Right to Appeal Remains Intact Despite Full Payment of Demand

[Kamal Aggarwal]

The Hon’ble Gauhati High Court in the matter of TNS EXPRESS PVT LTD AND SUBODH KUMAR SINGH VERSUS THE STATE OF ASSAM, THE DEPUTY COMMISSIONER OF TAXES GUWAHATI, THE ASSISTANT COMMISSIONER OF STATE TAX GUWAHATI, THE DEPUTY COMMISSIONER OF TAXES GUWAHATI. - 2024 (9) TMI 1641 - GAUHATI HIGH COURT, held that the right to file an appeal cannot be revoked solely because the Petitioner has paid the full amount demanded by the order issued under Section 129(3) of the Assam Goods and Services Tax Act, 2017 (‘State Act’).

The Petitioners filed these writ petitions in regard to the failure of authorities to update the payments made by them in response to the final demands issued. It is important to note that, due to this lack of reflection on the portal, the Petitioners were unable to file the necessary statutory appeals.

On the directions of this Hon’ble High Court, the respondents submitted affidavits stating that since the demands for tax, penalty, and cess had been fully paid, the proceedings initiated under Section 129(3) of the State Act were concluded and no further action was required.

The Court reviewed Sections 107 and 129 of the State Act and found no indication that filing an appeal is barred if the entire demand has been paid. Section 129(5) of the State Act states that upon payment of the entire amount specified in Section 129(1) of the State Act, all proceedings related to the notice in Section 129(3) of the State Act are deemed concluded. This provision applies only when the full amount is paid pursuant to an SCN under Section 129(3) of the State Act. Notably, while Section 129(3) of the State Act mandates an order within seven days of notice service, Section 129(5) of the State Act only references the notice, not the order. Thus, the Court concluded that the right to appeal cannot be revoked simply because the Petitioner has paid the demanded amount.

The Hon’ble High Court thoroughly examined the relevant statutory provisions and observed that while payment of entire demand amount concludes the proceedings related to the notice, it does not negate the right to challenge the underlying issues through an appeal, thereby reinforcing the importance of allowing individuals to contest decisions affecting their rights, regardless of compliance with payment demand. This principle ensures that due process is upheld in legal proceedings, safeguarding the rights of taxpayers and promoting fairness in the enforcement of tax regulations.

The assessee makes payments demanded by the revenue under two specific conditions: first, when their transport vehicle has been confiscated, and second, when they face undue harassment from departmental authorities. However, it is important to understand that making such payments does not imply that the assessee has accepted liability for the demand. These payments are often made under duress or to mitigate immediate adverse consequences, rather than as an acknowledgment of wrongdoing or acceptance of the charges levied against them. Thus, the act of payment in these circumstances should not be interpreted as an admission of liability.