Allahabad High Court Quashes GST Orders After Department Contradicts Its Own ‘No Dues’ Finding

The present writ petition has been filed by M/s Polestar Software Private Limited in the Allahabad High Court challenging GST orders dated December 31, 2023 and September 30, 2024, passed by the GST authorities.

The GST authority argued that the petition was time-barred by one and a half years, meaning it was filed beyond the statutory time limit allowed under the law. Therefore, the writ petition is liable to be dismissed on the ground of unexplained delay (laches). On the other hand, the petitioner claimed that the proceedings were initiated without jurisdiction. Initially, a show cause notice (DRC-01A) dated October 14, 2022, was issued for the financial year 2017-18; subsequently, another notice dated September 30, 2023, was issued for the same FY, even referring to the earlier notice.

The petitioner flagged that in the second notice dated September 30, 2023, the date for the personal hearing, i.e., October 10, 2023, was fixed prior to the last date for filing the reply, i.e., October 30, 2023. The petitioner quickly filed a reply to the notice, and the GST authority too accepted the explanation vide an order dated December 30, 2023, and clearly recorded that no tax was payable and no demand was outstanding.

Even after considering the reply, the authorities issued an order dated December 31, 2023, and thereafter rejected the petitioner’s appeal on September 30, 2024, without properly considering the earlier order that had already cleared the petitioner of any liability.

The Court observed that although the explanation for delay was not very strong, the key fact remained that once the order dated December 30, 2023 had accepted the petitioner’s reply and found no dues, it made the entire subsequent orders invalid. Accordingly, the court quashed the impugned GST orders dated December 31, 2023 and September 30, 2024, passed by the GST authorities, with no order as to costs.