2025 (2) TMI 364 - HC - GST

Valid pre-deposit for the purpose of filing an appeal against the order-in-original or not - payment made by the petitioner through Form GST DRC-03 - HELD THAT - In this case due to non-availability of facilities to pay the pre-deposit through online for filing an appeal against the original order the petitioner has voluntarily made the said payment of pre-deposit through Form GST DRC-03 on 19.03.2024 and filed their appeal on 20.03.2024. Subsequently Form GST DRC-03A was introduced vide Notification dated 10.07.2024. Under these circumstances the appeal filed by the petitioner was rejected by the respondent vide impugned order dated 26.07.2024 by stating that no pre-deposit was made through Form GST DRC-03A. A perusal of Circular No.224/18/2024-GST dated 11.07.2024 makes it clear that the said circular talks about the difficulties faced by the Assesee in payment of pre-deposit and on that aspect the clarification has been issued by the Department to the extent that the voluntary payment made in Form GST DRC-03 shall be consider as pre-deposit paid through Form GST DRC- 03A. Accordingly the petitioner made the payment of pre-deposit through Form GST DRC-03. Though this Court has already adjourned this matter during the 7 earlier occasions till date no verification was made by the respondent. Further it was submitted by the petitioner that the said amount is still lying in Form GST DRC-03. In such case if at all if there is any discrepancies the same shall be verified and reported before this Court by the respondent. Conclusion - The appeal filed by the petitioner was rejected by the respondent vide impugned order dated 26.07.2024 by stating that no pre-deposit was made through Form GST DRC-03A. The rejection order dated 26.07.2024 is set aside and the appeal filed by the petitioner is restored. The amount paid by the petitioner through Form GST DRC-03 shall be considered as pre-deposit for filing the appeal - Petition disposed off.

The primary issue considered in this judgment was whether the payment made by the petitioner through Form GST DRC-03 could be recognized as a valid pre-deposit for the purpose of filing an appeal against the order-in-original dated 26.07.2024. The respondent had rejected the appeal on the grounds that the pre-deposit was not made through the newly introduced Form GST DRC-03A.

The relevant legal framework involves the provisions of the Central Goods and Services Tax (CGST) Act, specifically Sections 107 and 112, which govern the requirement of a pre-deposit for filing appeals. The court also considered Circular No. 224/18/2024-GST dated 11.07.2024, which clarified the treatment of payments made through Form GST DRC-03 when the new Form GST DRC-03A was not yet functional on the common portal.

The Court interpreted the circular as providing a mechanism to address situations where taxpayers inadvertently made pre-deposit payments through Form GST DRC-03 instead of the prescribed Form GST DRC-03A. The circular allowed for such payments to be adjusted against the pre-deposit requirement, acknowledging the technical limitations and the unavailability of the new form at the time of payment.

The key evidence in this case was the payment made by the petitioner on 19.03.2024, which was 10% of the total tax liabilities, including interest and penalty, as required for the appeal. The petitioner argued that the payment was specifically intended for the appeal, but due to the non-availability of online facilities, it was made through Form GST DRC-03. The respondent's suspicion that the payment was for another purpose was not substantiated by any verification.

The Court applied the law to the facts by emphasizing the intent behind the payment and the clarification provided in the circular. The Court found that the petitioner's payment through Form GST DRC-03 should be considered a valid pre-deposit, as the new form was not yet operational, and the circular explicitly allowed for such adjustments.

In addressing competing arguments, the Court noted the respondent's concern about the purpose of the payment but highlighted the lack of verification and the petitioner's consistent assertion that the payment was for the appeal. The Court concluded that the rejection of the appeal based on the form of payment was unjustified.

Significant holdings in this judgment include the Court's decision to set aside the rejection order dated 26.07.2024 and restore the petitioner's appeal. The Court directed the respondent to consider the payment made through Form GST DRC-03 as a valid pre-deposit and to take the appeal on record, providing the petitioner with a fair opportunity to be heard.

The core principle established by this judgment is the recognition of payments made through Form GST DRC-03 as valid pre-deposits for appeals when the prescribed Form GST DRC-03A is not yet available, in accordance with the clarifications provided in the relevant circular. The Court's final determination was to restore the appeal and direct the respondent to proceed with it on merits, ensuring compliance with the law and providing due process to the petitioner.

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