Ms Danieli INDIA Limited Through Its Authorized Signatory Mr Bivash Chandra Paul vs. The State Of Jharkhand Through The Secretary Commercial Taxes Department

Facts

The petitioner, M/s Danieli India Limited, filed a writ petition before the Jharkhand High Court challenging an appellate order dated August 6, 2019, passed by the Joint Commissioner of State Taxes (Appeal). The appeal was dismissed solely on the ground of non-payment of the pre-deposit amount. The petitioner contended that its electronic credit ledger was blocked, leading to approximately Rs. 1.83 Crore being held by the State exchequer. Although the ledger has since been unblocked, the petitioner sought to make the 10% pre-deposit and have the appeal reheard on its merits. The petitioner relied on a Gujarat High Court judgment in a similar case. The respondent State did not have a serious objection to the petitioner's prayer for rehearing upon making the pre-deposit.

Held

The Court held that the appellate order dated August 6, 2019, which dismissed the petitioner's appeal solely on the ground of non-payment of the 10% pre-deposit, was to be set aside. The Court found merit in the petitioner's plea for a rehearing, subject to the deposit of 10% of the tax dues. The reasoning was that the appeal was dismissed on a procedural technicality without delving into the merits. The Court directed the petitioner to deposit Rs. 18,35,721.81/- or 10% of the total tax dues, whichever is higher, within two weeks. Upon such deposit, the appeal would be restored to its original file, and the Joint Commissioner of State Tax (Appeal) would proceed to hear the matter on its merits. The ratio decidendi is that appeals should not be dismissed on technical grounds of pre-deposit if the appellant is willing to comply and the merits warrant a hearing, especially when substantial amounts are already with the revenue.

Key Issues

1. Whether the appellate order dated August 6, 2019, dismissing the petitioner's appeal on the sole ground of non-payment of pre-deposit, is sustainable in light of the petitioner's contention that a substantial amount of tax dues was held by the State exchequer due to a blocked electronic credit ledger, and whether the appeal ought to be restored for a hearing on merits upon payment of the pre-deposit amount as per Section 107(6) of the CGST Act? Petitioner's Arguments: The petitioner argued that the dismissal of the appeal solely for non-payment of pre-deposit was erroneous because a significant amount of tax was already with the State due to a blocked electronic credit ledger. They submitted that the ledger has since been unblocked and they are ready to make the 10% pre-deposit and have the appeal heard on merits. They relied on the Gujarat High Court's decision in M/s Hinron Steel Private Limited Vrs. Union of India. Revenue's Arguments: The respondent State acknowledged the petitioner's misconception regarding tax dues but did not raise a serious objection to the prayer for allowing the petitioner to make the 10% pre-deposit for a rehearing of the appeal.