GST Appeal Dismissal Reversed: Court Rules Blocked Credit Ledger Cannot Substitute Section 107(6) Pre-Deposit Requirement

The HC quashed an appellate order that had dismissed a GST appeal for non-payment of pre-deposit. Despite the petitioner's electronic credit ledger being blocked (with approximately Rs.1.83 Crore with the State), the Court held that this did not satisfy the Section 107(6) CGST Act requirement for pre-deposit. The Court set aside the dismissal order and directed the petitioner to deposit Rs. 18,35,721.81 or 10% of total tax dues (whichever was higher) within two weeks, after which the appeal would be reinstated for hearing on merits before the Joint Commissioner of State Tax (Appeal).

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Issues:
1. Quashing of appellate order based on non-payment of pre-deposit.
2. Blocking of electronic credit ledger leading to dismissal of appeal.
3. Interpretation of Section 107(6) of the CGST Act regarding pre-deposit requirements.
4. Request for rehearing of appeal on merits.

Analysis:
The petitioner sought to quash an appellate order that dismissed the appeal due to non-payment of the pre-deposit amount. The petitioner emphasized that the electronic credit ledger had been blocked, resulting in approximately Rs.1.83 Crore being with the State exchequer. The petitioner was willing to make the 10% pre-deposit and requested a rehearing on merits. Citing a Gujarat High Court judgment, the petitioner argued for a similar direction in their case.

The respondent State clarified that the petitioner misunderstood the availability of tax dues with the State exchequer for appeal purposes under Section 107(6) of the CGST Act. However, they did not oppose the petitioner's request to make the pre-deposit for rehearing the appeal.

The Court examined the facts and noted that the appeal was solely dismissed for non-payment of the 10% tax dues deposit. Without delving into the case's merits, the Court decided to allow the petitioner's plea for rehearing upon depositing the required amount. The appellate order was set aside, and the petitioner was directed to deposit Rs. 18,35,721.81 or 10% of the total tax dues, whichever was higher, within two weeks. Upon compliance, the appeal would be reinstated for a hearing on its merits by the Joint Commissioner of State Tax (Appeal).

In conclusion, the Court disposed of the writ petition, granting the petitioner the opportunity for a rehearing subject to fulfilling the pre-deposit condition as mandated by Section 107(6) of the Act.

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