2025 (3) TMI 607 - HC - GST

Court Rules Timing of Statutory Deposit Shouldn't Dismiss GST Appeal, Emphasizing Right to Appeal Under Section 107(6)(b).

The Court held that the Appellate Authority erred in dismissing the appeal based solely on the timing of the statutory deposit. Interpreting Section 107 ... Appeal of petitioner rejected solely on the ground that the statutory deposit of 10% is not deposited along with appeal - HELD THAT:- Section 107 of the 2017 Act provides for appeal against decision or order passed under the Act and it also prescribes three months time to file appeal from the date of communication of the order. Further, one month extended time is provided under Section 107 (4) of 2017 Act to file appeal and the said period could be condoned if acceptable cause is shown - Section 107 (6) (b) of 2017 Act states that no appeal shall be filed under Section 107 (1) of 2017 Act, unless the appellant pay a sum equal to 10% of the remaining amount of tax in dispute arising from the order under appeal. In the instant case, though the petitioner has not deposited the amount as required under Section 107 (6) (b) of 2017 Act along with appeal, but deposited the said 10% of the amount within five days from the date of filing of the appeal. Both filing of the appeal and deposit as required under Section 107 (6) (b) of 2017 Act was within the period of limitation prescribed under Section 107 (1) of 2017 Act. A liberal interpretation is to be given to Section 107 (6) of 2017 Act and if the statutory deposit as required is made within the limitation prescribed under Section 107 (1) of 2017 Act, then it shall be treated as deposit made along with appeal. The petitioner filed an appeal as well as deposited the statutory deposit within the period of limitation prescribed under Section 107 (1) of 2017 Act. Conclusion - The Appellate Authority's rejection of the appeal on the sole ground of timing of the deposit was erroneous. The statutory deposit, being made within the limitation period, fulfilled the legal requirements, and the appeal should be considered on its merits. Petition allowed. ISSUES PRESENTED and CONSIDEREDThe core legal question considered by the Court was whether the Appellate Authority erred in rejecting the petitioner's appeal solely on the ground that the statutory deposit of 10% of the disputed tax amount was not deposited simultaneously with the filing of the appeal, despite being deposited within the limitation period prescribed by the Goods and Services Tax Act, 2017 (hereinafter referred to as the '2017 Act').ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework primarily revolves around Section 107 of the 2017 Act, which governs the filing of appeals against decisions or orders made under the Act. Section 107 (1) stipulates a three-month period from the date of communication of the order to file an appeal, with an additional one-month extension available under Section 107 (4) upon showing acceptable cause. Importantly, Section 107 (6) (b) mandates that an appellant must pay 10% of the disputed tax amount before filing an appeal.Court's interpretation and reasoning:The Court interpreted Section 107 (6) (b) of the 2017 Act with a liberal approach, emphasizing that the statutory deposit made within the limitation period should be considered as being in compliance with the requirement to deposit the amount 'along with the appeal.' The Court reasoned that the legislative intent behind the statutory deposit is to secure the revenue and not to obstruct the right to appeal. Therefore, as long as the deposit is made within the prescribed timeframe, it should not be a ground for appeal dismissal.Key evidence and findings:The petitioner filed the appeal on 02.12.2021, and the statutory deposit was made on 07.12.2021. Both actions were within the three-month limitation period provided under Section 107 (1) of the 2017 Act. The Court found that the Appellate Authority's decision to dismiss the appeal was solely based on the timing of the deposit, without considering that it was made within the permissible period.Application of law to facts:Applying the law to the facts, the Court concluded that the petitioner's compliance with the statutory deposit requirement within the limitation period satisfies the conditions of Section 107 (6) (b). The timing of the deposit, being within five days of the appeal filing, did not contravene the statutory requirements, thus invalidating the Appellate Authority's basis for dismissal.Treatment of competing arguments:The respondents argued that the statutory deposit was not made concurrently with the appeal filing, which is a prerequisite under Section 107 (6) (b). However, they conceded that the deposit was made within the limitation period. The Court addressed this by emphasizing the legislative purpose of the deposit requirement and the need for a liberal interpretation to prevent undue obstruction of the right to appeal.Conclusions:The Court concluded that the Appellate Authority's rejection of the appeal on the sole ground of timing of the deposit was erroneous. The statutory deposit, being made within the limitation period, fulfilled the legal requirements, and the appeal should be considered on its merits.SIGNIFICANT HOLDINGSThe Court held that a liberal interpretation of Section 107 (6) of the 2017 Act is warranted, ensuring that statutory deposits made within the prescribed limitation period are deemed compliant with the requirement to deposit the amount 'along with the appeal.' This interpretation aligns with the legislative intent to secure revenue without obstructing the right to appeal.The Court quashed the impugned order of the Appellate Authority, directing it to consider the petitioner's appeal on its merits. This decision underscores the principle that procedural requirements should not unjustly hinder substantive rights, particularly the right to appeal.