Facts of the Case

M/s. GAEA Engineers and Contractors Pvt. Ltd. challenged an Order-in-Appeal dated 01.11.2024, which had rejected its appeal (filed manually against a manually passed Order-in-Original dated 14.11.2023) on the ground of non-compliance with the mandatory pre-deposit under Section 107(6) of the CGST/OGST Act, 2017. Notably, the Department had registered the appeal and assigned it a case number, and even issued a notice of personal hearing, before rejecting it on this technical ground without examining the merits. By the time the matter reached the High Court, the petitioner had already deposited the requisite pre-deposit amount of Rs.1,58,179/- on 04.09.2025.

Issues Involved

  1. Whether an Appellate Authority, having registered an appeal, assigned it a case number, and issued a personal-hearing notice, can subsequently reject it solely on the ground of non-compliance with the Section 107(6) pre-deposit, without considering that the amount has since been paid.
  2. Whether the appeal deserves to be restored to file and heard on merits given the subsequent compliance with the pre-deposit requirement.

Petitioner's Arguments

  • The Department, having received and registered the appeal without raising any defect at the threshold, could have returned the memorandum of appeal or flagged the defect within a reasonable period, but did not do so.
  • The Appellate Authority had itself issued a notice of personal hearing, showing an intention to proceed with the appeal on merits, yet rejected it purely on the pre-deposit technicality.
  • The requisite pre-deposit amount under Section 107(6) had since been deposited on 04.09.2025, and the Order-in-Appeal ought to be set aside to allow the appeal to be decided on merits.

Respondent's Arguments

  • The Department contended that since the petitioner had not complied with the statutory mandate of Section 107(6) at the relevant time, the Appellate Authority had no jurisdiction to proceed with the hearing of the appeal, notwithstanding the notice of personal hearing that had been issued.

Court Order / Findings

  • The Court noted that the personal hearing notice sent to the petitioner had itself been returned by the postal department with the remark 'No such person', suggesting a service defect independent of the pre-deposit issue.
  • The Court observed that the Appellate Authority's own conduct — registering the appeal and assigning it a number despite the statutory pre-deposit condition not being met at that time — indicated an intention to waive the technical defect and proceed on merits.
  • Since the petitioner had since deposited the amount required under Section 107(6), the Court set aside the order of rejection and granted the petitioner liberty to appear before the Appellate Authority to have the appeal restored and heard on merits, clarifying that failure to appear by the stipulated date would result in automatic revival of the impugned rejection, and expressing no opinion on the merits.

Important Clarification

  • Where an Appellate Authority registers an appeal, assigns it a case number, and issues a hearing notice despite an alleged pre-deposit defect under Section 107(6), and the assessee subsequently deposits the required amount, courts will generally restore the appeal to file for a merits hearing rather than allow a belated technical rejection to stand.
  • A hearing notice returned undelivered by the postal department (e.g., marked 'No such person') independently undermines the validity of an ex parte rejection of an appeal, regardless of the pre-deposit issue.

Sections Involved

  • Section 107(6), CGST/OGST Act, 2017 — mandates pre-deposit of 10% of the disputed tax amount as a precondition for filing an appeal against an Order-in-Original.
  • Section 107, CGST/OGST Act, 2017 (generally) — the appellate provision under which the Order-in-Appeal rejecting the petitioner's appeal was passed.

Decision – In Favour of

The decision is in favour of the assessee (GAEA Engineers and Contractors), conditional on appearance before the Appellate Authority by the stipulated date. The rejection was set aside and the appeal restored for a merits hearing.

Case Details

High Court of Orissa at Cuttack; W.P.(C) No.25187 of 2025; Coram: Hon'ble The Chief Justice Harish Tandon and Hon'ble Mr. Justice Murahari Sri Raman; Order dated 06.11.2025.

Link to Download the Order

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