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2025 (3) TMI 732 - HC - GSTRejection of petitioner s appeal due to non-compliance with the pre-deposit requirement under Section 107(6) of the Central Goods and Services Tax Act 2017 - refund claim - appropriation of refunds against non-existent dues - failure to generate the DRC-03 form - HELD THAT - This Court finds merit in the submission of the learned counsel for the petitioner inasmuch as the condition of payment of 10% of disputed tax as pre-deposit was complied with in terms of Section 107 of the Act though DRC-03 may not have been generated within the stipulated period. The infraction/ non-compliance if any is only technical. In view thereof the Appeal shall be taken on record duly numbered and heard on merits. At this stage the learned counsel for the petitioner seeks liberty of the Court to file a representation seeking refund of the erroneous appropriation of the refund due in terms of Section 107 of the Act - the petitioner is granted liberty to submit a representation to the Respondents. If any such representation is filed the Respondents shall pass orders on merits and in accordance with law within a period of 4 weeks from the date of receipt of a copy of this order after affording a reasonable opportunity of hearing. Petition disposed off.
ISSUES PRESENTED and CONSIDERED
The legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Compliance with Pre-deposit Requirement under Section 107(6) of the CGST Act - Relevant Legal Framework and Precedents: Section 107(6) of the CGST Act mandates a pre-deposit of 10% of the disputed tax amount for an appeal to be considered. The petitioner credited this amount to the electronic cash ledger but failed to generate the DRC-03 form. - Court's Interpretation and Reasoning: The Court found merit in the petitioner's argument that the substantive requirement of the pre-deposit was met despite the technical failure to generate the DRC-03 form. The Court deemed this infraction as a technical non-compliance rather than a substantive failure. - Key Evidence and Findings: The petitioner credited the required 10% of the disputed tax to the cash ledger within the stipulated time, but the appeal was rejected due to the absence of the DRC-03 form. - Application of Law to Facts: The Court determined that the substantive compliance with the pre-deposit requirement was achieved, warranting the acceptance of the appeal for consideration on its merits. - Treatment of Competing Arguments: The Respondent argued against the petitioner's entitlement to a refund, but the Court focused on the technical nature of the non-compliance. - Conclusions: The Court ordered the appeal to be taken on record, duly numbered, and heard on merits, setting aside the rejection based on technical grounds. 2. Appropriation of Refunds Against Non-existent Dues - Relevant Legal Framework and Precedents: The appropriation of refunds is governed by the provisions of the CGST Act, particularly in relation to the compliance with pre-deposit requirements. - Court's Interpretation and Reasoning: The Court recognized that the refunds were appropriated following the rejection of the appeal. However, since the appeal rejection was set aside, the basis for appropriation was nullified. - Key Evidence and Findings: The impugned orders appropriated refunds due to the petitioner against tax demands that were contested and potentially non-existent. - Application of Law to Facts: The Court found that any recovery post-compliance with the pre-deposit is barred under Section 107(7) of the CGST Act. - Treatment of Competing Arguments: The Respondent's contention against the refund was not upheld in light of the Court's finding on the pre-deposit compliance. - Conclusions: The Court set aside the impugned orders and allowed the petitioner to seek a refund through representation. 3. Representation for Refund of Appropriated Amounts - Relevant Legal Framework and Precedents: The petitioner sought to file a representation to reclaim the appropriated refund amounts. - Court's Interpretation and Reasoning: The Court granted liberty to the petitioner to file a representation with the Respondents for the refund of the appropriated amounts. - Key Evidence and Findings: The Court acknowledged the petitioner's right to seek a refund due to the setting aside of the appeal rejection. - Application of Law to Facts: The Court directed the Respondents to consider the representation on its merits and in accordance with the law, providing a reasonable opportunity for a hearing. - Treatment of Competing Arguments: The Respondent's position was not detailed in this context as the Court focused on procedural fairness. - Conclusions: The Court ordered the Respondents to pass orders on the representation within four weeks, ensuring procedural compliance. SIGNIFICANT HOLDINGS - The Court held that the failure to generate the DRC-03 form was a technical breach, not affecting the substantive compliance with the pre-deposit requirement under Section 107(6) of the CGST Act. - "The condition of payment of 10% of disputed tax as pre-deposit was complied with in terms of Section 107 of the Act, though DRC-03 may not have been generated within the stipulated period. The infraction/ non-compliance if any is only technical." - The Court established that the appeal should be taken on record and heard on merits, setting aside the rejection based on technical grounds. - The Court recognized that any recovery post-compliance with the pre-deposit is barred under Section 107(7) of the CGST Act. - The Court provided the petitioner with the opportunity to file a representation for the refund of appropriated amounts, directing the Respondents to decide on the matter within four weeks.
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