Safal Trading Company Vs Commissioner (Appeals) (Chhattisgarh High Court)
Summary: The Chhattisgarh High Court, in M/s Safal Trading Company Vs Commissioner (Appeals), CGST and Central Excise & Ors., dismissed a writ petition challenging rejection of a GST appeal for failure to comply with the mandatory pre-deposit requirement under Section 107(6) of the CGST Act, 2017. The petitioner challenged the appellate order dated 15 January 2026, which had dismissed its appeal against the Joint Commissioner’s adjudication order dated 19 December 2024. The adjudication order included an IGST penalty of ₹2,06,77,809 under Section 74(1) and 74(9), besides a GST demand of ₹3,51,820 concerning alleged clandestine removal of goods without payment of tax and issuance of invoices during October 2020. Interest under Section 50 and a corresponding penalty of ₹3,51,820 were also ordered. The Appellate Authority dismissed the appeal as not maintainable because the petitioner had failed to comply with the statutory pre-deposit requirement.
The petitioner submitted before the High Court that it was financially incapable of depositing the amount required for pursuing the statutory appellate remedy. Its counsel requested the Court to entertain the writ petition despite the availability of an appeal before the GST Appellate Tribunal. The respondents opposed the petition, arguing that the petitioner had approached the High Court without exhausting the available statutory remedy and had failed to deposit even the prescribed percentage of the disputed tax. According to the Department, the Appellate Authority had correctly dismissed the appeal without examining its merits because compliance with the statutory pre-deposit condition was mandatory.
The High Court identified the central question as whether an appeal could be entertained without the prescribed pre-deposit. Applying the principle of strict interpretation of taxation statutes, the Court relied upon the Constitution Bench decision in Commissioner of Customs (Import) Vs M/s Dilip Kumar and Company & Ors.. The Court held that the language of Section 107 makes the pre-deposit requirement mandatory and does not confer any discretion upon the Appellate Authority to dispense with or reduce that requirement. Financial inability to deposit the prescribed amount cannot, by itself, create a power of waiver that the statute does not provide. Consequently, the Court found no illegality in the appellate order dismissing the appeal for non-compliance with the statutory condition and declined to interfere under Article 226 of the Constitution. The writ petition was dismissed without adjudication of the underlying GST demand on merits.
Cases Discussed
1. Commissioner of Customs (Import) Vs M/s Dilip Kumar and Company & Ors. (Supreme Court); (2018) 9 SCC 1; 2018 AIR Supreme Court Weekly SC 3606; 30/07/2018. The Constitution Bench decision was relied upon for the principle of strict interpretation of taxation statutes. The Chhattisgarh High Court applied this interpretative principle to hold that the statutory requirement of pre-deposit under Section 107 of the CGST Act cannot be waived or reduced by the Appellate Authority in the absence of an express statutory power.
FULL TEXT OF THE ORDER OF CHHATTISGARH HIGH COURT
1. Heard on I.A. No.2, application for exemption from filing typed/eligible copy.
2. On due consideration and for the reasons assigned in I.A. No.2, application for exemption from filing typed/eligible copy is allowed.
3. This writ petition under Article 226 of the Constitution of India has been filed challenging the order dated 15/01/2026 (Annexure P/9), whereby the appeal preferred by the petitioner against the order dated 19/12/2024 passed by the Joint Commissioner, CGST and Central Excise, was dismissed. By the said order, the Assessing Authority determined the tax liability of the petitioner and imposed penalties, as detailed in paragraphs 3 to 6 of the order, which reads as follows :-
“(3) I determine and confirm the imposition of penalty amounting to Rs.2,06,77,809/- (IGST) (Rs. Two Crore Six Lakhs Seventy Seven Thousand Eight Hundred and Nine only) on the Noticee and order for Its recovery under Section 74(1) and 74(9) of the CGST Act, 2017. The same shall be reduced to 50% of the amount confirmed supra if the Noticee pays Goods and Services Tax so determined along with Interest within 30 days of communication of this order.
