The Calcutta High Court in the case of M/S EVERGREEN CONSTRUCTION, DURGAPUR PRIVATE LIMITED AND ANR. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES GOVERNMENT OF WEST BENGAL AND ORS. vide MAT/425/2024 IA NO. CAN/1/2024 dated 09.04.2024, has allowed the intra court appeal of assessee. It was held that Section 112 of the CGST Act, 2017 which specifies pre-deposit requirements for appeals to the appellate tribunal, clearly restricts pre-deposit amount to 20 per cent of remaining amount of tax in dispute and does not speak of interest. The Court set aside the order to the extent directing assessee to pay 20 percent of remaining interest.

Facts of the Case:- In this case, the petitioner have challenged intra-court appeal against an interim order passed in  WPA 28335 of 2023 dated 25.01.2024, requiring them to deposit 20% of disputed unpaid interest.

The Petitioner earlier in this case challenged the order of adjudication authority demanding interest on the ground that they had belatedly filed the returns for the relevant financial year. Since, the appellate tribunal is yet to be constituted, the petitioner had filed the writ petition before the High Court in which it was held that “If petitioner makes deposit of further 20% of the disputed remaining unpaid interest within two weeks from date and files proof of payment of the same before the authority concerned, no recovery proceeding shall be taken against the petitioner. This interim order shall continue till 30th April, 2024 or until further order whichever is earlier”  (herein referred as ‘the impugned order').

The Petitioner contended that in terms of Section 112 of the GST Act, if the appellants were to approach the appellate tribunal the registered taxpayer  is required to pre-deposit a sum equal to 20% of the remaining amount of tax in dispute in addition to the amount paid under Section 107(6) arising from the order.  Reliance placed upon the judgment of Karnataka High Court in the case of  M/s Tejas Arecanut Traders v. Joint Commissioner of Commercial Taxes (Appeals) Dharwad Division, Hubli & Others reported in 2023- VIL-923-KAR, wherein it was held that “10% pre-deposit obligation is confined to the disputed tax quantum excluding penalty fee and interest”. The court then proceeded to examine the legislative intent and held that the absence of any reference to disputed interest, fine, fee and penalty in Sub-clause (b) of Section 107(6) suggests a meticulous legislative choice.

However, the government counsel contended that the pre-deposit is discretionary order and aimed at secure the revenue interests and hence there is no error in the said order.

Held:- The Court noted the legislative intent as amplified in Section 112(8)(b) of the Act clearly restricts the pre-deposit amount to 20% of the remaining amount of tax in dispute and does not speak of interest. Further,  the provision for filing an appeal before the tribunal does not contemplate payment of 20% of the disputed interest and it is specific in stating that no appeal shall be filed under sub-section (1) of Section 112 unless the appellant has paid a sum equal to 20% of the remaining amount of tax in dispute. Therefore, there is a clear distinction drawn in the said provision restricting the pre-deposit amount to a sum equal to 20% of the remaining amount of tax in dispute.

The Court also held that the discretion which the court can exercise has to be in terms of the provision of the statute more particularly when the appellants had filed the writ petition on account of the fact that the appellate tribunal is yet to be constituted under the Act. Therefore, condition imposed by the learned Single Bench calls for interference. 

Hence, the appeal is allowed and that portion of the order passed by the learned Single Bench directing the petitioners to pay 20% of the remaining interest is set aside and the respondents are directed not to initiate any recovery proceedings till the writ petition is heard and disposed of.

To read the complete judgment 2024 Taxo.online 664