M/S Hinron Steel Private Limited vs. Union Of INDIA

Facts

The petitioner, M/s Hinron Steel Private Limited, is challenging two orders: one dated 06.01.2021 by the Joint Commissioner of Central GST, Kutch, Gandhidham, determining a total liability of Rs. 1,10,89,614/-, and another dated 18.08.2021 by the Commissioner (Appeals) of CGST, Rajkot, which dismissed the petitioner's appeal. The dismissal occurred because the petitioner failed to make the mandatory pre-deposit of 10% of the total liability, amounting to Rs. 11,08,961/-, as required by Section 107(6) of the CGST Act. The petitioner contended that there was a communication gap leading to the non-deposit. Following the dismissal, recovery notices were issued, prompting the petitioner to file this writ application.

Held

The Court did not adjudicate the writ application on merits. Instead, it acceded to the petitioner's request to deposit the pre-deposit amount. The Court directed the writ applicant to deposit Rs. 11,08,961/- within two weeks with the Office of the Commissioner (Appeals) in accordance with Section 107(6) of the CGST Act. Upon such deposit, the appeal shall be restored to its original file, and the Commissioner (Appeals) shall proceed to hear the appeal on its own merits. The Court explicitly clarified that it had not expressed any opinion on the merits of the case. The ratio decidendi is that where a taxpayer is willing to deposit the mandatory pre-deposit amount within a reasonable time, and the appeal was dismissed solely for non-compliance of this procedural requirement, the appellate authority should be directed to restore the appeal for hearing on merits.

Key Issues

1. Whether the Commissioner (Appeals) was justified in dismissing the petitioner's appeal for non-compliance with the pre-deposit requirement under Section 107(6) of the CGST Act, despite the petitioner's submission regarding a communication gap? The petitioner argued that due to a communication gap, they were unable to make the pre-deposit and sought restoration of their appeal to be heard on merits. The petitioner also argued that the appeal should be restored if they are permitted to deposit the required amount. The revenue's argument is not explicitly recorded in the judgment, but their stance is implicit in the orders passed by the authorities below, which insisted on the pre-deposit. The Commissioner (Appeals) order relied on Section 107(6) of the CGST Act and noted that the petitioner had stated 'NA' against the pre-deposit details and claimed no demand of tax or denial of ITC was confirmed, which was contrary to the fact that the appeal was against a confirmed amount under Section 74 of the Act.