M/S.Hyatt Iron And Steels Private Limited vs. Union Of INDIA

Held

The High Court held that the appeal was dismissed by the appellate authority only on the ground of non-payment of the mandated pre-deposit of 10% of the disputed amount, without delving into the merits of the case. The Court, considering the submissions of both parties, including the Petitioner's willingness to make the necessary pre-deposit and the Revenue's stance, set aside the impugned order-in-appeal. The Court granted liberty to the Petitioner to make the mandated pre-deposit of 10% of the disputed amount within two weeks from the date of the order. Upon such pre-deposit, the appellate authority was directed to consider the appeal on its merits in accordance with the law. The ratio decidendi is that an appeal dismissed solely for a procedural defect in making the pre-deposit, where the appellant is willing to rectify it, should be remanded for a decision on merits, provided the statutory pre-deposit is subsequently made.

Facts

M/s. Hyatt Iron & Steels Private Limited (the Petitioner) filed a writ petition challenging the order of the Commissioner of Customs and Central Tax (Appeals-II) which rejected their appeal. The appeal was rejected solely on the ground that the pre-deposit of 10% of the disputed tax amount, as required under Section 107(6) of the CGST Act, 2017, was made by debiting the Electronic Credit Ledger, which the appellate authority deemed an invalid mode of payment. This rejection confirmed the Order-in-Original passed by the Joint Commissioner of Central Tax. The tax period in dispute is September 2021 to June 2023.

Key Issues

1. Whether the discharge of the pre-deposit amount of 10% of the disputed tax under Section 107(6) of the CGST Act, 2017, by way of debit from the Electronic Credit Ledger is a valid mode of payment for the maintainability of an appeal? Petitioner's contention: The Petitioner argued that the appellate authority's action in rejecting the appeal solely on the ground of the mode of pre-deposit was illegal, perverse, and in violation of the principles of natural justice. They sought to have the appeal admitted and decided on its merits. Revenue's contention: The Revenue, represented by the Senior Standing Counsel for CBIC, submitted that if the Court were inclined to remand the matter, the Petitioner should be directed to make the mandated pre-deposit of 10% of the disputed amount for the appeal to be maintainable as per Section 107(6) of the CGST Act.