Case Law Details
Frontline (NCR) Business Solutions Private Limited & Anr. Vs State of West Bengal & Ors. (Calcutta High Court)
Whether rejection of appeal before the GST authorities on grounds of being defective for non payment of the requisite pre-deposit can be cured by filing another appeal by making correct pre-deposit?
Introduction
In a significant ruling, the Calcutta High Court addressed a critical issue regarding the procedural aspects of filing GST appeals. The case, Private Limited & Anr. Vs State of West Bengal & Ors., revolved around whether a defective appeal, dismissed due to non-payment of the requisite pre-deposit, could be cured by filing a subsequent appeal with the correct pre-deposit. This judgment provides clarity on the process and reinforces taxpayers’ rights to appeal.
Detailed Analysis
The dispute arose when the appellant filed an appeal before the GST authorities under Section 107 of the CGST/WBGST Act, 2017, without paying the correct pre-deposit amount. Initially, the appellant paid only 1% of the disputed tax instead of the mandatory 10%. Consequently, the appeal was dismissed as defective and delayed.
After receiving the dismissal order, the appellant filed another appeal with the correct 10% pre-deposit. However, this appeal was also dismissed due to delay. The appellant then approached the Calcutta High Court, seeking relief and challenging the dismissal orders dated 31st January 2024 and 28th May 2024.
Key Points from the Judgment:
1. Initial Dismissal: The first appeal was dismissed because the appellant did not comply with the pre-deposit requirement and filed the appeal beyond the prescribed time limit.
2. Subsequent Appeal: After the dismissal, the appellant paid the correct pre-deposit and refiled the appeal, which was again dismissed due to the delay.
3. Court’s Observation: The court noted that the GST Act does not explicitly provide for filing a second appeal to correct pre-deposit mistakes. However, the appellant’s genuine attempt to comply with the pre-deposit requirement was recognized.
4. Merits of the Case: The court did not delve into the merits of the tax dispute but focused on procedural fairness and the right to be heard.
5. emand for Rehearing: The court remanded the case back to the appellate authority, directing them to hear the appeal on merits, given that the appellant had paid more than the required pre-deposit.
6. Legal Implications: The Calcutta High Court’s decision underscores the importance of procedural compliance in GST appeals but also highlights the judiciary’s role in ensuring fairness. By allowing the appellant another opportunity to be heard on merits, the court balanced procedural rigidity with substantive justice.
This judgment serves as a precedent for similar cases where procedural defects in GST appeals can be cured by refiling, provided the appellant acts in good faith and rectifies the errors promptly.
Conclusion
The Calcutta High Court’s ruling in Private Limited & Anr. Vs State of West Bengal & Ors. provides critical guidance for taxpayers and legal practitioners dealing with GST appeals. It reaffirms the principle that procedural lapses, such as incorrect pre-deposit payments, can be rectified by refiling the appeal with the correct deposit, ensuring that justice is served on merits rather than dismissed on technical grounds.
This decision is a relief for taxpayers who may face dismissal of their appeals due to inadvertent procedural errors, ensuring that they still have a fair chance to present their case. The appellate authority is now required to hear such appeals on merits, provided the pre-deposit requirements are subsequently met, promoting a more just and equitable tax adjudication process.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. The present writ petition has been filed, inter alia, challenging the orders passed by the appellate authority on 31st January 2024 as also on 28th May 2024 under Section 107 of the WBGST/CGST Act, 2017 (hereinafter referred to as the “said Act”).
2. Being aggrieved by the order dated 30th May 2023 passed under Section 73 of the said Act for the tax period July 2017 to March 2018, the petitioner no.1 had preferred an appeal. Unfortunately, while filing the appeal, the petitioner no.1 only paid 1 per cent of the amount of tax in dispute in place and stead of 10 per cent of the amount of tax in dispute as required for maintaining an appeal under Section 107(6) of the said Act. It appears that the appellate authority had proceeded to dismiss the said appeal by an order dated 31st January, 2024 on the ground of delay. The petitioners, however, candidly submit that since the petitioners did not make payment of the required pre deposit for maintaining an appeal, the appeal stood dismissed.
