the rejection of the appeal.

The bench strongly asserted that justice should not be denied solely due to procedural lapses without affording the petitioner an opportunity to rectify such defects. According to the bench, the Commissioner (Appeal) should have issued a defect memo, requesting the Petitioner to provide proof of pre-deposit of tax as required by Section 107(6) of the CGST Act, 2017, furnish the certified copy of the order, and authenticate the appeal memo following Rule 26(2)(a) of the CGST Rules. The bench emphasized that since the Commissioner (Appeal) did not allow the Petitioner a chance to rectify the procedural flaw, the rejection of the appeal was not justified and went against the principles of natural justice.

In light of this, the Order in Appeal, was set aside, and the case was restored to the Commissioner (Appeal) for further review. The Commissioner (Appeal) was instructed to provide the petitioner with a defect memo outlining the procedural discrepancies and allowing ample opportunity for rectification.