Deposit amount for appeal in the Tribunal, Goods and Services Tax - GST

[Lalitha Krishnamurthy]

A client had filed an appeal under section 107 of the CGST Act depositing 10% of the disputed amount of tax, which was approximately Rs 80 lakhs. The appellate authority has set aside part of the demand and upheld the balance tax amounting to about Rs 35 lakhs. Since the disputed amount is now only Rs 35 lakhs and the amount already deposited is more than 20% of this amount, the client is of the opinion that additional deposit should not be required while filing the appeal before the Tribunal under section 112 (or following the procedure as prescribed under Circular 224/18/2024 -GST dated 11.7.2024 for stay of recovery, pending the constitution of the Appellate Tribunal). The department is, however not in agreement and insisting on additional deposit of 10% of Rs 35 lakhs. Can the experts kindly clarify. Thank you.

Posts / Replies

[Sadanand Bulbule]

Plz meet the Commissioner with proper representation and it might solve your problem, since you are on the right side of the law. Some authorities enjoy being in the "cage" by forfeiting their quasi-judicial freedom.

[KASTURI SETHI]

Dear Querist,

The issue involved is what is the actual disputed amount of tax now whether as per Order-in-Original or Order-in-Appeal ?

If the department decides to file an appeal against the Order-in-Appeal for contesting the relief of reduced amount of tax given by the First Appellate Authority, the disputed amount of tax will remain as per Order-in-Original for the purpose of filing an appeal with GSTAT. If the department accepts the O-i-A, in that situation, the disputed amount of tax will be Rs. 35 lakhs.

The department has a period of six months to file an appeal.

(To be continued)

[KASTURI SETHI]

The solution of the problem is possible only through meeting with the jurisdictional Commissioner as rightly advised by Sh. Sadanand  Bulbule, Sir.

[Sadanand Bulbule]

Thank you very much for your validation Sirji

[Lalitha Krishnamurthy]

Thank you, Sh, Bulbule ji and Sh. Sethi ji for your valuable advice.

[Manoj Thakur]

Tribunal was insisting on 7.5% predeposit for provisional release order under section 110A of Customs Act 1962. We stuck to our clear interpretation of section 129E which prescribes 7.5% of duty demanded. Provisional release order has bank guarantee and performance bond, no duty demand. Tribunal fixed a defect hearing. We won. So our appeal being heard by Tribunal without predeposit. Scope to apply this logic in your case.

[Sumit Srivastava]

The Query:

A client had filed an appeal under section 107 of the CGST Act depositing 10% of the disputed amount of tax, which was approximately Rs 80 lakhs. The appellate authority has set aside part of the demand and upheld the balance tax amounting to about Rs 35 lakhs. Since the disputed amount is now only Rs 35 lakhs and the amount already deposited is more than 20% of this amount, the client is of the opinion that additional deposit should not be required while filing the appeal before the Tribunal under section 112 (or following the procedure as prescribed under Circular 224/18/2024 -GST dated 11.7.2024 for stay of recovery, pending the constitution of the Appellate Tribunal). The department is, however not in agreement and insisting on additional deposit of 10% of Rs 35 lakhs. Can the experts kindly clarify. Thank you.

***

Let us get the facts straight.

The demand/disputed amount of tax as confirmed by the adjudicating authority is Rs.80 lakhs.

For filing appeal u/s 107(6), the assessee is required to make pre-deposit in terms of S.107(6) of Act, 2017.

The sub-section, at present, reads –

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order ¹[subject to a maximum of ³[twenty] crore rupees], in relation to which the appeal has been filed.

Since the assessee does not admit any amount from the impugned order, the clause (a) result is nil/null and, therefore, he is required to pay a sum equal ten per cent of the remaining amount of tax in dispute and which would be Rs.8 lakhs (10% of 80 lakhs) since the assessee has filed an appeal in relation to the entire tax demand.

