M/S Tejas Arecanut Traders vs. Joint Commissioner Of Commercial Taxes

Held

The Court held that the appellate authority was not justified in demanding a pre-deposit of 10% on the entire disputed amount, including tax, fine, penalty, and fee. The Court interpreted Section 107(6)(b) of the CGST Act, 2017, to mean that the 10% pre-deposit is specifically on the 'remaining amount of tax in dispute' and does not extend to interest, fine, fee, and penalty when the entire tax liability is contested. The Court reasoned that the legislative intent, as evidenced by the specific wording of Section 107(6)(b), was to focus the pre-deposit obligation solely on the disputed tax amount, recognizing that penalties, fines, fees, and interest are consequential to the determination of the primary tax liability. The Court cited Supreme Court judgments in J.K. Synthetics Ltd. v. CTO, Prakash Nath Khanna v. CIT, and B. Premanand v. Mohan Koikal to emphasize the importance of adhering to the literal interpretation of statutory language and legislative intent. The impugned order demanding pre-deposit of 10% of Rs. 1,41,11,633/- was set aside. The Court directed the appellate authority to admit the appeal and decide it in accordance with the law, noting that the petitioner had already deposited 10% of the tax liability (Rs. 67,200/-).

Facts

The petitioner, M/s Tejas Arecanut Traders, filed a writ petition challenging an order passed by the Joint Commissioner of Commercial Taxes (Appeals). The appellate authority declined to admit the petitioner's appeal under Section 107(6) of the CGST Act, 2017, on the grounds that the petitioner failed to comply with the pre-deposit requirement. The petitioner was asked to deposit 10% of Rs. 1,41,11,633/-. The petitioner argued that this demand was without jurisdiction and that the pre-deposit should only be calculated on the 'tax in dispute' and not include interest, penalty, fine, or fee. The petitioner had already deposited 10% of the tax amount determined by the Enforcement Officer, which was Rs. 6,71,983/-.

Key Issues

1. Whether the expression 'tax in dispute' under Section 107(6) of the CGST Act, 2017, includes interest, penalty, fine, and fee for the purpose of calculating the pre-deposit amount for an appeal. Petitioner's contention: The petitioner argued that Section 107(6) of the CGST Act mandates pre-deposit of 10% of the 'remaining amount of tax in dispute' and that this expression does not encompass interest, penalty, fine, and fee. They relied on judgments from the Patna High Court in Carbon Resources (P) Limited vs. The State of Bihar and others and the Allahabad High Court in Durga Raj Vijay Kumar vs. State of U.P. to support the argument that the appellate authority was not justified in including these other components in the pre-deposit calculation. The petitioner also stated that the confiscating officer determined the tax at Rs. 6,71,983/-, and they had already deposited 10% of this amount. Revenue's contention: The revenue contended that by questioning the pre-deposit quantum, the petitioner was attempting to defeat the provisions of appeal. They argued that since the petitioner was disputing the entire claim of the Enforcement Officer, they were bound to pay 10% on the entire amount determined by the Enforcement Officer. Reliance was placed on the Supreme Court judgment in Commissioner of Income Tax vs. Hindustan Bulk Carriers.