Tejas Arecanut Traders vs Joint Commissioner pf Commercial Taxes (Appeals), Hubli

The captioned petition is filed seeking following reliefs:

“i) Issue a writ, order, or direction in certiorari quashing the impugned order bearing M/s. Tejas Arecanut Traders GST/2023-24/Appeal Order No. dated. 28.06.2023 (Annexure-A) Order U/s 107(1) and R/w 107(6)(A) & (B) of CGST and SGST Acts 2017 which has been passed without jurisdiction.

ii) Issue a writ, order or direction in the nature of mandamus directing the Respondent No. 1 to admit the appeal filed by the petitioner.

iii) Issue any other writ order or direction, which this Hon’ble Court may deem fit and proper under the facts and circumstances of the present case.

iv) Grant costs and interest and

v). Grant such further and other reliefs as the nature and circumstances of the case may require.”

2. In the captioned petition, the appellate authority while examining the maintainability of the appeal under Section 107(6) of the Central Goods and Services Tax Act, 2017 (for short “CGST Act”) has declined to admit the appeal on the ground that petitioner has failed to comply the mandate of pre- deposit and therefore, has declined to admit the appeal filed by the petitioner under Section 107(6) of the CGST Act.

3. The learned counsel for the petitioner reiterating the grounds urged in the writ petition would contend that the order of the appellate authority calling upon the petitioner to deposit 10% of Rs.1,41,11,633/- is one without jurisdiction and therefore, he would point out that the impugned order is in disregard to Section 107(6) of the CGST Act.

4. The counsel on record while referring to Section 107(6) of the CGST Act would contend that petitioner has challenged the entire demand confirmed in the confiscation order and therefore, he would contend that the expression “tax in dispute” provided under Section 107(6) of the CGST Act does not include interest, penalty, fine and fee. While referring to the language of Section 107(6) of the CGST Act, he would contend that deposit of 10% of the disputed tax amount means only tax amount and not entire composite amount comprising tax, fine, penalty and fee. Therefore, he would vehemently argue and contend that the appellate authority has wrongly calculated pre-deposit of Rs.14,11,163/- which is 10% of total demand that is Rs.1,41,11,633/-. To substantiate his grounds, he has placed reliance on the judgment rendered by the High Court of Patna in the case of Carbon Resources (P) Limited .vs. The State of Bihar and others [Civil Writ Jurisdiction Case No.2412 0f 2023] as well as the judgment rendered by the High Court of Allahabad in the case of Durga Raj Vijay Kumar .vs. State of U.P. 2022(66) GSTL.321 (All.). Referring to these judgments, he would point out that appellate authority was not justified in including other components while determining pre- deposit namely, fine, penalty and fees. He would further point out that confiscating Officer has determined tax at Rs.6,71,983/- and petitioner has already deposited 10% of the tax already determined by the Enforcement Officer.

5. Per contra, learned AGA has filed statement of objections and has contended that petitioner by questioning the pre-deposit quantum is virtually seeking to defeat the provisions of the appeal by contending that while preferring an appeal under Section 107(6), 10% of the tax is to be paid and not on 10% of the disputed amount. He would point out that since petitioner is disputing the claim of the Enforcement Officer in entirety, he is bound to pay 10% on entire amount determined by the Enforcement Officer. Reliance is placed on the judgment rendered by the Apex Court in the case of Commissioner of Income Tax .vs. Hindustan Bulk Carriers 2003(3) SCC 57.

6. Heard the learned counsel for the petitioner and the learned AGA. Perused the material on record.

7. Section 107 sub-clause(6) of the CGST Act reads as under:

“6. No appeal shall be filed under sub- section (1), unless the appellant has paid –

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as in admitted by him; and

(b) a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.”

On reading clause (a) of sub-section (6) of Section 107 of the CGST Act, what emerges is that petitioner has to pay in full such part of the amount of tax, interest, fine, fee and penalty as admitted by him. The petitioner has to further pay sum equal to 10% of the remaining amount of tax in dispute arising from the said order in terms of clause (b) of sub- section (6) of Section 107 of CGST Act.

8. Section 107(6) of the CGST Act outlines the conditions for filing an appeal mandating the appellant to fulfill certain financial obligations. Notably, the provision stipulates that the petitioner, in challenging a tax decision, is obliged to pre-deposit the entire amount admitted by him comprising tax, interest, fine, fee and penalty. In the context of disputing the entire tax amount, the 10% pre-deposit requirement pertains exclusively to the remaining disputed tax amount as articulated in the statutory language. Consequently, there exists a statutory basis for asserting that 10% pre-deposit obligation is confined to the contested tax quantum excluding penalty, fee and interest. This interpretation aligns with the legal principle that penalties are consequential to the determination of the underlining tax liability. Therefore, when petitioner disputes the entire tax amount, the focus on the pre-deposit obligation remains on the contested tax, recognizing the subsequent nature of penalty, fee, interest in the adjudicative process. If a statute provides a thing to be done in a particular manner, then it has to be done only in that manner.

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Tejas Arecanut Traders

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