M/S Sae Exports Inc vs. Union Territory Of J And K And Ors. (State Taxes Department)

Facts

The petitioner, M/s Sae Exports Inc., filed a writ petition challenging an order dated 30.05.2023 passed by the Appellate Authority (Appeals II), States Taxes Department, Kashmir. The Appellate Authority refused to entertain the petitioner's appeal on the grounds that 10% of the disputed tax amount had not been deposited as required by Section 107 of the CGST Act, 2017. The petitioner contended that the required amount had indeed been deposited, evidenced by a receipt for Rs. 46,000/-, which was annexed to the writ petition. The respondents, UT of J&K and Ors., acknowledged that if the deposit was made, there would be no valid reason to refuse the appeal.

Held

The Court held that the Appellate Authority should hear the appeal on its merits, given that the petitioner had deposited the required 10% of the disputed amount. The Court found the petitioner's claim of deposit to be supported by the annexed receipt. Consequently, the order dated 30.05.2023 passed by the Appellate Authority was set aside. The ratio decidendi is that an appeal should not be rejected on procedural grounds if the statutory pre-deposit has been made, and the appellate authority must consider the appeal on its merits. The operative direction was to set aside the impugned order and direct the Appellate Authority to hear the appeal on its merit.

Key Issues

1. Whether the Appellate Authority was justified in refusing to entertain the appeal on the ground of non-deposit of 10% of the disputed tax amount, when the petitioner claims to have made the deposit? (Question of mixed law and fact, turning on Section 107 of the CGST Act, 2017). Petitioner's contention: The petitioner argued that the required 10% of the disputed tax amount had been deposited, as evidenced by a receipt for Rs. 46,000/-. Therefore, the Appellate Authority erred in refusing to entertain the appeal. Respondents' contention: The respondents, represented by the learned GA, conceded that if the petitioner had indeed deposited the required amount, there would be no valid basis for the Appellate Authority to refuse to hear the appeal.