Appeal Restored; Shortfall in Pre-Deposit Requires Opportunity to Rectify
Issue: Whether an appeal should be rejected due to an alleged shortfall in the pre-deposit required under Section 107(6) of the CGST Act, 2017, without providing the petitioner an opportunity to rectify the shortfall.
Facts:
- The petitioner challenged an order made by the Commissioner (Appeals) rejecting their appeal.
- The appeal was rejected on the ground of an alleged shortfall in the pre-deposit required under Section 107(6).
- The petitioner submitted that they were not informed about the shortfall and not granted a reasonable opportunity to make good the shortfall.
- The petitioner argued that dismissing the appeal without giving them such an opportunity amounted to a breach of natural justice.
- The GST Tribunal, which would have been an alternate remedy, was not functional.
Decision:
- The court held that though the petitioner had an alternate remedy in this matter, the same was not functional as the GST Tribunal was not functional.
- Therefore, the petitioner did not currently have an efficacious remedy.
- The impugned order was set aside, and the petitioner’s appeal was to be restored before the Commissioner (Appeals).
Key Takeaways:
- Opportunity to Rectify Shortfall: Before rejecting an appeal for a shortfall in the pre-deposit, the appellate authority must provide the appellant a reasonable opportunity to rectify the shortfall.
- Breach of Natural Justice: Dismissing an appeal without providing such an opportunity amounts to a breach of natural justice.
- Non-Functional Tribunal: When an alternate remedy, such as the GST Tribunal, is not functional, the High Court can exercise its writ jurisdiction.
- Efficacious Remedy: The court emphasized the need for an efficacious remedy to ensure that the petitioner’s rights are protected.
- Restoration of Appeal: The court restored the appeal to ensure that the petitioner’s case is heard on its merits.
- The court is reinforcing the need to follow the principles of natural justice, and to give tax payers an opportunity to correct errors.
HIGH COURT OF BOMBAY
D N Polymers
v.
Union of India
M. S. SONAK and Jitendra Jain, JJ.
WRIT PETITION NO. 18007 OF 2024
DECEMBER 9, 2024
Bharat Raichandani, Mahesh Raichandani and Jasmine Dixit for the Petitioner. Ms. S.D. Vyas, Addl. GP, Ms. P.N. Diwan, AGP, Suman Kumar Das and Ram Ochani, for the Respondent.
ORDER
M.S.Sonak, J. – Heard learned counsel for the parties.
2. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
3. The petitioner challenges the order dated 31 July 2024 made by the Commissioner (Appeals) rejecting the petitioners’ appeal on the ground of alleged shortfall of Rupees Two Lakhs in the pre-deposit required under Section 107(6) of the Central Goods and Services Tax Act (CGST Act).
4. Mr. Raichandani submits that there was no shortfall. In any event, the petitioner should have been informed about the shortfall and granted a reasonable opportunity to make good the shortfall, if any. He submits that dismissing the appeal without giving the petitioner such an opportunity amounts to a breach of natural justice.
5. Though the petitioner has an alternate remedy in this matter, we propose to entertain it because we, too, are satisfied that this is a case of failure of natural justice. Besides, Mr. Raichandani pointed out that the GST Tribunal is not functional, and therefore, the petitioner does not currently have an efficacious remedy.
6. In somewhat similar circumstances, we interfered with the impugned order, which was the subject matter of challenge in ‘Delphi World Money Ltd. v. The Union of India and ors’ Writ Petition (L) No. 28914 of 2024.
7. For the above reasons, we set aside the impugned order in appeal dated 31 July 2024 and restore the petitioners’ appeal before the Commissioner (Appeals). If the pre-deposit has any deficiencies, the petitioner is granted two weeks to remedy them. If, according to the Respondents, the deficiencies still persist, the respondents must inform the petitioner within two weeks, and the petitioner must remedy them within two weeks of being so informed.
8. All contentions of all parties on merits are left open. The appeal must be disposed of on merits as expeditiously as possible once the issue of pre-deposit is resolved.
9. The Rule is made absolute in the above terms without any costs order.
10. The interim order, if any, stands vacated. The interim application, if any, is disposed of.