2025 (6) TMI 1002 - HC - GST

Refusal to entertain the appeal by reasons of failure on the part of the petitioners to make payment of pre-deposit as is required under Section 107(6) of the WBGST/CGST Act 2017 - petitioners did not comply with the mandatory requirement for payment of pre-deposit - HELD THAT - The petitioners had preferred an appeal challenging the said order. Although the learned advocate for the petitioners insists that the appellate authority was duty bound to dispose of the appeal by passing a reasoned order having regard to the provisions contained in Section 107(12) of the said Act it is however found that in terms of the provisions contained in Section 107(6) of the said Act the appellate authority could not have accepted the appeal filed by the petitioner unless the petitioner no.1 who was the appellant had paid the amount of tax interest fine and penalty arising from the impugned order as admitted by him and a sum equal to 10% of the remaining amount of tax in dispute arising out of the order (subject to maximum of 25 crores of rupees) in relation to which the appeal has been filed. The language of Section 107(6) of the said Act is distinct and clear and mandates that no appeal shall be filed under sub-Section 1 unless the appellant has paid the amount. If the petitioner did not comply with the above directive for mandatory pre-deposit there is no scope for the appellate authority to entertain the appeal. Conclusion - Since the appeal was not entertained question of the appellate authority disposing the appeal by stating the points of determination and the decision thereon could not have arisen. The petitioners have not been able to make out any special case for entertaining the writ petition. There are no merit in the writ petition. The writ petition is accordingly dismissed without any order as to costs.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

(a) Whether the appellate authority was justified in refusing to entertain the appeal due to non-payment of the mandatory pre-deposit under Section 107(6) of the WBGST/CGST Act, 2017;

(b) Whether the appellate authority was obligated under Section 107(12) of the said Act to dispose of the appeal by passing a reasoned order stating points of determination and decisions thereon, despite the appeal not being entertained;

(c) Whether the petitioners could seek relief by way of writ petition challenging the appellate authority's refusal to entertain the appeal on the ground of financial hardship and non-payment of pre-deposit;

(d) The interpretation and application of the mandatory pre-deposit requirement under Section 107(6) and the scope of judicial review in the context of appeals under the said Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Validity of appellate authority's refusal to entertain appeal for non-payment of pre-deposit under Section 107(6)

Relevant legal framework and precedents: Section 107(6) of the WBGST/CGST Act, 2017 mandates that no appeal shall be entertained by the appellate authority unless the appellant has made a pre-deposit of the amount of tax, interest, fine, and penalty admitted by him, plus 10% of the remaining tax amount in dispute (subject to a cap of Rs. 25 crores). This provision is a statutory condition precedent for entertaining appeals under the Act.

Court's interpretation and reasoning: The Court emphasized the clear and unambiguous language of Section 107(6), which imposes a mandatory pre-deposit condition for filing an appeal. The appellate authority's refusal to entertain the appeal due to non-compliance with this statutory requirement was held to be in strict accordance with the law. The Court rejected the petitioners' contention that the appellate authority should have entertained the appeal despite non-payment of the pre-deposit.

Key evidence and findings: The petitioners admitted non-payment of the pre-deposit citing financial hardship and submitted a letter requesting hearing without pre-deposit. However, no statutory exception to the mandatory pre-deposit requirement was established.

Application of law to facts: Since the petitioners failed to comply with the statutory pre-deposit, the appellate authority had no jurisdiction to entertain the appeal. The Court held that the appellate authority acted correctly in refusing to entertain the appeal.

Treatment of competing arguments: The petitioners argued financial catastrophe and hardship as grounds for waiver or relaxation of the pre-deposit requirement. The Court found no provision in the Act permitting such waiver and rejected this argument.

Conclusion: The appellate authority's refusal to entertain the appeal for non-payment of pre-deposit under Section 107(6) was lawful and justified.

Issue (b): Obligation of appellate authority to pass reasoned order under Section 107(12) despite refusal to entertain appeal

Relevant legal framework and precedents: Section 107(12) of the Act requires the appellate authority to dispose of appeals by stating points of determination and decisions thereon with reasons. This provision governs the manner of disposal of appeals once entertained.

Court's interpretation and reasoning: The Court observed that the statutory obligation to pass a reasoned order under Section 107(12) arises only when the appeal is entertained and proceeds to disposal. Since the appeal was not entertained in the present case due to non-payment of pre-deposit, the appellate authority was not required to pass a reasoned order on the merits.

Key evidence and findings: The impugned order dated 29th August 2024 simply refused to entertain the appeal. No adjudication on merits or points of determination was made.

Application of law to facts: The Court held that the petitioners' contention that the appellate authority failed to comply with Section 107(12) was misplaced because the appeal was never admitted for adjudication.

Treatment of competing arguments: The petitioners argued that the order refusing to entertain the appeal was unreasoned and violative of Section 107(12). The Court rejected this, clarifying the procedural distinction between admission and disposal of appeals.

Conclusion: The appellate authority was under no obligation to pass a reasoned order under Section 107(12) when refusing to entertain an appeal for non-payment of pre-deposit.

Issue (c): Availability of writ jurisdiction to challenge refusal to entertain appeal on grounds of financial hardship

Relevant legal framework and precedents: The writ jurisdiction under Article 226 of the Constitution is discretionary and is not ordinarily exercised to override clear statutory mandates unless exceptional circumstances exist.

Court's interpretation and reasoning: The Court noted that the petitioners failed to demonstrate any exceptional or special circumstances warranting interference with the statutory scheme. Mere financial hardship does not constitute sufficient ground to bypass the mandatory pre-deposit requirement.

Key evidence and findings: The petitioners' letter expressing financial crisis was not supported by any substantive evidence or legal basis for waiver of pre-deposit.

Application of law to facts: The Court held that the petitioners had not made out a special case for relief by writ petition and that the statutory provisions must be strictly enforced.

Treatment of competing arguments: The petitioners sought equitable relief on grounds of hardship. The Court declined to extend relief beyond the statutory framework.

Conclusion: The writ petition challenging the refusal to entertain the appeal on grounds of financial hardship was dismissed for lack of merit.

Issue (d): Interpretation and application of mandatory pre-deposit requirement under Section 107(6)

Relevant legal framework and precedents: Section 107(6) is a statutory bar designed to ensure compliance with tax demands before entertaining appeals, thereby preventing frivolous or vexatious litigation and protecting revenue interests.

Court's interpretation and reasoning: The Court underscored the mandatory nature of the pre-deposit and its role in the