In the present case, the assessee has got a partial reprieve from the appellate authority inasmuch as the demand now confirmed is 35 lakhs. That is, a tax demand of Rs.45 lakhs has been dropped.

The assessee is aggrieved with this confirmation too and, therefore, is contemplating filing appeal before Tribunal in terms of S.112 of the Act, 2017. Notwithstanding that the Tribunals have not been constituted, reading the provisions of s.112(8) read with the CBIC Circular 224/8/2024 dated 11 July 2024, for the purpose of getting a stay from recovery of the confirmed tax amount, the assessee is required to comply with s.112(8) of the Act, 2017.

This sub-section (8), at present, reads as –

(8) No appeal shall be filed under sub-section (1), unless the appellant has paid––

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and

(b) a sum equal to ⁵[ten per cent.] of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order ¹[subject to a maximum of ⁶[twenty crore rupees]], in relation to which the appeal has been filed.

Again, in terms of clause (a), it is observed that the assessee does not admit any amount of tax as confirmed in the impugned order (passed by the appellate authority) and which is appealed against before the Tribunal. Particular mention is usage of the word “impugned order”.

So, clause (a) result is Nil/Null and coming to clause (b), it is clearly mentioned that the assessee has to pay a sum equal to ten per cent of the remaining amount of tax in dispute, arising from the said order in relation to which the appeal is filed. This means that since an amount of Rs.35 lakhs has been confirmed by the lower appellate authority, the assessee is required to pay ten per cent of this amount and which is Rs.3.5 lakhs. It is pertinent to note that clause (b) in clear terms mentions that this amount of ten per cent would be in addition to the amount paid under s.107(6).

Therefore, in effect, the assessee, to avail the benefit of stay from recovery of the remaining amount of confirmed demand, the assessee would be required to pay a total of Rs.8 lakhs plus Rs.3.5 lakhs i.e. a total of Rs.11.5 lakhs as against the demand of Rs. 35 lakhs as upheld by the appellate authority.

Whether or not the department files an appeal against the dropped demand of Rs.45 lakhs is not a matter of concern insofar as filing of the appeal by the assessee is concerned.

Every assessee needs to remember that it is only when he files an appeal, that he is required to make a pre-deposit. The department is not/never required to make any pre-deposit so they are always free to file appeal, if they are aggrieved by any order.

I am, therefore, of the view that the contention of the departmental officers is absolutely correct.

That is, they are right in insisting on additional deposit of 10% of Rs 35 lakhs i.e Rs.3.5 lakhs.

Quasi-judicial freedom and the ‘cage’ reference seem unwarranted.

Be that as it may, as for the “solution” offered by the experts of meeting the jurisdictional Commissioner, I find it to be meaningless in the facts of the case.

Nonetheless, I have high regard to the learned experts who have been a continuous source of knowledge for lesser mortals like me.

May be, I am wrong in my interpretation and I am always open to getting myself corrected.

Thanks.

[Manoj Thakur]

What you're suggesting would be valid if appellant had withdrawn their predeposit amount for Commissioner appeals.

[KASTURI SETHI]

Sh.Manoj Thakur Ji,

Your views are welcome. because dissent always opens new avenues.

(i) If the proper officer does not provide fair justice, will the Appellant/tax-payer not feel caged (suffocated) ?

(ii) Regarding the meaninglessness, should the Appellant not make all-out efforts to seek fair justice ? Should he sit idle and resign to fate ?

I have posted my replies in the interest of the querist on the basis of my experience in the Review Branch of the department.

[Sadanand Bulbule]

Dear Sir

Like you, I too have posted opinion based on my 36 years of service in all the segments of the State Commercial Tax Department.There may be difference of perception.But the intent of law remains absolute.

[Sadanand Bulbule]

Dear all

Our endeavour is to disperse the dark clouds surrounding this and similar issues. But never to thicken them rapidly then and now.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, Your replies speak volumes of your vast knowledge and experience. I really relish your replies with an intent to acquire more knowledge and novel ideas.