GST: No pre-deposit required in case tax is fully deposited – Calcutta High Court

Liakhat Ali Mallick Vs State of West Bengal & Ors. (Calcutta High Court)

The Hon’ble Calcutta High Court in Liakhat Ali Mallick v. State of West Bengal [M.A.T. NO.823 of 2023 dated June 16, 2023] set aside the order of the Single Bench directing the assessee to deposit 20 per cent of the interest liability and directed the Appellate Authority to consider the appeal of the assessee on merits and held that, condition of deposit of 20 per cent need not be imposed since the same is not statutory requirement.

Facts:

Liakhat Ali Mallick (“the Petitioner”) aggrieved by the demand order of Adjudicating Authority filed an appeal under Section 107(7) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and the Petitioner deposited 10 per cent of the disputed tax as pre deposit.

The Petitioner filed an appeal before the Appellate Authority argued that the garnishee notice was issued by the Adjudicating Authority in case where they have already paid the demanded tax in full. The Appellate Authority rejected the appeal.

Aggrieved by which the Petitioner filed writ before The Hon’ble Calcutta High Court in W.P.A. no.7454 of 2023 dated April 27, 2023 granted the stay on the condition that Petitioner has to pay additionally pay 20 per cent of the interest liability.

Aggrieved by the Order of the Single bench the Petitioner filed an intra- court appeal.

Issue:

Whether the Petitioner is required to pay additional 20 per cent of interest liability as deposit for availing stay order?

Held:

The Hon’ble Calcutta High Court in M.A.T. NO.823 of 2023 held as under:

• Observed that, single Bench has granted stay of the garnishee notice but has imposed a condition that the Petitioner has to deposit 20 per cent of the interest liability which was originally quantified as INR 31,58,936, subsequently rectified as INR 29,85,527.
• Held that, the condition need not be imposed by directing the Petitioner to pay 20 per cent of the interest.
• Allowed the appeal and set aside the order and directed the Appellate Authority to consider the appeal on merits in accordance with law after affording an opportunity of personal hearing.

Conclusion: The ruling by the Calcutta High Court provides relief to Liakhat Ali Mallick by exempting the petitioner from making an additional 20% pre-deposit of the interest liability in the GST case. The High Court emphasized that the imposition of such a condition was not a statutory requirement. This decision sets an important precedent and clarifies the obligations of taxpayers in terms of pre-deposit requirements for availing stay orders in GST matters. It is essential for taxpayers involved in GST cases to understand the implications of this ruling and ensure compliance with relevant legal provisions.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. This intra-Court appeal by the writ petitioner is directed against the order dated 27th April, 2023 in W.P.A. No.7454 of 2023. The appellant had challenged the garnishee notice dated 13th February, 2023 on the ground that the appellant has paid the entire tax as demanded and has also preferred an appeal before the appellate authority and before the expiry of the period for filing the appeal, the garnishee notice was issued.

2. The learned Single Bench has granted stay of the garnishee notice but has imposed a condition that the appellant has to deposit 20% of the interest liability, which was originally quantified as Rs.31,58,936/-, subsequently rectified as Rs.29,85,527/-.

3. In terms of Section 107(7) of the CGST Act read with Section 107(6) for preferring an appeal, the aggrieved assessee is required to deposit 10% of the disputed tax. It is not in dispute that the appellant has paid the entire tax, which has been noted in the order dated 19th December, 2022 passed under Section 73(9) of the W.B.G.S.T. Act, 2017, which shows that the appellant/petitioner has paid the tax of Rs.74,69,348.00.

4. Considering the facts and circumstances of the case and also the statutory requirement, which mandates payment of only 10% of the disputed tax, we are of the view that a condition need not be imposed by directing the appellant/petitioner to pay 20% of the interest.

5. Accordingly, the appeal is allowed and that portion of the order passed by the learned Single Bench directing the appellant to pay 20% of the interest amount is set aside and direction is issued to the appellate authority to consider the appeal filed by the appellant on merits and in accordance with law after affording an opportunity of personal hearing.

6. There shall be no order as to costs.

7. Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.

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