2024 (7) TMI 232 - HC - GST

Challenge to interim order by which the appellants were directed to deposit 20% of the disputed remaining unpaid interest within a time frame - HELD THAT - In the case on hand the provision for filing an appeal before the tribunal does not contemplate payment of 20% of the disputed interest and it is specific in stating that no appeal shall be filed under sub-section (1) of Section 112 unless the appellant has paid a sum equal to 20% of the remaining amount of tax in dispute - the legislative intent as amplified in Section 112(8)(b) of the Act clearly restricts the pre-deposit amount to 20% of the remaining amount of tax in dispute and does not speak of interest. The discretion to be exercised by the court should be in terms of the statute and, therefore, the said condition imposed by the learned Single Bench calls for interference. Appeal allowed.

Summary

Issues:
Interim order directing deposit of 20% disputed unpaid interest pending appeal before appellate tribunal under GST Act.

Analysis:
The judgment involves the interpretation of Section 112 of the GST Act regarding pre-deposit requirements for filing an appeal before the appellate tribunal. The appellants challenged an adjudication order demanding interest due to delayed filing of returns. The court noted that the appellate tribunal was not yet constituted, leading the appellants to file a writ petition against the interim order. The government counsel argued that the order was discretionary to safeguard revenue interests. The court referred to a Supreme Court case emphasizing that High Courts should exercise discretion in line with relevant provisions, particularly related to limitation.

The key contention revolved around the interpretation of Section 112(8) of the Act, which mandates pre-deposit conditions for filing an appeal. The court highlighted that the provision specifies the pre-deposit amount as 20% of the remaining tax in dispute, without mentioning interest. Referring to a Karnataka High Court decision, the court emphasized that the legislative intent behind the statute was crucial, and the language used in the law was determinative of the intent. The court concluded that the discretion to be exercised should align with the statutory provisions, leading to interference with the order imposing a 20% pre-deposit of the remaining interest amount.

Consequently, the court allowed the appeal, setting aside the portion of the order directing the payment of 20% of the remaining interest. The respondents were instructed not to initiate any recovery proceedings until the writ petition was heard and disposed of. Additionally, the respondents were directed to submit their affidavit-in-opposition within three weeks, with a reply deadline of two weeks thereafter. The writ petition was scheduled for listing before the appropriate Bench after six weeks.