2025 (10) TMI 1254 - HC - GST

Appeal rejected for non-payment of interest under Section 107(6) GST; petitioner allowed 90 days to pay admitted tax

HC held the impugned order was not infirm and the petitioner's appeal was rightly rejected for failure to comply with Section 107(6) of the GST enactments ... Non-payment of interest on belated payment of tax - though the petitioner had sought for time to pay interest, but the interest was not paid - petitioner submits that the petitioner has already paid amount more than 10% of the amount demanded - HELD THAT:- The order does not suffer from any infirmity. The petitioner's appeal has been rightly rejected on the ground that the petitioner failed to comply with the requirement under Section 107(6) of the respective GST Enactments. The impugned order does not merit any interference in the hands of this Court under Article 226 of the Constitution of India. At the same time, liberty is given to the petitioner to pay the admitted tax liability, as stated in the petitioner's reply dated 23.05.2022 in response to Show Cause Notice dated 31.03.2022, within a period of ninety (90) days from the date of receipt of a copy of this order. This will be without prejudice to the rights of the petitioner under Section 80 of the respective GST Enactments. There shall be a direction to the first respondent to dispose of the appeal afresh within a period of six (6) months from the date of receipt of a copy of this order, subject to the petitioner depositing the balance amount of the admitted interest liability as confirmed passed by the second respondent - Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the appellate order rejecting the appeal for non-compliance with Section 107(6) of the respective GST enactments is legally sustainable. 2. Whether the petitioner's admissions in the reply to the Show Cause Notice and subsequent correspondence estop the petitioner from disputing the liability for interest for the purpose of pre-deposit requirements. 3. Whether the High Court should exercise its writ jurisdiction under Article 226 to interfere with the impugned appellate order, and if not, whether equitable relief by permitting payment of the admitted amount and remand for fresh disposal is appropriate. 4. Whether liberty to pay the balance of the admitted liability (without prejudice to rights under Section 80) and a direction to the appellate authority to decide the appeal afresh within a fixed period is an appropriate remedy. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legality of rejection of appeal for non-compliance with Section 107(6) Legal framework: Section 107(6) of the respective GST enactments (as applied by the Court) imposes a condition precedent for admission of appeals, requiring compliance with prescribed pre-deposit obligations before the appellate authority entertains the appeal. Precedent Treatment: The judgment does not rely on or discuss any prior judicial precedents; the Court applies the statutory scheme directly. Interpretation and reasoning: The Court examined the Show Cause Notice, the Order-in-Original and the admissions contained in the petitioner's reply and correspondence, and concluded that the impugned appellate order rightly proceeded on the basis that the petitioner failed to satisfy the statutory pre-deposit requirement under Section 107(6). The Court treated the pre-deposit condition as mandatory for continuation of the appeal process and found no infirmity in the appellate authority rejecting the appeal for non-compliance. Ratio vs. Obiter: Ratio - The appellate authority correctly applied Section 107(6) to reject the appeal where statutory pre-deposit obligations were not complied with. There is no obiter on alternative statutory constructions. Conclusions: The rejection of the appeal for non-compliance with Section 107(6) is sustainable; the impugned order does not suffer from legal infirmity on this ground. Issue 2 - Effect of admissions in petitioner's reply and correspondence on contesting interest liability for pre-deposit Legal framework: Admissions made in response to a Show Cause Notice and subsequent submissions are relevant to quantify admitted liability and to determine what portion, if any, remains disputed for the purpose of pre-deposit rules. Precedent Treatment: No precedents were referenced; the Court relied on documentary admissions present in the file. Interpretation and reasoning: The Court noted that the petitioner, in a reply dated 23.05.2022 and in subsequent submissions, admitted liability to pay interest on belated payment of tax and sought time under Section 80. Those admissions fixed an admitted component of the demand which, in the Court's view, obliged compliance with pre-deposit requirements. The petitioner's contention that more than 10% had been paid was examined against the record and found not to cure the non-compliance with statutory pre-deposit obligations as treated by the appellate authority. Ratio vs. Obiter: Ratio - Documentary admissions can determine the admitted liability which must be met for pre-deposit compliance; such admissions are material to the appellate authority's decision to admit or reject an appeal. Conclusions: The admissions in the petitioner's reply and correspondence operate against the petitioner for the limited purpose of establishing an admitted liability; the appellate authority's reliance on those admissions in rejecting the appeal was justified. Issue 3 - Exercise of writ jurisdiction under Article 226 and availability of equitable relief Legal framework: Article 226 permits judicial review of administrative and quasi-judicial orders, but interference is governed by established limits where statutory preconditions are not met; courts may, however, fashion equitable remedies in appropriate cases. Precedent Treatment: The Court did not cite authorities but applied constitutional review principles to the facts. Interpretation and reasoning: The Court found no legal infirmity warranting interference under Article 226 with the appellate authority's rejection based on statutory non-compliance. Simultaneously, the Court exercised its equitable discretion to prevent harshness by allowing the petitioner a limited opportunity to cure the deficiency: liberty to pay the admitted tax liability within ninety days, without prejudice to rights under Section 80, coupled with a direction for the appellate authority to dispose of the appeal afresh within six months if the balance is paid. The Court recorded the petitioner's statement to deposit the balance within ninety days and treated that undertaking as part of the remedial scheme. Ratio vs. Obiter: Ratio - Where an appeal is rejected for statutory non-compliance, Article 226 interference is not justified absent infirmity; nevertheless, the writ court may permit curative compliance and direct a fresh decision by the appellate authority within a specified time. Obiter - No extensive guidance was given on broader circumstances for such equitable relief beyond the facts. Conclusions: Article 226 interference was declined; equitable relief in the form of time-limited liberty to deposit the admitted amount and a remand for fresh disposal is appropriate and directed. Issue 4 - Appropriateness and terms of remedial directions (payment, Section 80 reservation, time-bound remand) Legal framework: Courts may impose terms when granting curative opportunities; rights under Sections such as Section 80 (time to pay) may be preserved by explicit reservation. Precedent Treatment: Not addressed by the Court; directions were fashioned on the facts and statutory context. Interpretation and reasoning: The Court structured relief to balance statutory compliance and substantive rights: (a) liberty to pay the admitted liability within ninety days from receipt of the order; (b) explicit preservation of rights under Section 80; (c) direction to the appellate authority to dispose of the appeal afresh within six months from receipt of the order, subject to the deposit of the balance of the admitted interest liability. The Court recorded the petitioner's undertaking to deposit the balance within ninety days, treating that statement as operative for enforcement of the direction. Ratio vs. Obiter: Ratio - A writ court may grant a time-limited opportunity to comply with statutory pre-deposit obligations and direct the appellate authority to decide the appeal afresh within a specified period; such relief may be subject to recorded undertakings and preservation of statutory rights (e.g., Section 80). Obiter - No general rule about extension periods or varying timelines beyond the present order was articulated. Conclusions: The remedial directions (90-day deposit period; reservation of Section 80 rights; six-month mandate to the appellate authority) are appropriate and form part of the operative order; no costs were imposed.