HC standardizes GST appeal pre-deposit at 30% total, reduces burden on assessees pending tribunal constitution

The HC addressed inconsistencies in interim orders regarding pre-deposit amounts in GST appeals where the second appellate tribunal was not constituted by the Government. The court held that similarly situated assessees should receive identical treatment to avoid Article 14 violations. Instead of requiring 50% pre-deposit, the court standardized the requirement to 20% additional deposit (beyond the initial 10% paid to first appellate authority), totaling 30%. The court emphasized assessees cannot be penalized for Government's failure to constitute the tribunal. Recovery proceedings were stayed subject to the prescribed deposit, with the matter listed after six weeks.

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Issues Involved:
1. Denial of statutory right to a second appeal due to non-constitution of the Appellate Tribunal.
2. Inconsistency in interim orders regarding the amount of pre-deposit required.

Summary:

Issue 1: Denial of Statutory Right to a Second Appeal
The petitioner challenged the order of the first appellate authority under the Uttar Pradesh Goods and Services Tax Act and the Central Goods and Services Tax Act. The second appeal lies before the Appellate Tribunal under Section 112 of the respective Acts. However, the Appellate Tribunal has not been constituted, denying the petitioner the statutory right to a second appeal. The court cited the Supreme Court's observation in *Supdt. of Taxes v. Onkarmal Nathmal Trust*, emphasizing that "executive inertia cannot become the cause of denial of a statutory right." The petitioner invoked the extraordinary jurisdiction under Article 226 of the Constitution of India due to this denial.

Issue 2: Inconsistency in Interim Orders Regarding Pre-Deposit
The court noted inconsistencies in interim orders concerning the amount of pre-deposit required. Some orders required a deposit of 30% of the disputed tax amount, while others required 50%.

- 30% Pre-Deposit Orders:
- *M/S Kent Cables Pvt. Ltd. vs. State Of U.P.*: The petitioner was permitted to deposit 20% of the remaining disputed tax amount, in addition to the 10% already deposited before the first appellate authority.
- *M/S Tulsi Steels vs. State Of U.P.*: The petitioner was directed to deposit 30% of the disputed tax amount.
- *M/S Nandan Sales Corporation vs. State Of U.P.*: Similar direction to deposit 30% of the disputed tax amount.

- 50% Pre-Deposit Order:
- *M/S Virender Kumar Projects Pvt Ltd vs. State Of U.P.*: Directed to deposit 50% of the disputed tax amount.

The court highlighted the need for consistency in interim orders, referencing *Siliguri Municipality v. Amalendu Das* and *Vishnu Traders v. State of Haryana*, which emphasized the importance of uniformity in judicial discretion. The court also cited the Supreme Court's decision in *Bir Bajrang Kumar v. State of Bihar*, which stressed identical treatment in cases involving similar issues to avoid discrimination and uphold Article 14 of the Constitution.

The court concluded that the statutory requirement under Section 112 of the GST Acts is a 10% deposit before the first appellate authority and an additional 20% before the second appellate authority. Imposing a 50% deposit penalizes the assessees for the government's failure to constitute the tribunal. Therefore, the court preferred the view that required a 30% total deposit (10% + 20%).

Final Direction:
The petitioner was directed to deposit 20% of the disputed tax liability in addition to the 10% already deposited. Subject to this deposit, recovery proceedings for the balance amount shall remain stayed until the decision of the writ petition. The respondents were given four weeks to file a counter affidavit, and the petitioner two weeks thereafter to file a rejoinder. The case was listed for hearing after six weeks.

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