Liakhat Ali Mallick vs. State Of West Bengal And Ors.

Facts

The appellant, Liakhat Ali Mallick, filed an intra-Court appeal against an order dated April 27, 2023, passed by a learned Single Bench. The appellant had challenged a garnishee notice dated February 13, 2023. The grounds for challenge were that the appellant had already paid the entire tax demanded and had filed an appeal before the appellate authority. The garnishee notice was issued before the expiry of the period for filing the appeal. The learned Single Bench had stayed the garnishee notice but imposed a condition for the appellant to deposit 20% of the interest liability, which was initially quantified at Rs. 31,58,936 and later rectified to Rs. 29,85,527. The tax demanded and paid by the appellant was Rs. 74,69,348, as per an order dated December 19, 2022, under Section 73(9) of the W.B.G.S.T. Act, 2017.

Held

The Court allowed the appeal, setting aside the portion of the learned Single Bench's order that directed the appellant to pay 20% of the interest amount. The Court reasoned that the statutory requirement for preferring an appeal under Section 107(7) of the CGST Act read with Section 107(6) mandates the deposit of only 10% of the disputed tax. Since it was not disputed that the appellant had paid the entire tax demanded (Rs. 74,69,348), imposing a condition to pay 20% of the interest liability was deemed unnecessary and contrary to the statutory mandate. The Court directed the appellate authority to consider the appeal filed by the appellant on its merits and in accordance with law, after affording an opportunity of personal hearing. The principle established is that conditions for staying recovery proceedings pending appeal should align with statutory deposit requirements, and imposing higher conditional deposits without statutory basis is not permissible.

Key Issues

1. Whether the condition imposed by the learned Single Bench, requiring the appellant to deposit 20% of the interest liability (Rs. 29,85,527) for staying the garnishee notice, is justified, considering the statutory requirement for preferring an appeal under Section 107(7) of the CGST Act read with Section 107(6), which mandates a deposit of 10% of the disputed tax. The appellant argued that the learned Single Bench erred in imposing a condition to deposit 20% of the interest liability, as the statutory provision for preferring an appeal only requires a deposit of 10% of the disputed tax. The appellant contended that they had already paid the entire tax demanded and had filed an appeal. The State (revenue) did not record any specific arguments against the appellant's contention regarding the deposit amount in the judgment.