Green Woods Vs Union of India & Anr. (Bombay High Court)
Summary: The Bombay High Court considered a writ petition filed by Green Woods, a firm registered under the Goods and Services Tax Act, 2017, challenging the Order-in-Appeal dated 4 August 2025 passed by the Commissioner, CGST and CX Appeals-II, Mumbai.
The Petitioner had been issued summons on 27 December 2021, following which an investigation was initiated. During the investigation, the Petitioner made deposits on four different occasions totalling Rs. 2,60,24,954/-. Upon completion of the investigation, a Show Cause Notice in GST DRC-01 under Section 74 read with Section 122 of the CGST Act was issued, alleging contravention of the Act and proposing recovery of tax along with interest and penalty. The Petitioner contested the Show Cause Notice by filing a Reply. Thereafter, the Joint Commissioner passed an Order-in-Original dated 26 December 2024 confirming the demand of ITC and imposing penalty upon the Petitioner.
Aggrieved by the Order-in-Original, the Petitioner preferred an appeal before the Appellate Authority. There was, however, a shortfall of Rs. 33,18,000/- towards the statutory 10% pre-deposit required for the appeal. On 1 April 2025, the Petitioner deposited the additional Rs. 33,18,000/-, thereby completing the statutory pre-deposit of 10%. Despite this, the appeal was dismissed by the Order-in-Appeal dated 4 August 2025 on the ground that the Petitioner had failed to pay the statutory pre-deposit as required under Section 107(6)(b) of the GST Act, 2017.
Before the High Court, the Petitioner submitted that the delay in depositing the shortfall occurred due to a genuine financial constraint. It was argued that the amount was deposited within the grace period of one month, during which the Appellate Authority had the power to condone the delay after considering the explanation furnished by the Petitioner. The Petitioner contended that the appeal had nevertheless been dismissed mechanically and without providing an adequate opportunity to explain its position.
The Petitioner relied upon JEM Exporter Vs. Union of India, 2023 (76) G.S.T.L. 4 (Bom.), Delphi World Money Ltd. Vs. Union of India, 1 (92) G.S.T.L. 226 (Bom.), G. Khanna & Company Vs. Union of India, 2025 (95) G.S.T.L. 429 (Bom.), and DN Polymers Vs. Union of India, 2023 (92) G.S.T.L. 226 (Bom.).
The Respondents submitted that the appeal was liable to be dismissed because the statutory 10% pre-deposit had not been made at the time of filing the appeal. However, the departmental counsel did not dispute that the Petitioner had completed the statutory pre-deposit within the one-month grace period provided by the statute and before the impugned Order-in-Appeal dated 4 August 2025 was passed.
The High Court considered the earlier decision in JEM Exporter Vs. Union of India. In that case, the Appellate Authority had dismissed an appeal on the grounds that the appellant had failed to make the statutory pre-deposit and had also failed to file the certified copy of the order. The High Court had interfered with the appellate order and remanded the matter to the Appellate Authority with directions to issue a defect memo pointing out the procedural defects and provide adequate opportunity to rectify them.
The Court reproduced paragraph 11 of JEM Exporter, wherein it was observed that requirements relating to proof of pre-deposit, filing of a certified copy of the order and authentication of the appeal memo were procedural requirements, and that justice could not be denied for failure to comply with such procedure without giving the appellant an opportunity to rectify the procedural defects. The Commissioner (Appeals) was required to issue a defect memo calling upon the petitioner to produce proof of pre-deposit, file the certified copy and authenticate the appeal memo. The failure to provide such an opportunity was held contrary to the principles of natural justice.
The High Court further noted that a similar view had been taken in Delphi World Money Ltd. Vs. Union of India and G. Khanna & Company Vs. Union of India, where, in somewhat similar circumstances, the Court had set aside the Orders-in-Appeal and restored the appeals before the Commissioner (Appeals), granting reasonable time to rectify the defect or deficiency.
Having regard to the peculiar facts and circumstances and the explanation offered by the Petitioner for failure to make the pre-deposit in time, the High Court held that the ratio of the aforementioned decisions was applicable to the present case.
