Nishant Ispat Private Limited And Anr vs. State Of West Bengal And Ors.

Held

The Court held that the appellate authority erred in dismissing the petitioners' appeal solely on the ground of non-compliance with the statutory pre-deposit requirement under Section 107(6) of the said Act of 2017. The Court found that it was not disputed that a sum in excess of 10% of the tax in dispute had already been recovered from the petitioners on March 14, 2023. This recovery, made on the strength of an order which was later dropped, satisfied the condition for filing the appeal. Therefore, on the date the appeal was lodged, the requirement of putting in the statutory pre-deposit was deemed to have been satisfied. The Court set aside the appellate authority's order dated July 28, 2025, and remanded the matter back to the appellate authority for deciding the appeal on merits, without insisting on any further pre-deposit. The Court also directed that the sum recovered in excess of 10% of the tax in dispute shall be refunded to the petitioners within four weeks, as the recovery of the balance sum is deemed to have been stayed in terms of Section 107(7) upon deposit of 10%. The Court explicitly stated that it had not gone into the merits of the petitioners' appeal, leaving all points open for the appellate authority to decide.

Facts

The petitioners, Nishant Ispat Private Limited & Anr., are challenging an order dated July 28, 2025, passed by the appellate authority under Section 107 of the WBGST Act, 2017/CGST Act, 2017. This order dismissed their appeal against an adjudication order dated February 5, 2025, passed under Section 74 of the Act, solely on the grounds of non-compliance with the mandatory pre-deposit requirement. The petitioners' primary grievances are that the February 5, 2025 order was passed despite an earlier proceeding based on the same show-cause notice having been dropped, and that recovery of the determined tax had already been initiated prior to the adjudication order. The petitioners contend that an amount of Rs.10,76,006/- was recovered on March 14, 2023, based on an order dated May 27, 2022, which was subsequently dropped on June 22, 2022. The State GST authorities acknowledged that a sum exceeding 10% of the disputed tax had been recovered from the petitioners' electronic credit ledger.

Key Issues

1. Whether the appellate authority erred in dismissing the petitioners' appeal on the ground of non-compliance with the statutory pre-deposit under Section 107(6) of the said Act of 2017, when a sum in excess of 10% of the tax in dispute had already been recovered from the petitioners prior to the filing of the appeal. Petitioner's argument: The petitioners argued that the pre-deposit requirement under Section 107(6) was satisfied because an amount exceeding 10% of the disputed tax had already been recovered from them on March 14, 2023, based on an earlier order that was later dropped. They submitted their electronic credit ledger as evidence. They also contended that the subsequent adjudication order dated February 5, 2025, was based on the same show-cause notice as the dropped proceeding, and that recovery had already been initiated, thus their appeal ought to have been entertained without further pre-deposit. Revenue/State's argument: The State GST authorities, represented by Mr. Chakraborty, submitted instructions indicating that due to a flaw in DRC-08, the demand remained unpaid, and recovery proceedings were initiated, resulting in the entire tax amount being recovered from the electronic credit ledger. They did not dispute that a sum in excess of 10% of the tax in dispute had been recovered.