Facts of the Case:

In this case, the petitioner challenged an appellate order passed under Section 107, by which the appeal against an order passed under Section 74 on 16 November 2022 was dismissed for non-compliance with the mandatory pre-deposit requirement under Section 107(6). The petitioner submitted that it had simultaneously filed an application before the appellate authority seeking waiver of pre-deposit, asserting that the underlying demand itself was illegal. 

According to the petitioner, this waiver application was not considered or heard. After dismissal of the appeal, the GST authorities recovered the entire disputed tax, leaving the petitioner in severe financial difficulty. The petitioner contended that since more than 10% of the disputed tax had already been recovered by the Department, the mandatory pre-deposit condition stood substantially satisfied, thus entitling the petitioner to a hearing on merits.

The petitioner further explained the delay in approaching the High Court by stating that it was in a state of financial distress due to recovery across multiple years and had been awaiting the constitution of the Appellate Tribunal under Section 112, hoping to pursue its statutory remedy.

Issue:

Whether an appeal dismissed for non-compliance with the mandatory pre-deposit under Section 107(6) can be restored when the Department has subsequently recovered more than 10% of the disputed tax, and whether the petitioner is entitled to a merits hearing before the appellate authority in the absence of a functional Appellate Tribunal.

Held that:

The Court observed that the petitioner had lost the opportunity to pursue the appeal solely due to inability to comply with the pre-deposit requirement and that the Appellate Tribunal remains non-functional, leaving taxpayers without an alternate remedy.

Taking note of the fact that more than 10% of the disputed tax had already been recovered by the Department, the Court held that the statutory pre-deposit requirement stood effectively satisfied. Consequently, the Court set aside the appellate order dated 11 May 2023 and remanded the matter to the appellate authority with a direction to hear the appeal on merits without insisting on any further pre-deposit. The Court clarified that, since the petitioner approached the Court much after the recovery had taken place, it would not issue any direction for refund of the recovered amount at this stage.

The High Court held that the appellate authority has no statutory power to waive or relax the mandatory pre-deposit requirement prescribed under Section 107(6), and therefore the earlier dismissal order could not be faulted on that ground.

Case Name: Arup Kumar Chatterjee Versus Assistant Commissioner of State Tax, Bureau of Investigation (South Bengal) & Ors. dated 02.12.2025

To read the complete judgement 2025 Taxo.online 3162