Appeal Rejected for Pre-deposit Non-Compliance Set Aside; Appellate Authority Directed to Hear on Merits After Allowing Deposit.

Issue:

Whether an Appellate Authority can reject an appeal solely on the ground of non-compliance with the pre-deposit requirement under Section 107(6) of the CGST/Odisha GST Act, 2017, when the appeal was filed manually due to portal issues, the assessee appeared for a hearing and submitted written notes, and the Appellate Authority did not formally intimate the defect regarding pre-deposit until the rejection order.

Facts:

The assessee filed an appeal manually because the departmental portal reportedly did not accept the filing. The Appellate Authority subsequently issued a notice of hearing for this manually filed appeal. The assessee appeared for the hearing and filed a written note of submission. Importantly, the appeal was seemingly heard on merits, apparently ignoring the non-compliance with the pre-deposit requirement at that stage. Furthermore, no intimation was given to the petitioner regarding this non-compliance prior to the final order. However, the appeal was ultimately rejected solely on the ground of non-compliance with the pre-deposit requirement under Section 107(6). The assessee stated their readiness to comply with the pre-deposit requirement.

Decision:

In favor of the assessee (Matter remanded): The court held that the Appellate Authority should have brought the defect regarding the filing of the appeal (specifically, the non-compliance with pre-deposit) to the notice of the assessee much prior to the issuance of the notice of hearing. Having failed to do so, and having proceeded to hear the matter on merits, the Appellate Authority effectively deprived the assessee of a proper opportunity to rectify the defect. Therefore, the impugned order rejecting the appeal was set aside. The assessee was directed to deposit the requisite amount (pre-deposit), and the Appellate Authority was directed to hear the appeal on its merits thereafter.

Key Takeaways:

Procedural Fairness and Natural Justice: The principle of natural justice requires that a party be informed of any deficiencies or defects in their submissions (like non-payment of pre-deposit) and be given a reasonable opportunity to rectify them. The Appellate Authority’s failure to formally intimate the pre-deposit non-compliance before proceeding to hear the appeal, and then rejecting it solely on that ground, was deemed a denial of proper opportunity.
Duty of Appellate Authority to Intimate Defects: Even if an appeal is manually filed or has a formal defect, the Appellate Authority has a duty to communicate such defects to the appellant in a timely manner. This allows the appellant to cure the defect, rather than leading them to believe the appeal is being heard on merits when a fundamental requirement is unmet.
Hearing on Merits Implies Acceptance of Procedure: If the Appellate Authority proceeds to hear an appeal on merits (by issuing a hearing notice, taking submissions, etc.) without formally raising the pre-deposit issue, it creates an impression that the procedural aspects have been waived or overlooked for that stage. To then reject the appeal solely on that unaddressed ground is unjust.
“Audi Alteram Partem”: This ruling implicitly reinforces the “hear the other side” principle. By not informing the assessee of the pre-deposit issue in time, the Appellate Authority deprived them of the chance to make the deposit.
Remand for Rectification: The court’s decision to set aside the order and direct the assessee to make the pre-deposit, followed by a fresh hearing on merits, is a common judicial approach to ensure that justice is not denied due to procedural missteps or technicalities, especially when the assessee is willing to comply.
Importance of Pre-deposit (Section 107(6)): While the order is in favor of the assessee on procedural grounds, it explicitly upholds the statutory requirement of pre-deposit for appeals under Section 107(6). The relief granted is to allow compliance, not to waive the requirement itself.

HIGH COURT OF ORISSA

Harsheel Auto Planet

Commissioner (Appeals), CGST, Central Excise & Customs

HARISH TANDON, CJ.
and MURAHARI SRI RAMAN, J.

W.P.(C) No. 6650 of 2025

MAY 7, 2025

Bibekananda Mohanty, Sr. Adv. and Sayed Shahzeb Ali, Adv. for the Petitioner. Choudhury Satyajit Misra, Sr. Standing Counsel for the Respondent.

