Right to appeal to turn illusory without reasoned order to tax demand, penalty under CGST Act: SC
New Delhi: The Supreme Court has held that passing a reasoned order, despite payment of penalty on issuance of show cause notice under Central Goods and Services Tax Act, 2017 is mandatory, particularly when protest or dispute is raised.
A bench of Justices J B Pardiwala and R Mahadevan said that the right to appeal under Section 107 of the CGST Act, 2017 is predicated on the existence of a formal adjudication order, and its absence renders the right illusory.
The court said the proper officer is duty-bound to pass a formal order in Form GST MOV-09 and upload a summary thereof in Form GST DRT 07 as mandated under Rule 142(5) and the circular of April 13, 2018, so as to enable the taxpayer to avail the appeal remedy as per law.
"While Section 129(5) of the 2017 Act provides that proceedings shall be deemed to be concluded upon payment of tax and penalty, this deeming fiction cannot be interpreted to imply that the assessee has agreed to waive or abandon the right to challenge the levy, a right that is protected by the very enactment itself," the bench said.
The court explained the term “conclusion” as used in Section 129(5) merely signified that no further proceedings for prosecution will be initiated.
