A court provided relief from multiple pre-deposits for overlapping GST demands.

A court provided relief from multiple pre-deposits for overlapping GST demands.

Issue

When a taxpayer is faced with multiple, overlapping demand orders and notices from different GST authorities for the exact same issue and period, what is the appropriate legal remedy, and can a High Court provide relief from the statutory requirement of making a separate pre-deposit for each separate appeal?

Facts

• The petitioner was facing parallel proceedings and overlapping tax demands from three different wings of the GST administration: DGST, CGST (East), and CGST (North).
• The underlying allegation in all the cases was the same: the fraudulent availment of Input Tax Credit (ITC) based on invoices from fictitious and non-existent firms, without any actual supply of goods or services.
• The petitioner filed a writ petition in the High Court, arguing that being subjected to multiple adjudications for the same issue by different authorities was illegal, unjust, and a duplication of proceedings. The department argued that the petitioner should simply file separate appeals against each order.

Decision

The High Court, while holding that the petitioner should use the statutory appeal process to argue the facts of the case, provided significant and practical relief to prevent undue hardship and multiplicity of proceedings.

• The court directed the petitioner to file appeals against the various orders, as the case required an extensive examination of facts, which is the proper role of the appellate authority.
• However, it gave a crucial and definitive direction regarding the mandatory pre-deposit that is required to file an appeal:
  • The pre-deposit was to be made only for one of the main orders (Impugned Order No. 2).
  • No pre-deposit was required for the appeal against the other order (Impugned Order No. 3), as the court explicitly acknowledged that the demand amount was overlapping.
• Furthermore, to prevent a third parallel proceeding, the court ordered that a separate Show Cause Notice (SCN) that covered the same issues be dropped entirely.

Key Takeways

1. Protection Against Multiple Proceedings for the Same Issue: A taxpayer cannot be subjected to multiple legal proceedings and potential recoveries from different authorities for the very same alleged offense for the same period. This is a fundamental principle of justice that prevents harassment.
2. When Writ Courts Can Intervene: While the “alternate remedy” of filing an appeal is the standard rule, High Courts can and will intervene in their writ jurisdiction in exceptional circumstances. A clear case of overlapping jurisdiction and multiple parallel proceedings is one such exception where the court can step in to lay down a fair and just procedure.
3. Pragmatic Relief on the Pre-deposit Requirement: The court’s direction on the pre-deposit is a key and practical takeaway. It ensures that a taxpayer’s statutory right to appeal is not made practically impossible by a requirement to deposit the same disputed amount multiple times with different authorities, which would be financially crippling.
4. Streamlining the Litigation Process: The spirit of the court’s order is to streamline the legal process and avoid unnecessary and duplicative litigation. By dropping one SCN and waiving one pre-deposit, the court is effectively guiding the entire system towards a more consolidated, efficient, and fair adjudication of the core issue.