ORDER

1. This matter is taken up through Hybrid mode.

2. Challenging the Order-in-Appeal No.619 GST/BBSR/ADC/2024-25, dated 05.12.2024 passed by the Additional Commissioner, Goods and Services Tax (Appeals) directed against the assessment framed under Section 73 of the Central Goods and Services Tax Act, 2017/ Inter-State Goods and Services Tax Act, 2017 (collectively, “the GST Act”) read with Section 20 of the (for short, “the IGST Act”), vide Order-in-Original dated 07.12.2023 the Petitioner has approached this Court by way of filing this writ petition invoking extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.

3. Mr. Bibekananda Mohanty, learned Senior Advocate assisted by Mr. Sayed Shahzeb Ali, learned counsel for the Petitioner submitted that since the departmental portal did not accept the filing, the appeal was filed manual. The Appellate Authority having issued notice of hearing on the merits of the appeal, the petitioner appeared and filed written note of submission. The hearing was concluded.

3.1. It is submitted that though the Petitioner has addressed the appeal on merits on each ground, the appeal has been rejected basing on noncompliance of sub-section (6) of Section 107 of the CGST Act, 2017. It is argued by learned Senior Counsel that after conducting the hearing on merit without indicating the Petitioner with regard to removing the defect, if any, the Appellate Authority erred in law by straightaway rejecting the appeal on the ground of technicality, i.e., non-furnishing of pre-deposit. Since the hearing before the Appellate Authority proceeded on the basis of the merit of the matter, there could not have been rejection of the appeal on the basis of non-compliance of requirements under Section 107(6) of CGST Act.

4. Mr. Choudhury Satyajit Misra, learned Senior Standing Counsel appearing for the CGST, Central Excise and Customs DepartmentOpposite Parties submitted that it is not disputed or denied that the petitioner has not complied with the conditions for filing of appeal. It is the appellant who is required to comply with the statutory requirement at the time of filing of appeal. Since it was within its knowledge about the requirement under sub-section (6) of Section 107 of the CGST Act read with Rule 108 of the CGST Rules, there was no requirement to bring it to its notice regarding defective filing. Therefore, the Appellate Authority was justifying in dismissing the appeal without going into the merits of the matter.

5. Considered the rival contentions advanced by the learned counsel for the respective parties. On perusal of the impugned order dated 05.12.2024 (paragraph-6), it is revealed that the Appellate Authority has taken note of furnishing documents along with appeal and he found that no evidence was available on record with regard to pre-deposit. It is required to be complied with as per sub-section (6) of Section 107 of the CGST Act. Except the said pre-deposit the appeal was otherwise defect-free. It is undeniable that the Appellate Authority proceeded to hear the matter on merit having ignored such a statutory requirement. However, it is no contested by the learned Senior Standing Counsel that the appeal was heard on merit and no intimation was given to the Petitioner with regard to non-compliance of requirements under subsection (6) of Section 107. The learned Senior Advocate fairly conceded that had the Appellate Authority pointed out such a defect, the petitioner would have deposited such amount as is required for the purpose of appeal to be heard on merit.

5. 1 This Court, therefore, feels it expedient to observe that when the appeal is admitted and the Appellate Authority is proceeded to hear the matter on merit, the Office of the Appellate Authority should have brought to the notice of the Petitioner with regard to defect in filing of appeal much prior to issue of notice of hearing. Having not done so, the Appellate Authority proceeded to hear the matter on merit. Therefore, the Petitioner was not afforded proper opportunity. Having not intimated the Petitioner with regard to defect, even though it is admitted that the appeal was admitted for hearing due to inadvertence, there is violation of principles of natural justice.

6. At this stage, learned Senior Counsel appearing for the Petitioner conceded that five days’ time be given to the Petitioner to comply with requirement as per under Section 107(6) of the CGST Act.

7. Having thus the peculiarity in the factual scenario, considering the submissions of the learned Senior Advocate for the Petitioner for grant of five days’ period to make requisite deposit, this Court sets aside the impugned order dated 05.12.2024 passed by the Additional Commissioner, GST (Appeals) and direct the Petitioner to deposit the requirement under Section 107(6) of the CGST Act within five days hence. In the event such deposit is made, the Appellate Authority shall consider the same and proceed to hear the appeal in accordance with law by intimating the date(s) of hearing to the Petitioner.

8. With the aforesaid observation and direction, the writ petition stands disposed of. As a result of the disposal of the writ petition, all pending Interlocutory Applications, if any, shall stand disposed of.