Bhagyoday Agro Industries vs. Commissioner Appeals CGST And Central Excise And Ors

Facts

The Petitioner, Bhagyoday Agro Industries, challenged an order dated May 19, 2026, passed by the Commissioner (Appeals), CGST & Central Excise, Nashik. The Directorate General of Goods and Service Tax Intelligence had investigated the Petitioner for alleged non-payment of GST under Reverse Charge Mechanism (RCM) on the purchase of rock cotton from agriculturists. A search was conducted under Section 67 of the CGST Act, and the RCM GST liability was quantified at ₹14,77,57,828/-. The Adjudicating Authority confirmed this demand and imposed a tax amount of ₹1,50,00,000/-. The Petitioner appealed this order, but the Appellate Authority rejected the appeal. The Petitioner argued that the Appellate Authority failed to consider the ₹1,50,00,000/- deposited during the investigation, which exceeded the statutory pre-deposit amount, and that the appeal was dismissed without notice or opportunity to be heard, violating principles of natural justice.

Held

The Court held that the impugned order dated May 19, 2026, passed by the Commissioner (Appeals) was liable to be quashed and set aside. It was not disputed that no defect memo, notice, or opportunity was granted to the Petitioner before dismissing the appeal. The Court noted that the Petitioner had deposited ₹1,50,00,000/- during the investigation, which far exceeded the statutory pre-deposit amount required before filing an appeal. The Appellate Authority ought to have followed the principle that an appellant must be given a no-defect memo, notice, or opportunity of hearing before dismissing an appeal for a shortfall in pre-deposit, and the appellant should be given a chance to satisfy any such shortfall. The Petitioner's contention that the deposited amount already exceeded the requirement was a relevant fact that the Appellate Authority failed to consider. Therefore, the Court allowed the Writ Petition, quashed the impugned order, and directed the Commissioner (Appeals) to grant a fresh hearing to the Petitioner, particularly on the point of pre-deposit, and decide the proceedings within 12 weeks. All contentions on merits were kept open.

Key Issues

1. Whether the Appellate Authority erred in rejecting the Petitioner's appeal without considering the amount of ₹1,50,00,000/- deposited during the investigation, which the Petitioner contended exceeded the statutory pre-deposit requirement as per the Circular dated July 11, 2024? (Question of law and fact, turning on Section 107 of the CGST Act and principles of natural justice). Petitioner's Arguments: - The impugned order was passed in gross violation of the principles of natural justice as no defect memo, notice, or opportunity of hearing was granted before dismissing the appeal. - The amount of ₹1,50,00,000/- deposited during the investigation was not considered, despite it exceeding the statutory pre-deposit amount. Revenue's Arguments: - The impugned order does not suffer from any error and the appeal was rightly rejected.