Prior GST Payments To Authorities Can Be Adjusted Against Pre-Deposit For Filing Appeal: Allahabad High Court

The Allahabad High Court has recently held that any money deposited by a taxpayer with the GST authorities, in the facts of the case, prior to filing an appeal under Section 107 of the Goods and Services Tax Act, 2017, must be adjusted towards the mandatory pre-deposit required for filing the appeal.

In the present case, an interest liability of Rs 1.43 Crore was raised against Excel Vehicles, a unit of My Auto World Kanpur Private Limited, against which the taxpayer preferred an appeal under Section 107 of the GST Act.

The taxpayer pleaded that it had suo motu deposited amounts towards the demand of Rs 2,49,88,532 raised in the original order, as well as an amount of Rs 25,662,470, which was required to be reconciled and ought to have been treated as the pre-deposit for filing the appeal.

However, the appeal was dismissed on the ground that the taxpayer had failed to make the mandatory pre-deposit. Aggrieved by this order, the taxpayer approached the High Court.

A single bench of Justice Vikas Budhwar noted that the appellate provision under the GST Act is pari materia with Section 26(6A) of the Maharashtra Value Added Tax Act, 2002.

Relying on the Supreme Court's decision in VVF (India) Limited v. State of Maharashtra, Justice Vikas Budhwar observed, “A bare look of the above-quoted judgment would reveal that the Hon'ble Apx Court had clearly propounded the law that on plain reading of the language of the statute, 10% of the entire disputed tax liability have to be deposited in pursuance of the charging section and the amount which has been deposited by the appellant therein and period to be order of assessment cannot be excluded from the consideration in absence of statutory language to that effect”

The Court further relied on Clause 7.2 of a circular issued by the Central Board of Indirect Taxes and Customs dated July 11, 2004, which provides that any amount paid earlier is liable to be adjusted towards the pre-deposit under Section 107 read with Section 112 of the CGST Act.

Accordingly, the writ petition was allowed, and the appellate authority was directed to decide the appeal on its merits within three months.