Facts of the Case

The writ applicant, M/s Hinron Steel Private Limited, engaged in the business of supply of iron and steel and registered under the CGST Act, was assessed by the Joint Commissioner, Central GST, Gandhidham, who passed an order-in-original dated 06.01.2021 determining total liability of Rs.1,10,89,614/-, arising from denial of Input Tax Credit wrongly transitioned through TRAN-1 and confirmed under Section 74, Central Goods and Services Tax Act, 2017. Aggrieved, the applicant preferred an appeal under Section 107 of the CGST Act before the Commissioner (Appeals), who required a mandatory pre-deposit of 10% of the confirmed liability, amounting to Rs.11,08,961/-. Due to a communication gap, the applicant did not make the pre-deposit, and the appeal was dismissed for non-compliance vide order dated 18.08.2021. Recovery notices followed, prompting the applicant to approach the Gujarat High Court under Article 226 of the Constitution seeking to quash both the assessment order and the appellate dismissal, or alternatively, restoration of the appeal.

Issues Involved

  1. Whether the Commissioner (Appeals) was justified in dismissing the appeal solely for non-payment of the mandatory 10% pre-deposit under Section 107(6) of the CGST Act, 2017.
  2. Whether the appeal could be restored on the applicant now undertaking to make the pre-deposit.

Petitioner's Arguments

  • The pre-deposit could not be made earlier on account of a communication gap, leading to dismissal of the appeal.
  • The applicant was ready and willing to deposit the required amount of Rs.11,08,961/- in accordance with Section 107(6) of the CGST Act within two weeks, and requested that the appeal be restored and heard on merits.

Respondent's Arguments

The extracted order does not record any substantive opposition by the respondents; the Standing Counsel appeared and the writ application was disposed of by consent-based directions without recording contested submissions on the underlying tax liability.

Court Order / Findings

  • The Court held that it did not need to adjudicate the writ application on merits, as there was nothing on merits for it to examine at this stage.
  • Accepting the applicant's undertaking, the Court found no difficulty in acceding to the request for restoration of the appeal upon deposit of the pre-deposit amount.
  • The writ application was disposed of with a direction to deposit Rs.11,08,961/- within two weeks with the Office of the Commissioner (Appeals) in accordance with Section 107(6) of the CGST Act.
  • On such deposit within the stipulated time, the appeal would stand restored to its original file and be heard on merits by the Commissioner (Appeals).
  • The Court expressly clarified that it had not expressed any opinion on the merits of the underlying dispute.

Important Clarification

  • Dismissal of a GST appeal for non-payment of the mandatory pre-deposit under Section 107(6) is a procedural bar, not an adjudication on merits; courts may permit restoration of such appeals on a fresh undertaking to comply with the pre-deposit requirement, without expressing any view on the tax dispute itself.

Sections Involved

  • Section 74, Central Goods and Services Tax Act, 2017 – governs demand and recovery of tax not paid or ITC wrongly availed by reason of fraud or wilful misstatement.
  • Section 107, Central Goods and Services Tax Act, 2017 – provides for appeals against orders passed by the adjudicating authority.
  • Section 107(6), Central Goods and Services Tax Act, 2017 – mandates pre-deposit of a percentage of the disputed amount as a condition for filing an appeal.

Decision – In Favour of

This is a disposal with directions, in part in favour of the Assessee — the Gujarat High Court did not decide the underlying tax dispute but directed restoration of the appeal for hearing on merits upon the applicant depositing the mandatory pre-deposit within two weeks, expressly reserving all questions on merits for the appellate authority.

Related Case Laws

No related case laws on this specific issue are available on this site at present.

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No.7458 of 2022
  • Coram: Justice J.B. Pardiwala and Justice Nisha M. Thakore
  • Date of Order: 20.04.2022

Link to Download the Order

Download the full judgment (PDF)

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