The Department frequently shortcuts statutory adjudication by converting administrative return reminders into direct summary demand orders for late fees.
The following legal grounds examine why bypassing a formal Show Cause Notice, misidentifying aggregate turnover, and ignoring portal lockouts renders such automated demands legally unsustainable:
GROUND 1: FAILURE TO ADJUDICATE 'AGGREGATE TURNOVER' — GSTR-1
FIGURES CANNOT BE DIRECTLY EQUATED TO GSTR-9 ANNUAL TURNOVER
• Statutory Definition:
Section 47(2) explicitly caps the late fee at 0.25% of turnover in the State,
and return filing obligations under Section 44 hinge upon 'Aggregate Turnover'
under Section 2(6).
• No Legal Presumption: Nowhere in the CGST/OGST Act or Rules is it provided
that outward supplies reported in Form GSTR-1 automatically constitute the
annual 'Aggregate Turnover'. GSTR-1 is a fluid transaction statement subject to
multi-year amendments, debit/credit notes, and clerical errors.
• Adjudication Mandatory: Whenever computation is disputed, establishing the
turnover pool requires formal adjudication under Section 73/74 before levying
fees under Section 47.
GROUND 2: FOUNDATIONAL VOID — TOTAL NON-ISSUANCE OF MANDATORY
SHOW CAUSE NOTICE (SCN)
• An SCN is a
jurisdictional prerequisite for determining any tax, fee, or penalty under
Chapter XV of the Act.
• The Respondent skipped the mandatory SCN mechanism under Section 73/74,
jumping straight from an informal Section 46 intimation to a final summary
demand in Form DRC-07. A summary DRC-07 entry cannot legally exist without a
foundational adjudication order.
GROUND 3: GROSS VIOLATION OF NATURAL JUSTICE & SECTION 75(4)
OF THE CGST/OGST ACT
• The summary order
explicitly states that the demand was confirmed on account of a 'Non
satisfactory reply'.
• Once the Appellant's reply was deemed unsatisfactory, an active legal contest
arose. Under Section 75(4), granting a Personal Hearing is strictly mandatory
where an adverse decision is contemplated.
• Unilateral confirmation without an oral hearing violates Section 75(4) and
the basic tenets of natural justice guaranteed under Article 14 of the
Constitution of India.
GROUND 4: COMPLETE EXTINGUISHMENT OF JURISDICTION (FUNCTUS
OFFICIO) UNDER SECTION 44(2)
• Section 44(2) contains
an absolute statutory bar prohibiting the furnishing of an annual return after
3 years from its original due date (Due date for FY 2021-22 was 31/12/2022; the
3-year bar expired on 31/12/2025).
• The Section 46 notice was issued well after the statutory
window had permanently closed. The proper officer became functus officio
(lacked jurisdiction) to direct filing for FY 2021-22.
GROUND 5: APPLICATION OF THE DOCTRINE OF IMPOSSIBILITY (LEX NON
COGIT AD IMPOSSIBILIA)
• The electronic GST
Common Portal systemically blocked/locked the functionality to file FORM GSTR-9
for FY 2021-22 due to the expiry of the statutory period.
• Settled Maxim: Lex non cogit ad impossibilia (the law does not compel a
person to do that which is impossible). The Department cannot penalize the
Appellant for a compliance action blocked by the government's own digital
portal.
GROUND 6: MANDATORY STATUTORY FORM GSTR-3A BYPASSED (RULE 68 )
• Rule 68 mandatorily
requires that a notice to a return defaulter under Section 46 shall be issued
in FORM GSTR-3A electronically on the portal.
• Bypassing statutory Form GSTR-3A by issuing a manual letter violates the
locus classicus doctrine 'When a statute requires a thing to be done in a
particular manner, it must be done in that manner or not at all.'
GROUND 7: INAPPLICABILITY OF SUMMARY BEST JUDGMENT ASSESSMENT
UNDER SECTION 62
• Summary assessment
powers under Section 62(1) apply exclusively to defaults under Section 39
(GSTR-3B) and Section 45 (Final Return). Section 44 is intentionally excluded
by the legislature.
• Consequently, the Proper Officer has no statutory authorization to issue a
summary recovery order for GSTR-9 late fees without standard Section 73/74
adjudication.
GROUND 8: PREMATURE & UNLAWFUL INVOCATION OF RECOVERY
SECTIONS 78 & 79
• Sections 78 and 79 are
post-adjudication recovery provisions. A Section 46 intimation is merely an
administrative reminder, not an assessment order. Direct resort to recovery is
ultra vires and unlawful.