(4) I determine and confirm the demand of GST amounting to Rs.3,51,820/- (CGST Rs.1,75,910/- + SGST Rs. 1,75,910/-) (Rs. Three Lakhs Fifty One Thousand Eight Hundred and Twenty only) for clandestine removal of goods without payment of tax and without issuance of invoice for the period Oct’2020 and order for its recovery from them under Section 74 of CGST Act, 2017;
(5) I order for recovery of interest under Section 50 of the CGST Act, 2017 from the Noticee at the appropriate rate on the demand so confirmed and/or ordered for recovery from the Noticee at Sr. (4);
(6) I determine and confirm the imposition of penalty amounting to Rs.3,51,820/- (CGST Rs.1,75,910/- + SGST Rs. 1,75,910/-) (Rs. Three Lakhs Fifty One Thousand Eight Hundred and Twenty only) on the Noticee and order for its recovery under Section 74(1) and 74(9) of the CGST Act, 2017. The same shall be reduced to 50% of the amount confirmed supra if the Noticee pays Goods and Services Tax so determined along with interest within 30 days of communication of this order.”
4. Thereafter, the petitioner preferred an appeal before the Appellate Authority, which was dismissed vide order dated 15/01/2026 (Annexure P/9). The Appellate Authority recorded a finding that the petitioner had failed to establish any exceptional circumstances warranting exemption from the mandatory pre-deposit prescribed under Section 107(6) of the CGST Act, 2017, and consequently held that the appeal was not maintainable.
5. Upon being specifically queried as to whether an alternative and efficacious remedy of appeal before the GST Appellate Tribunal is available under the CGST Act, 2017 learned counsel for the petitioner submitted that, for preferring an appeal, the petitioner was required to deposit the amount prescribed under Section 107 of the CGST Act, 2017. However, the petitioner was not in a position to deposit the amount determined by the Assessing Authority and affirmed by the Appellate Authority. Accordingly, learned counsel prayed that this Court may entertain the present writ petition.
6. Opposing the aforesaid submissions, learned counsel for the respondents submitted that the petitioner has a further statutory remedy of appeal before the GST Appellate Tribunal against the order passed by the Appellate Authority. Without exhausting the available statutory remedy, the petitioner has approached this Court. It was further submitted that the petitioner had failed to deposit even the prescribed percentage of the disputed tax amount as required under the CGST Act, 2017. Therefore, the Appellate Authority had committed no illegality in dismissing the appeal on the ground of non-compliance with the mandatory requirement of pre-deposit, without examining the merits of the case. Accordingly, learned counsel prayed for dismissal of the writ petition.
7. I have heard learned counsel for both the parties and have considered their rival submissions.
8. From the submissions advanced by learned counsel for the parties, the question that arises for consideration is whether the appeal could have been entertained in absence of the mandatory pre-deposit prescribed under the CGST Act, 2017.
9. It is well settled position of law that while interpreting the provisions of a taxing statute, the Courts are required to apply strict rule of interpretation and in taxation statute, there is no room for any intendment that regard must be made to clear many words and the matter should be governed only by the language notification the equity has not placed in the tax statute. It is also well settled position of law that strictly one has to look into the language used, there is no rule for searching the intendment law nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential interference while considering taxation statute. The Constitutional Bench of the Hon’ble Supreme in case of Commissioner of Customs (Import) vs. M/s. Dilip Kumar and Company & Others reported in 2018 AIR Supreme Court Weekly SC 3606 has taken same view and no interpretation contrary to the legislative intent can be adopted. A perusal of Section 107 of the CGST Act, 2017, makes it clear that compliance with the prescribed requirement of pre-deposit is mandatory for maintaining an appeal before the Appellate Authority. The Appellate Authority has no discretion to dispense with or reduce the statutory pre-deposit requirement in absence of any such relaxation power conferred upon the authorities.
10. In view of the plain language of the provision and the settled principles governing the interpretation of tax statute, this Court is of the considered opinion that the Appellate Authority has not committed any illegality in dismissing the appeal for non-compliance with the mandatory requirement of pre-deposit. The petitioner’s inability to deposit the requisite amount, by itself, does not confer a power upon the Appellate Authority to waive a statutory condition.
11. Accordingly, this Court finds no ground to interfere with the impugned order in exercise of its writ jurisdiction. The writ petition is, therefore, dismissed.
