M/S.Eraiyarul Construction Material Trading Private Limited vs. Appellate Deputy Commissioner (CT)

Held

The Court held that the Petitioner's mistake in calculating the pre-deposit amount, by excluding the Rs. 1,30,158/- representing the reversal of input tax credit, was bonafide. The Court found that rejecting the appeal based on this bonafide mistake, which deprived the Petitioner of their valuable right of appeal, was not warranted. Applying the Supreme Court's judgment in M/s. Ranjit Impex, the Court reasoned that the appellate authority may not have been justified in rejecting the appeal when the Petitioner had subsequently paid the 25% pre-deposit. The Court set aside the impugned order and directed the appellate authority to entertain the appeal. The ratio decidendi is that bonafide mistakes in calculating pre-deposit, especially when the tax amount is unclear, should not lead to the outright rejection of an appeal, and the principle of entertaining an appeal for consideration on merits, even if pre-deposit is initially delayed due to such bonafide reasons, should be followed.

Facts

The Petitioner, M/s. Eraiyarul Construction Material Trading Private Limited, filed a writ petition challenging the rejection of its appeal papers by the Respondent, the Appellate Deputy Commissioner (CT), Thanjavur. The appeal was rejected because the Petitioner failed to make the pre-deposit of 25% of the tax amount by the statutory deadline of 30.05.2022, paying it instead on 04.07.2022. The Petitioner argued that the Supreme Court's suo motu extension of time until 31.05.2022 for limitations expiring between 15.03.2020 and 28.02.2022 should apply. The Petitioner also contended that the pre-deposit calculation was based on a bonafide misunderstanding of the tax amount due, specifically regarding the inclusion of Rs. 1,30,158/- representing the reversal of input tax credit.

Key Issues

1. Whether the Petitioner's appeal, filed within the extended period granted by the Supreme Court's suo motu order, could be rejected solely on the ground of delayed pre-deposit of 25% of the tax amount, contrary to the principle that an appeal should not be returned for non-compliance with pre-deposit at the presentation stage but rather entertained and considered for dismissal on that ground if not rectified. 2. Whether the Petitioner's misinterpretation of the tax amount due for pre-deposit, specifically excluding the Rs. 1,30,158/- representing reversal of input tax credit, constituted a bonafide mistake that warranted setting aside the rejection of the appeal. Petitioner's Arguments: The Petitioner argued that the Supreme Court's suo motu order extended the limitation period, and therefore, the appeal was filed in time. They relied on the Supreme Court's judgment in M/s. Ranjit Impex Vs. Appellate Deputy Commissioner and another, which held that the proof of deposit of tax has to be produced when the appeal is taken for consideration, not at the time of presentation, and that a condition to 'entertain' an appeal does not mean the memorandum of appeal shall be returned for non-compliance. Respondent's Arguments: The Respondent's action of rejecting the appeal was based on the Petitioner's failure to make the pre-deposit within the statutory period.