The Court particularly noted that the appeal had been dismissed on the ground of failure to deposit the shortfall in pre-deposit, but the shortfall of Rs. 33,18,000/- had already been made good before the Order-in-Appeal dated 4 August 2025 was passed. On that basis, the Court held that the appeal deserved to be heard on merits.
Accordingly, the Bombay High Court set aside the Order-in-Appeal dated 4 August 2025 and restored the appeal to its original file. The Commissioner of Appeals, being the Appellate Authority, was directed to issue and serve a fresh notice upon the Petitioner intimating the date of hearing and to dispose of the appeal on merits by a reasoned order after providing adequate opportunity of being heard to the Petitioner.
The writ petition was therefore allowed to the extent indicated above, with the parties directed to bear their own costs.
Cases Discussed
- JEM Exporter Vs. Union of India, 2023 (76) G.S.T.L. 4 (Bom.) — relied upon for the proposition that procedural defects in a GST appeal should be capable of rectification after the appellant is given an adequate opportunity to cure them.
- Delphi World Money Ltd. Vs. Union of India, (92) G.S.T.L. 226 (Bom.) — referred to as a decision where the Court had set aside the Order-in-Appeal and restored the appeal in circumstances concerning the statutory pre-deposit.
- G. Khanna & Company Vs. Union of India, 2025 (95) G.S.T.L. 429 (Bom.) — referred to for the similar view that an appellate order could be set aside and the appeal restored with reasonable time to rectify a defect or deficiency.
- DN Polymers Vs. Union of India, 2023 (92) G.S.T.L. 226 (Bom.) — cited by the Petitioner in support of the challenge to the dismissal of the appeal on account of pre-deposit-related deficiency.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. The Writ Petitioner is a firm having registration under the Goods and Service Tax Act, 2017 bearing GSTIN 27ALVPD6556C1ZV. On 27th December 2021, summons were issued to the Petitioner, whereafter, investigation was initiated against the Petitioner firm. During the course of investigation, the Petitioner has made deposit on four different occasions, totalling to an amount of Rs. 2,60,24,954/-. On completion of investigation, Show Cause Notice (GST DRC-01) under Section 74 read with Section 122 of the CGST Act was issued to the Petitioner by the Additional Commissioner of GST, Mumbai alleging contravention of the provisions of the Act and proposing to make recovery of tax from the Petitioner along with interest and penalty. The Petitioner had contested the Show Cause Notice by filing Reply. However, upon conclusion of the proceeding, the Joint Commissioner had passed Order-in-Original dated 26th December 2024 confirming the demand of ITC and also imposing penalty upon the Petitioner.
2. Being aggrieved by the Order dated 26th December 2024, the Petitioner had preferred an Appeal before the Appellate Authority. However, there was a shortfall of an amount of Rs.33,18,000/- towards statutory pre-deposit of 10%, without which, the Appeal preferred by the Petitioner could not entertained by the Appellate Authority. On 1st April 2025, the Petitioner had deposited the additional amount of Rs. 33,18,000/- thus completing the statutory pre-deposit of 10%. Notwithstanding the same, the Appeal preferred by the Petitioner was dismissed by the Order-in-Appeal dated 4th August 2025 passed by the learned Commissioner, CGST and CX Appeals-II, Mumbai on the ground that the Petitioner had failed to pay the statutory pre-deposit as per Section 107(6)(b) of the GST Act, 2017. Aggrieved thereby, the Petitioner has approached this Court by filing the present Writ Petition.
3. Mr Sujit Sahoo, learned counsel for the Petitioner, by referring to the statements made in the Writ Petition, submits that due to a genuine financial constraint, there was some delay on the part of the Petitioner to deposit the amount of Rs. 33,18,000/- being the shortfall of the statutory pre-deposit. However, the said amount was deposited by the Petitioner within the grace period of one month, i.e., within the period during which, the Appellate Authority had the power to condone the delay after taking note of the explanation furnished by the Petitioner. Notwithstanding the same, in a most mechanical manner and without giving adequate opportunity to the Petitioner to explain his stand, the Appeal has been dismissed, thus causing serious prejudice to the interest of Writ Petitioner. Hence, this Petition.
