2023 (12) TMI 992 - HC - GST

Denial of right of second appeal - denial on account of the failure of the appropriate Government to constitute the tribunal - denial of a statutory right - inconsistency of some interim orders passed by this Court as regards the amount of pre-deposit - HELD THAT - One line of interim orders contemplates deposit of 30% of the amount out of which 10% which is deposited before the first appellate authority is liable to be adjusted. The Uttar Pradesh Goods and Services Tax Act as well as the Central Goods and Services Tax Act contemplate pre-deposit of certain amounts i.e. 10% of the of the disputed tax liability before the first appellate authority. In addition to that, 20% of the disputed tax liability is liable to be deposited before the second appellate authority at the time of institution of the appeal - In congruent facts, identical interim orders are liable to be granted, otherwise an anomalous situation will be created where similarly situated persons will be accorded differential treatment leading to discrimination and violation of Article 14 of the Constitution of India. The second aspect which requires to be given weight is that the assessee cannot be faulted for what is essentially a failure of the Government. The statute contemplates deposit of 10% plus 20% of the disputed tax liability before the first and second appellate authorities respectively. By imposing a demand of 50% in these matters, the assessees will be penalized for no fault of theirs - The grant of interim orders in the aforesaid manner made in the said orders passed by this Court balances the interests of revenue as well as the rights of the assessees. However, it needs to be clarified that it is always open to the Court to grant interim orders which are at variance with the aforesaid orders in peculiar facts and circumstances of a particular case while exercising writ jurisdiction in the interests of justice. The petitioner shall deposit 20% of the disputed tax liability in addition to the earlier deposit before the assessing authority (which is 10% of the disputed tax amount). Subject to the aforesaid deposit, the recovery proceedings of the balance amount shall remain stayed till the decision of this writ petition - List after six weeks.

Summary

Issues Involved:
1. Denial of statutory right to a second appeal due to non-constitution of the Appellate Tribunal.
2. Inconsistency in interim orders regarding the amount of pre-deposit required.

Summary:

Issue 1: Denial of Statutory Right to a Second Appeal
The petitioner challenged the order of the first appellate authority under the Uttar Pradesh Goods and Services Tax Act and the Central Goods and Services Tax Act. The second appeal lies before the Appellate Tribunal under Section 112 of the respective Acts. However, the Appellate Tribunal has not been constituted, denying the petitioner the statutory right to a second appeal. The court cited the Supreme Court's observation in *Supdt. of Taxes v. Onkarmal Nathmal Trust*, emphasizing that "executive inertia cannot become the cause of denial of a statutory right." The petitioner invoked the extraordinary jurisdiction under Article 226 of the Constitution of India due to this denial.

Issue 2: Inconsistency in Interim Orders Regarding Pre-Deposit
The court noted inconsistencies in interim orders concerning the amount of pre-deposit required. Some orders required a deposit of 30% of the disputed tax amount, while others required 50%.

- 30% Pre-Deposit Orders:
- *M/S Kent Cables Pvt. Ltd. vs. State Of U.P.*: The petitioner was permitted to deposit 20% of the remaining disputed tax amount, in addition to the 10% already deposited before the first appellate authority.
- *M/S Tulsi Steels vs. State Of U.P.*: The petitioner was directed to deposit 30% of the disputed tax amount.
- *M/S Nandan Sales Corporation vs. State Of U.P.*: Similar direction to deposit 30% of the disputed tax amount.

- 50% Pre-Deposit Order:
- *M/S Virender Kumar Projects Pvt Ltd vs. State Of U.P.*: Directed to deposit 50% of the disputed tax amount.

The court highlighted the need for consistency in interim orders, referencing *Siliguri Municipality v. Amalendu Das* and *Vishnu Traders v. State of Haryana*, which emphasized the importance of uniformity in judicial discretion. The court also cited the Supreme Court's decision in *Bir Bajrang Kumar v. State of Bihar*, which stressed identical treatment in cases involving similar issues to avoid discrimination and uphold Article 14 of the Constitution.

The court concluded that the statutory requirement under Section 112 of the GST Acts is a 10% deposit before the first appellate authority and an additional 20% before the second appellate authority. Imposing a 50% deposit penalizes the assessees for the government's failure to constitute the tribunal. Therefore, the court preferred the view that required a 30% total deposit (10% + 20%).

Final Direction:
The petitioner was directed to deposit 20% of the disputed tax liability in addition to the 10% already deposited. Subject to this deposit, recovery proceedings for the balance amount shall remain stayed until the decision of the writ petition. The respondents were given four weeks to file a counter affidavit, and the petitioner two weeks thereafter to file a rejoinder. The case was listed for hearing after six weeks.