2023 (12) TMI 1281 - HC - GST

Determination of quantum of pre-deposit for filing of appeal - deposit of 10% of the disputed tax amount means only tax amount and entire composite amount comprising tax, fine, penalty and fee? - failure to comply the mandate of pre- deposit - HELD THAT - By isolating a sum equal to ten per cent of the remaining amount of tax in dispute in sub-clause (b), the legislator conveys a focused pre-deposit requirement specifically related to the disputed tax amount. This implies that the legislative design prioritizes the financial commitment associated directly with the primary tax liability being contested. This approach aligns with the legal principle that penalties, fines, fees, and interest are subsequent to the determination of tax. The apex court in the case of PRAKASH NATH KHANNA AND ANOTHER VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER 2004 (2) TMI 3 - SUPREME COURT , has explained that the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency. Where the legislative intent is clear from the language, the Court should give effect to it. The appellate authority therefore, was not justified in calling upon the petitioner to deposit 10% of not only tax liability, but, also fine which is imposed by the Enforcement Officer equivalent to the value of the goods. If the order passed by the appellate authority under challenge is accepted, then the condition under clause (b) giving an option to the aggrieved person who disputes the entire tax liability to deposit 10% of the remaining amount of tax in dispute would be defeated. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability. Petition allowed.

Summary

Issues involved:
The judgment addresses the issue of the maintainability of an appeal under Section 107(6) of the Central Goods and Services Tax Act, 2017, specifically focusing on the pre-deposit requirement for filing an appeal.

Summary:

Issue 1: Interpretation of pre-deposit requirement under Section 107(6) of the CGST Act

The petitioner challenged the appellate authority's decision to decline admission of the appeal due to non-compliance with the pre-deposit mandate. The petitioner argued that the pre-deposit amount should only include the disputed tax amount and not penalty, fine, or interest. Citing judgments from the High Courts of Patna and Allahabad, the petitioner contended that the appellate authority erred in calculating the pre-deposit amount. On the other hand, the AGA argued that the petitioner, by disputing the entire amount, must pay 10% on the total sum determined by the Enforcement Officer. The court analyzed Section 107(6) of the CGST Act, emphasizing that the pre-deposit must cover the tax, interest, fine, fee, and penalty admitted by the appellant and 10% of the remaining disputed tax amount.

Issue 2: Legislative intent and statutory interpretation

The court delved into the legislative intent behind the pre-deposit requirement, highlighting the deliberate exclusion of disputed interest, fine, fee, and penalty from the pre-deposit calculation. By focusing on the disputed tax amount for the 10% pre-deposit, the court emphasized that penalties and fines are consequential to the tax liability determination. The court referred to legal principles and judgments to support the interpretation that the pre-deposit obligation pertains solely to the contested tax amount, aligning with the legislative design to prioritize the financial commitment related to the primary tax liability in appeals.

Conclusion:

The court allowed the writ petition, setting aside the appellate authority's decision on the pre-deposit amount. It directed the appellate authority to admit the appeal since the petitioner had already deposited 10% of the tax liability. The judgment clarified that the legislative intent, as construed from Section 107(6)(b) of the CGST Act, mandates pre-deposit only on the tax liability when the appellant contests the entirety of the tax liability, excluding penalties, fees, or interest from the pre-deposit requirement.