Facts of the Case:

In this case, the petitioner voluntarily reversed ineligible ITC relating to exempt supplies after it was pointed out during departmental audit. Despite such reversal, the department initiated proceedings under Section 73 of the CGST/OGST Act and confirmed demand of interest along with penalty. Although no tax demand survived, Form GST DRC-07 erroneously reflected the interest demand under the head “Tax”.

The petitioner’s appeal under Section 107 was dismissed. Since Section 112 mandates pre-deposit only of the disputed tax for filing an appeal before the GST Appellate Tribunal, the erroneous classification compelled the petitioner to deposit 10% of the interest amount as if it were tax. Even though the adjudicating authority later rectified the error under Section 161, the appellate authority could not rectify its order due to expiry of the limitation period. Aggrieved, the petitioner invoked the writ jurisdiction of the High Court.

Issue:

Whether the High Court should entertain a writ petition despite the availability of an alternative statutory appeal when an apparent clerical error in the GST demand order renders the statutory appellate remedy ineffective by requiring an unlawful pre-deposit on the interest component.

Held That:

The Orissa High Court held that although disputes relating to levy of interest and penalty ordinarily fall within the domain of the statutory appellate authorities, the present case constituted an exceptional circumstance warranting exercise of writ jurisdiction. The Court observed that the erroneous classification of interest as tax in Form GST DRC-07 resulted in serious prejudice by compelling the petitioner to make a pre-deposit not contemplated under Section 112(8) of the GST Act. Since the adjudicating authority had rectified the error but the appellate authority was powerless to amend its order owing to statutory limitation, the alternative remedy had become illusory and ineffective. Accordingly, the Court set aside the appellate order and remanded the matter to the Appellate Authority for fresh adjudication in accordance with law after granting an opportunity of hearing to the petitioner.

A taxpayer cannot be denied an effective statutory appeal because of a departmental clerical error. Where an incorrect classification of interest as tax frustrates the appellate remedy by compelling an impermissible pre-deposit, the High Court can invoke its writ jurisdiction to restore the taxpayer’s substantive right of appeal.

Case name: M/s. Magnum Estates Private Limited Versus Additional Commissioner, GST (Appeals) At: Central Excise & Customs Central Revenue Bhubaneswar, Superintendent CGST & Central Excise Balasore-1 Range Balasore, Superintendent Jajpur Audit Circle, GST & Central Excise Audit Commissionerate. dated 15.07.2026