“Uttarakhand High Court Permits Appeal Against Penalty Imposed Under UKGST Act for Delayed Show-Cause Notice, Cites Right to Raise Vehicle Interception Argument”

Court’s Decision:

The High Court of Uttarakhand disposed of the writ petition, granting the petitioner the liberty to file an appeal against the penalty order issued under the Uttarakhand Goods and Services Tax (UKGST) Act. The court allowed the petitioner to challenge the penalty and fine imposed, directing that the petitioner can raise all arguments before the appellate authority under Section 107 of the UKGST Act.

Facts:

The petitioner, whose vehicle was intercepted on September 7, 2024, by the State Tax Department, was later issued a show-cause notice on September 21, 2024, under Sections 130 and 122 of the UKGST Act. The petitioner contended that the show-cause notice was not issued within the stipulated time of seven days as required by Section 129 of the UKGST Act. Consequently, the respondent imposed a penalty on October 12, 2024, without considering the delayed notice.

Issues:

• Whether the delayed issuance of the show-cause notice under Section 129 of the UKGST Act affects the validity of the penalty imposed under Section 130.
• Whether the petitioner should be granted relief due to the procedural lapses by the respondents.

Petitioner’s Arguments:

The petitioner argued that the show-cause notice issued by the Assistant Commissioner was significantly delayed and exceeded the seven-day period required under Section 129 of the UKGST Act. This delay, according to the petitioner, vitiated the proceedings, and the subsequent penalty was unjustified.

Respondent’s Arguments:

The State’s counsel contended that the petitioner had not raised any objections to the show-cause notice and did not present any cause before the authority. As a result, the department passed the final order on October 12, 2024, imposing a penalty under Section 130 of the UKGST Act. The respondent also emphasized that the petitioner has the right to appeal under Section 107 of the UKGST Act.

Analysis of the Law:

Section 129 of the UKGST Act mandates that a show-cause notice must be issued within seven days of interception, and failure to adhere to this timeline could render subsequent proceedings questionable. The penalty imposed under Section 130, when coupled with a procedural violation, raises concerns about adherence to statutory timelines and due process. Additionally, the availability of an appeal under Section 107 ensures a further layer of judicial scrutiny in case of such disputes.

Precedent Analysis:

While the judgment did not cite specific precedents, it implied that procedural delays in issuing show-cause notices might be a ground for challenge, especially in tax-related penalties. The court’s decision to allow an appeal reflects the importance of procedural compliance in such cases.

Court’s Reasoning:

The court recognized the petitioner’s right to appeal the penalty imposed, considering that the petitioner could present all relevant arguments before the appellate authority. Although the petitioner did not raise objections to the show-cause notice earlier, the court allowed the opportunity for a full hearing before the appellate body, taking into account procedural fairness.

Conclusion:

The High Court of Uttarakhand disposed of the petition, permitting the petitioner to file an appeal before the Joint Commissioner (Appeal) under Section 107 of the UKGST Act, challenging the penalty order. The court clarified that the petitioner is entitled to raise all arguments, including the delayed issuance of the show-cause notice, before the appellate court.

Implications:

This decision underscores the importance of adhering to procedural timelines in tax proceedings under the UKGST Act. It reaffirms the taxpayer’s right to appeal even when initial objections are not raised, promoting procedural fairness. The outcome of the appellate hearing could set a significant precedent on the validity of penalties imposed following delayed show-cause notices.

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