3. It is in the facts as noted hereinabove and since there was no decision on merits, the petitioner no.1 had once again, by making payment of the 10 per cent of the amount of tax in dispute as is required for maintaining an appeal under Section 107 of the said Act, filed another appeal on 5th February, 2024. Factum of filing of such appeal would corroborate from the Form GST APL – 01 appearing at page 57 of the writ petition. Such appeal was also dismissed by the appellate authority by its order dated 28th May, 2024 on the ground of delay. From the order impugned it would transpire that although, the petitioner no.1 was issued a show cause notice as to why the appeal shall not be dismissed on the ground of delay, since, none appeared on behalf of the petitioners to explain the reasons for delay, the appeal was dismissed.
4. According to Mr. Agarwal, learned advocate appearing for the petitioners, there was only a delay of 1 month and 7 days. Unfortunately, for reasons beyond the control of the petitioners, the petitioners could not appropriately explain the delay in preferring the appeal by appearing in person. There has, however, been no decision on merits. He submits that in the facts of the case, this Court may be pleased to set aside the impugned order and remand the matter back to the appellate authority to re-hear the matter afresh on merits.
5. Mr. Chakraborty, learned advocate appearing for the respondents, however, submits that the petitioners initially did not prefer the appeal along with the pre deposit, as is required for maintaining the appeal. Such appeal was also delayed. Subsequently, after dismissal of the appeal, the petitioners had filed another appeal in respect of the self-same cause of action, though there is no sanction in law for filing the same. He, however, acknowledges the fact that the petitioners, by filing a subsequent appeal had paid further 10 per cent of the amount of the tax in dispute as is required for preferring such appeal. It is submitted that the petitioners did not offer any proper explanation for the delay. As such, the appellate authority cannot be faulted for rejecting the appeal.
6. Heard the learned advocates appearing for the respective parties and considered the materials on record.
7. Admittedly, in this case a determination has been made by the proper officer under Section 73 of the said Act. The petitioners claim to be aggrieved by the same. Initially, the petitioner no.1 had preferred an appeal by depositing 1 per cent of the amount of tax in dispute. Admittedly, such appeal was filed beyond the time prescribed for preferring the appeal and the same was also not accompanied with the proper pre deposit for maintaining the appeal. The appeal was defective and was accordingly rejected without entering into the merits. Subsequently, the petitioner no.1 once again had preferred another appeal from self same order passed under Section 73 of the said Act and on this occasion, the petitioner no.1 had deposited a further pre deposit of 10 per cent of the amount of tax in dispute. The aforesaid appeal was filed within 6 days from the date of rejection of the defective appeal.
8. Admittedly, therefore, the appeal filed by the petitioner no.1 on this occasion as well was out of time. Although, Mr. Chakraborty submits that there is no sanction in law to file a subsequent appeal and that the appeal was filed beyond the time prescribed, I find that there is no lack of bona fide on the part of the petitioners in preferring the appeal. The appeal filed on 6th October, 2023, which was rejected on 31st January, 2024, apart from being belatedly filed was defective as the amount required for pre deposit was not made. Following the same within five days, the subsequent appeal along with the required deposit was filed on 5th February, 2024. The appeal filed on 6th October, 2024 was a defective appeal. There has been no decision on merit. The petitioners do not stand to gain by filing a belated appeal.
9. Taking into consideration the aforesaid and since, the petitioners had already paid approximately 11 per cent of the amount of tax in dispute, i.e., more than the amount required for maintaining an appeal under Section 107(6) of the said Act, I am of the view that the matter is required to be remanded back to the appellate authority. The appellate authority is directed to re-hear the appeal on merits upon giving opportunity of hearing to the petitioners. As a sequel thereto, the orders passed by the appellate authority dated 31st January, 2024 and 28th May, 2024 are set aside.
10. It is made clear that this Court has not gone into the merits of the case and it shall be open to the parties to raise all issues before the appellate authority except the issue of maintainability of the appeal and the point of limitation.
11. The appellate authority shall decide the matter being uninfluenced by any of the observations of this Court.
12. Since, I have not called for any affidavits, the allegations made in the writ petition are deemed not to have been admitted by the respondents.
13. With the above observations and directions, the writ petition being WPA 16444 of 2024 is accordingly disposed of.
14. All parties shall act on the basis of the server copy of this order duly downloaded from this Court’s official website.
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