GST Appeal Rejected for ITC Pre-Deposit Set Aside; Hearing on Merits Directed

Lenovo India Private Limited Vs Commissioner of Central Tax (Karnataka High Court)

The Karnataka High Court considered a writ petition challenging an appellate order passed by the Commissioner of Central Tax (Appeals), which had dismissed the petitioner’s statutory appeal without examining the merits. The petitioner sought quashing of the Order-in-Appeal dated 13.04.2023 and a direction to reconsider the appeal on merits.

The material on record showed that the petitioner was aggrieved by an Order-in-Original dated 29.03.2022 passed by the Adjudicating Authority. Against this order, the petitioner filed an appeal before the Appellate Authority on 06.06.2022 within the prescribed period of limitation. For filing the appeal, the petitioner made a pre-deposit of 10% of the tax amount as required under Section 107(6) of the CGST Act, 2017. This pre-deposit was made by utilising the input tax credit (ITC) available in the petitioner’s electronic credit ledger.

The grievance of the petitioner was that, despite compliance with the statutory requirement and despite Circular No.171/03/2022 dated 06.07.2022 expressly permitting payment of the mandatory 10% pre-deposit for filing an appeal by utilising ITC from the electronic credit ledger, the Appellate Authority dismissed the appeal. The dismissal was solely on the ground that the petitioner was not entitled to make the required pre-deposit by utilising the electronic credit ledger and that such deposit was invalid. The Appellate Authority did not enter into the merits of the appeal.