M/S Utkal Udyog vs. Commissioner CT And GST

Facts

The Petitioner, M/s. Utkal Udyog, filed a writ petition before the Orissa High Court challenging the mandatory pre-deposit requirement of 10% of the demand under Section 107 of the Orissa Goods and Service Tax Act (OGST Act), read with Rule 108 of the OGST Rules, for filing an appeal. The Petitioner contended that they lacked the financial means to make this pre-deposit, preventing them from filing their appeal. They relied on a decision from the Punjab and Haryana High Court in Kelmar (India) Exports v. State of Punjab, where a reduction in pre-deposit was allowed. The Opposite Parties were the Commissioner CT & GST and others.

Held

The Court held that Section 107 of the OGST Act, read with Rule 108 of the OGST Rules, mandates a pre-deposit of 10% of the demand for an appeal to be considered, and this is a mandatory provision. The Court found no discretion vested with the appellate authority or itself to waive this requirement contrary to the statute. While acknowledging the Petitioner's reliance on the Kelmar (India) Exports case from the Punjab and Haryana High Court, the Court stated it was not persuaded to adopt a similar approach due to the clear language of the applicable OGST Act. The Court noted that upon making the 10% pre-deposit, an automatic stay is granted on the balance 90% of the demand, which it considered not unfair or unreasonable. Consequently, the Court was not inclined to entertain the writ petition.

Key Issues

1. Whether the Court, under Article 226 of the Constitution, can waive or reduce the mandatory pre-deposit of 10% of the demand as stipulated under Section 107 of the OGST Act, read with Rule 108 of the OGST Rules, to enable the Petitioner to file an appeal, especially when the Petitioner claims financial hardship. Contentions: Petitioner: Argued that due to financial constraints, they are unable to meet the pre-deposit requirement and sought the Court's intervention under Article 226 to waive or reduce it, citing the Punjab and Haryana High Court's decision in Kelmar (India) Exports v. State of Punjab. Revenue/State: Contended that Section 107 of the OGST Act is a mandatory provision with no discretion for the appellate authority or the High Court to waive the pre-deposit requirement contrary to the statute. They distinguished the Kelmar case as being under a different Act.