Impressive Data Services Private Limited Vs Commissioner (Appeals-I) (Delhi High Court)
Delhi High Court denies plea for waiver of mandatory pre-deposit under Section 107(6) of CGST Act, citing binding precedents on appeal requirements.
New Delhi: The Delhi High Court has reiterated that the requirement of pre-depositing a percentage of the disputed tax amount is mandatory for filing appeals under Section 107 of the Central Goods and Services Tax (CGST) Act, 2017. The court dismissed a petition by M/s Impressive Data Services Private Limited seeking exemption from this requirement.
Impressive Data Services had filed a petition challenging the pre-deposit mandated for appealing against an order from the Commissioner (Appeals-I) related to alleged wrongful availment of Input Tax Credit (ITC) during the financial years 2017-18, 2018-19, and 2019-20.
The petitioner argued that errors occurred in their GST returns during the initial transition phase to the GST regime, leading to incorrect turnover figures being reported, although ITC on these amounts was never actually availed. They specifically contended that for two entities, M/s DST Kumar Traders and M/s Vinay Sales Corporation, they had not availed ITC during the relevant period. Citing these points, the petitioner sought a waiver of the pre-deposit requirement.
Furthermore, the petitioner highlighted their financial situation, stating that significant amounts (over Rs. 6.4 crores) were recoverable from government departments and that securities worth Rs. 4 crores were also held by government entities. They submitted that these factors warranted a waiver of the pre-deposit.
The counsel for the Revenue Department countered the petitioner’s arguments by referring to judicial precedents. It was submitted that the decision in Shubh Impex v. Union of India, which the petitioner relied upon, was no longer being followed by coordinate benches of the High Court. Instead, these benches were adhering to the earlier judgment in Anjani Technoplast Ltd. v. CCE, which had been upheld by the Supreme Court. The department contended that the principles laid down in Diamond Entertainment Technologies (P.) Ltd. v. Commissioner of Central Goods and Tax Commissionerate, Dehradun & Anr. would be applicable, which addressed the mandatory nature of pre-deposit.
The High Court considered the provisions of Section 107(6) of the CGST Act, which stipulates that an appeal can only be filed upon payment of the full admitted tax, interest, fine, fee, and penalty, and a sum equal to ten percent of the remaining disputed tax amount, subject to a maximum limit. The court observed that this provision does not grant any discretion to waive the pre-deposit requirement.
Referring to the judgment in Diamond Entertainment Technologies, the court noted that it had clearly established that appeals filed after the amendment to similar provisions in the Excise Act were maintainable only if the mandatory pre-deposit was made. The Diamond Entertainment Technologies judgment had also distinguished earlier rulings, including Shubh Impex, based on the binding nature of the law set out in Anjani Technoplast, which merged with the Supreme Court’s order.
The High Court emphasized that, in light of the settled legal position and being bound by Article 141 of the Constitution to follow the law laid down in Anjani Technoplast (as interpreted in Diamond Entertainment Technologies), the prayer for waiver of pre-deposit could not be entertained.
However, the court allowed the petitioner the liberty to approach the concerned appellate authority and present their case regarding any amounts lying with government entities that could potentially be considered towards fulfilling the pre-deposit requirement. The petitioner had mentioned that Rs. 20 lakhs out of a total required deposit of Rs. 64 lakhs was already with the department; this point could also be raised before the appellate authority.
The High Court disposed of the petition, relegating the petitioner back to the appellate authority under Section 107 of the CGST Act. The court clarified that it had not examined the merits of the underlying dispute regarding the alleged wrongful availment of ITC.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
