2019 (8) TMI 1421 - HC - GST

Maintainability of appeal - stay of recovery - requirement for pre-condition for deposit - Section 107(6) of both the CGST Act and the KSGST Act - HELD THAT - This was not an issue agitated before the learned Single Judge. Further, a statutory appeal is yet to be filed. If the petitioner is intending to seek exoneration or waiver from the pre-conditions stipulated, it is them for to take steps if any available, either before the Appellate Authority or before any other appropriate forum. Since such an issue was not raised at the time of disposal of the writ petition and since no such ground was seen raised either in the writ petition or in the writ appeal, we are not deciding anything on the merit of such an issue. In view of the fact that the disputed amount now remains secure through the Bank Guarantee furnished, we are inclined to modify the impugned judgment by directing to keep in abeyance encashment of the Bank Guarantee furnished until the disposal of the appeal, provided the appellant keeps the same valid until disposal of a validly constituted appeal against Ext.P5 within a period of one month from today. Appeal disposed off.

Summary

Issues:
Challenge of tax and penalty imposition under CGST and KSGST Acts, denial of personal hearing opportunity, compliance with Section 107(6) for appeal deposit, waiver of deposit pre-condition, modification of judgment to keep Bank Guarantee secure.

Analysis:

1. The appellant challenged an order imposing tax and penalty under the CGST and KSGST Acts, seeking relief through a writ petition. The Single Judge dismissed the petition, advising the appellant to pursue a statutory appeal against the order. The encashment of the Bank Guarantee was stayed to allow the appellant to appeal and seek a stay. The Appellate Authority was directed to handle the stay petition promptly.

2. The appellant argued that the Single Judge should have considered the petition's merits, emphasizing the lack of a personal hearing opportunity in the order. However, the Court held that such grounds could be raised before the Appellate Authority during the appeal process, declining to intervene on this basis.

3. The appellant's counsel contended that Section 107(6) of both Acts requires a 10% deposit of the disputed tax amount for an appeal. The appellant had secured the entire disputed amount with a Bank Guarantee, making the deposit requirement prejudicial. The government pleader argued for the mandatory nature of the deposit condition, citing legal precedents.

4. The Court found the deposit issue irrelevant for the writ appeal, noting it was not raised before the Single Judge and a statutory appeal was pending. The appellant was advised to address the deposit issue before the Appellate Authority or an appropriate forum if desired, refraining from ruling on the matter's merits.

5. The Court disposed of the writ appeal, granting liberty to the appellant to pursue available remedies. To secure the disputed amount, the Court modified the judgment, directing the Bank Guarantee's encashment to be suspended until the appeal's resolution, provided the appellant maintains the Guarantee's validity during the appeal process.

This detailed analysis covers the key issues raised in the judgment, addressing the challenges faced by the appellant regarding the tax and penalty imposition, the deposit requirement for appeals, and the modification of the judgment to safeguard the Bank Guarantee.