Allahabad HC to fix cost on GST Official for Software Glitches Causing Harassment of Assessee’s

It has been over three years since the introduction of GST, but there still continues to be several areas of drawbacks of the GST portal. Even today the GST portal is not error or glitch free. Taxpayers are unable to access GST Return filing system before deadline runs out. The taxpayers are complaining about the continuous inconvenience they face while filing GST Returns. This is the story every month as the GSTN website stop working for hours during last days of filing returns. Frequent technical glitches of the GST Network website are become a big cause of inconvenience for taxpayers and other compliances continue to get affected due to these tech snags.

The Allahabad High Court (HC) in the case of M/s Ansari Construction vs Additional Commissioner Central Goods and Services Tax (Appeals) 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. HC 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.

Why was the petition filed?

Petition was filed to request the HC to allow this Recall Application and to recall or suitably modify the order passed by it to the extent that the directions regarding payment of cost of Rs.10,000 from the Applicant’s salary as well as other observations made personally against the applicant may be directed to be deleted from the order, and/or, pass such other and further order which HC may deem fit and proper in the facts and circumstances of the case, otherwise the applicant shall suffer irreparable loss and injury.

The petitioner further sought recall of the order to the extent that it directed 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.

What was the previous order passed by the HC?

• The petitioner was a proprietorship firm and was registered for providing constructions services.
• The petitioner was served show cause notice by the respondent proposing to cancel the registration certificate of the petitioner mainly on the ground that the petitioner had failed to file the return for a continuous period of six months.
• In pursuance of the said notice, an ex-parteorder was passed cancelling the registration of the petitioner by invoking the powers under Section 29(2)(5) of UP GST Act 2017.
• The petitioner filed an application under Section 13 for revocation of cancellation of registration on the ground that the petitioner had submitted all the pending returns under GSTR-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 issued a show cause notice calling upon the petitioner to show cause, failing which the application of the petitioner shall be decided on ex-parte on the basis of the available records on merits.
• Aggrieved against the said order, the petitioner preferred an appeal before the appellate authority.
• The Appellate Authority, dismissed the appeal and affirmed the order to the effect that tax payer did not upload any documents online while replying to the query.
• As the petitioner had simply stated that all the liabilities were cleared by them, even they had not disclosed as to on what date they filed return and did not enclose the copy filed by them and the tax payer simply made claims without producing proper evidence which could not be verified by the division office at this stage.
• The Appellate Authority further recorded that the proper Officer was not satisfied under Rule 23 and in the absence of statutory returns, the facts could not be verified at that level and, thus, proceeded to dismiss the appeal.
• HC could not overlook the mutually contradictory stands taken by the Department before the Appellate Authority on one hand and the instructions given to HC which was:
• The taxpayer has filed GSTR-3B up to November 2019.
• Further, there are no dues pending towards tax, late, fee interest up to November 2019.
• It was surprising to HC, that as to why these instructions could not be obtained or given at the level of the adjudication or appellate level and the callous attitude of the Department has resulted in the assessee being harassed by approaching one forum after the other and wasting his considerable financial resources as well as time.
• Considering the fact that now the Department had accepted that the returns were filed within time and no dues remain payable, a direction was given to allow the application for revocation of registration filed by the petitioner.
• Consequently, the order cancelling the registration was revoked from the date of filing of the application.
• In view of the specific findings recorded above to the effect that the petitioner was unnecessarily harassed, the writ petition is allowed with a cost of Rs. 10,000 to be paid to the petitioner within 30 days by the respondent from his own salary.

What was submitted by the petitioner in the current petition?

• HC while passing the order dated 24.11.2020 had quoted the show-cause notice dated 29.12.2019 issued to the petitioner therein, the said show-cause notice was issued by the applicant himself.
• Counsel for the applicant stated that while uploading the contents to be included in the show-cause notice, the applicant had mentioned that interest due arising from late filing of return was not paid
• It was argued that the said constituted the reasons for issuance of the said notice.
• However, he did not disagree that actually the show-cause notice quoted in the order (not containing any reasons) was served upon the petitioner.
• He further argued that after this order dated 29.11.20 was passed by HC, an inquiry was conducted wherein it came that the applicant had indeed uploaded the remarks as quoted above, however, the same were not included in the show-cause notice and the service agency namely ‘Wipro’ was probably at mistake and the applicant states that it was a technical error for which the technical team is analysing and the outcome would be communicated shortly.
• Counsel for the applicant categorically stated that the present application was filed in the personal capacity and he was not defending any action at the behest of the department that may have led to the petitioner to file a petition before HC.

Observations of the HC

• From the submission it appeared that the system and the operators were solely responsible for the harassment being meted out to the poor assesses.
• As the enquiry referred to by the counsel of the applicant was not on record, HC was unable to decipher whether, the harassment to the taxpayer was a personal one or the system/service provider is to be blamed.
• Thus, HC deemed it fit that the respondent was directed to file its response with regard to the submissions made by the applicant so that HC may fix the liability on the relevant person.

In view of the fact that HC will now 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. HC was of the view that a direction for payment of cost as against the applicant and the observations shall remain stayed till the next date.

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