4. In support of his above arguments, Mr Sujit Sahoo has relied upon the following decisions:
i. Delphi World Money Ltd. Vs. Union of India1
ii. JEM Exporter Vs. Union of India2
iii. G. Khanna & Company Vs. Union of India3
iv. DN Polymers Vs. Union of India4
5. Responding to the above arguments, Mr Karan Adik, learned departmental counsel submits that the Appeal preferred by the Petitioner was liable to be dismissed since he had not made the statutory pre-deposit of 10% at the time of filing the Appeal. Mr Adik, however, has not denied or disputed the fact that the Petitioner had in fact completed the statutory pre-deposit within the grace period of one month, as provided by the statute before the impugned order dated 4th August 2025 was passed by the Appellate Authority.
6. We have considered the submissions made at the Bar and have also gone through the material on record. In the case of JEM Exporter Vs. Union of India (Supra), relied upon by the Petitioner, this Court was confronted with an Order-in-Appeal passed by the Appellate Authority dismissing the Appeal on two grounds, viz.,(i) that the Appellant had failed to make the statutory pre-deposit and had also failed to file certified copy of the order. Interfering with the order of the Appellate Authority, this Court had remanded the matter back to the Appellate Authority to issue a defect memo to the Petitioner pointing out the procedural defects in the Appeal so as to give the Petitioner adequate opportunity for rectifying the same. The observations made in paragraph 11 of the said decision would be relevant for the purpose of this case and, therefore, are being reproduced hereinbelow for ready reference:-
“11. The reasons given in paragraphs 5.4 to 5.6 of the order in appeal that is to say proof of pre-deposit having not been filed, certified copy of the order having not been filed and appeal having not been authenticated as per rule 26(a) is a procedural requirement for filing the appeal. In our view, justice cannot be denied for failure to comply with the procedure without giving an opportunity to the Appellant to rectify the procedural defects. In our view, the Commissioner (Appeal) ought to have issued a defect memo calling upon the Petitioner to produce the proof of pre-deposit of tax as per section 107(6) of the CGST Act, 2017, for filing the certified copy of the order and for authentication of the appeal memo as per rule 26(2)(a). The Commissioner (Appeal) having not given an opportunity to the Petitioner for curing the procedural defect was not justified in rejecting the appeal. This would be contrary to the principal of natural justice.”
7. Similar view was taken by this Court in the case of Delphi World Money Ltd. Vs. Union of India (Supra), G. Khanna & Company Vs. Union of India (Supra), wherein, under somewhat similar circumstances, this Court had set aside the Order-in-Appeal and restored the Appeal preferred by the Petitioner before the Commissioner of Appeal by granting reasonable time to the Appellant to rectify the defect/deficiency. Having regard to the peculiar facts and circumstances and the explanation offered by the Petitioner for failure to make pre-deposit in time, we are of the considered view that the ratio laid down in the aforementioned decisions of this Court will be applicable in the present case as well.
8. As such, in view of the ground on which the Appeal has been dismissed, i.e., failure to deposit shortfall of the pre-deposit and also taking note of the fact that such shortfall of the pre-deposit had already been made good by the Petitioner before the order dated 4th August 2025 was passed by the Appellate Authority, we are of the view that the Appeal deserves to be heard on merit.
9. For the reasons stated above, the order dated 4th August 2025 stands set aside. The Appeal is hereby restored to its original file.
10. The Commissioner of Appeals, i.e., the Appellate Authority to issue/serve fresh notice upon the Petitioner intimating the date of hearing of the Appeal and proceed to dispose of the Appeal on merits by a reasoned order, after giving adequate opportunity of being heard to the Petitioner.
11. With the above observations, the Writ Petition stands allowed to the extent indicated above.
12. Parties to bear their own costs.
Nots:-
1 (92) G.S.T.L. 226 (Bom.).
2 2023 (76) G.S.T.L. 4 (Bom.).
3 2025 (95) G.S.T.L. 429 (Bom.)
4 2023 (92) G.S.T.L. 226 (Bom.).
