2025 (12) TMI 440 - HC - GST

Pre-deposit under s.107(6) deemed met as 10% recovered; appeal under s.74 to be heard afresh

Arup Kumar Chatterjee Versus Assistant Commissioner of State Tax, Bureau of Investigation (South Bengal) & Ors.

HC set aside the appellate authority's order dismissing the registered person's appeal under s.74 WBGST/CGST Acts for non-compliance with the statutory ... Dismissal of petitioner’s appeal against an order passed u/s 74 of WBGST Act, 2017/CGST Act, 2017 on the ground of noncompliance with the mandatory condition of statutory pre-deposit - power of appellate authority under Section 107 of the Act to waive the mandatory condition of pre-deposit - HELD THAT:- Having regard to the fact that the petitioner could not press its appeal before the appellate authority for want of compliance with the mandatory condition of pre-deposit in terms of Section 107(6) of the said Act of 2017 and the fact that the final fact finding authority i.e. the Appellate Tribunal has not yet become functional, this Court is of the view that if the petitioner is not afforded an opportunity of pressing his appeal before the appellate authority on merits. Accordingly the order impugned dated May 11, 2023 passed by the appellate authority is set aside and the matter is remanded to the appellate authority for considering the appeal on merits. It is clarified that since an amount more than 10% of the disputed tax has already been recovered and the precondition of putting in the pre-deposit equivalent to 10% of the disputed tax in terms of the Section 107(6) stands satisfied, therefore the appellate authority shall proceed to hear the petitioner’s appeal on merits, without requiring the petitioner to make any further pre-deposit. It is also clarified that since the petitioner has approached this Court much later to the date when the disputed tax was recovered, no order of refund is being made at present. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the appellate authority under Section 107 of the WBGST Act, 2017/CGST Act, 2017 has power to waive the mandatory statutory pre-deposit prescribed under Section 107(6). 1.2 Whether recovery by the tax authorities of an amount exceeding 10% of the disputed tax satisfies the statutory condition of pre-deposit under Section 107(6), thereby requiring the appellate authority to hear the appeal on merits without insisting on any further pre-deposit. 1.3 Whether, in the circumstances of delay in approaching the High Court and the non-functioning of the Appellate Tribunal under Section 112, the dismissal of the appeal for non-compliance with pre-deposit should be set aside and the matter remanded for decision on merits, and whether any order of refund of recovered tax should be made. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power of appellate authority to waive mandatory pre-deposit under Section 107(6) Interpretation and reasoning: The Court held that the appellate authority functioning under Section 107 of the said Act of 2017 has no power to waive the mandatory statutory pre-deposit requirement. The condition in Section 107(6) is mandatory in nature and not discretionary, and the appellate authority is bound by the statute. Conclusions: The appellate authority lacked jurisdiction to entertain an application seeking waiver of the statutory pre-deposit and correctly dismissed the appeal for non-compliance with the mandatory requirement. On this limited aspect, the impugned order could not be faulted. Issue 2 - Effect of prior recovery exceeding 10% of disputed tax on the requirement of pre-deposit Interpretation and reasoning: The Court noted that subsequent to the appellate order, the GST authorities had proceeded to recover the entire disputed tax. Since the statutory pre-deposit required under Section 107(6) is 10% of the disputed tax, the Court treated the recovery of an amount more than 10% of the disputed tax as satisfying the statutory condition of pre-deposit. In view of such recovery, there was no further purpose in insisting on an additional deposit for maintaining the appeal. The condition prescribed by Section 107(6) stood substantially complied with by reason of the recovery already effected. Conclusions: The precondition of depositing 10% of the disputed tax under Section 107(6) stood satisfied by recovery already made by the authorities. The appellate authority, upon remand, is required to hear the appeal on merits without demanding any further pre-deposit from the petitioner. Issue 3 - Remand of appeal despite delay and non-functioning of the Appellate Tribunal; refusal of refund Interpretation and reasoning: The Court considered that the petitioner could not press the appeal before the appellate authority due to non-fulfilment of the mandatory pre-deposit condition and that the final fact-finding authority, namely the Appellate Tribunal under Section 112 of the said Act of 2017, was not yet functional. In such circumstances, denial of an opportunity to have the appeal decided on merits would be inappropriate. The Court took into account the reasons advanced by the petitioner for delay in approaching the High Court, including financial hardship arising from recovery of substantial sums and the petitioner's wait for the Appellate Tribunal to become functional, as also the explanations in the supplementary affidavit. At the same time, the Court noted that the petitioner had approached the Court long after the disputed tax had been recovered. Having regard to this delay, and the fact that the appeal itself was being restored for adjudication on merits, the Court declined to pass any order for refund of the amounts already recovered. Conclusions: The impugned order dismissing the appeal for want of pre-deposit was set aside, and the matter was remanded to the appellate authority to consider and decide the appeal on merits. The appellate authority was directed to proceed without requiring any additional pre-deposit, since an amount exceeding 10% of the disputed tax had already been recovered. No order of refund of the recovered tax was made in view of the petitioner's delayed approach to the Court.