High Court quashes dismissal of GST appeal over Section 107(6) pre-deposit and authorization issues

The Bombay HC quashed the dismissal of petitioner's appeal and remanded the matter for fresh consideration. The appellate authority had dismissed the appeal citing non-payment of mandatory 10% pre-deposit under Section 107(6) of CGST Act, 2017 and lack of authorization documents under Companies Act, 1956. The HC found that the authorized signatory's credentials were verifiable on the GSTN portal, and the respondent failed to conduct proper verification. Following precedent from TATA CONSUMER PRODUCTS case, the court set aside the impugned order and directed de novo consideration by the appellate authority.

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Issues:
1. Compliance with pre-deposit requirement under Section 107(6) of the CGST Act, 2017.
2. Submission of valid documents, such as a Board resolution, to establish authorized signatory for appeals under the Companies Act, 1956.

Analysis:
1. The primary issue in this case pertains to the compliance with the pre-deposit requirement under Section 107(6) of the CGST Act, 2017. The Petitioner had paid a pre-deposit amount of Rs. 4,42,55,474/-, equivalent to 10% of the disputed tax amount, when filing the appeal. The court found that the Petitioner had indeed made the necessary pre-deposit as evidenced by the screenshots of the Electronic Credit Ledger and Electronic Cash Ledger, along with the system-generated provisional acknowledgement of the appeal. The court emphasized that if the Respondent was dissatisfied with the amount claimed to have been paid, they should have provided the Petitioner with an opportunity to clarify and prove the payments made.

2. The second issue revolves around the submission of valid documents, specifically a Board resolution appointing the authorized signatory for signing appeals under the Companies Act, 1956. The court noted that the Petitioner, in this case, had not been asked to submit such documents by the Respondent. However, the court observed that a screenshot from the GSTN Portal demonstrated that the individual signing the appeal documents was duly authorized. The court highlighted that a simple check by the Respondent on the GSTN portal would have revealed the authorization status of the signatory, emphasizing the need for due diligence on the part of the authorities.

3. The judgment referenced similar cases where orders were set aside and remanded for de novo consideration due to issues related to pre-deposit compliance and submission of valid documents. The court cited instances where the Appellate Authority's failure to verify the authority of the signatory or communicate requirements to the Appellant led to the orders being quashed and remanded. The court directed that the appeal must be disposed of by a specified date, ensuring that all rights and contentions of the parties are preserved while refraining from making observations on the merits of the matter.

4. Ultimately, the court quashed the impugned order and remanded it for de novo consideration, emphasizing the importance of providing the Petitioner with a personal hearing, issuing a reasoned order, and ensuring timely disposal of the appeal. The court maintained that all rights and contentions of the parties remain open, clarifying that no observations on the merits of the case were made. The Rule was disposed of without any orders for costs, concluding the judgment.

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