CGST appeal pre-deposit on disputed tax only u/s 107(6)(b), not interest, penalty or fine; order set aside

Section 107(6)(b) of the CGST Act was construed to require pre-deposit of 10% only of the "remaining amount of tax in dispute" and not of the composite demand including interest, penalty, fine, or fee. Relying on the principle that statutory language is determinative of legislative intent and courts cannot supply omissions, the HC held that the legislature deliberately confined the pre-deposit to disputed tax, treating penalty, fine, fee and interest as consequential to tax determination. The appellate authority therefore lacked justification to insist on 10% deposit of tax plus fine equivalent to goods value, as this would defeat the statutory option where entire tax liability is disputed. The impugned pre-deposit direction was set aside and the petition was allowed.

---

---

Issues involved:
The judgment addresses the issue of the maintainability of an appeal under Section 107(6) of the Central Goods and Services Tax Act, 2017, specifically focusing on the pre-deposit requirement for filing an appeal.

Summary:

Issue 1: Interpretation of pre-deposit requirement under Section 107(6) of the CGST Act

The petitioner challenged the appellate authority's decision to decline admission of the appeal due to non-compliance with the pre-deposit mandate. The petitioner argued that the pre-deposit amount should only include the disputed tax amount and not penalty, fine, or interest. Citing judgments from the High Courts of Patna and Allahabad, the petitioner contended that the appellate authority erred in calculating the pre-deposit amount. On the other hand, the AGA argued that the petitioner, by disputing the entire amount, must pay 10% on the total sum determined by the Enforcement Officer. The court analyzed Section 107(6) of the CGST Act, emphasizing that the pre-deposit must cover the tax, interest, fine, fee, and penalty admitted by the appellant and 10% of the remaining disputed tax amount.

Issue 2: Legislative intent and statutory interpretation

The court delved into the legislative intent behind the pre-deposit requirement, highlighting the deliberate exclusion of disputed interest, fine, fee, and penalty from the pre-deposit calculation. By focusing on the disputed tax amount for the 10% pre-deposit, the court emphasized that penalties and fines are consequential to the tax liability determination. The court referred to legal principles and judgments to support the interpretation that the pre-deposit obligation pertains solely to the contested tax amount, aligning with the legislative design to prioritize the financial commitment related to the primary tax liability in appeals.

Conclusion:

The court allowed the writ petition, setting aside the appellate authority's decision on the pre-deposit amount. It directed the appellate authority to admit the appeal since the petitioner had already deposited 10% of the tax liability. The judgment clarified that the legislative intent, as construed from Section 107(6)(b) of the CGST Act, mandates pre-deposit only on the tax liability when the appellant contests the entirety of the tax liability, excluding penalties, fees, or interest from the pre-deposit requirement.

---