CGST Act Has No Provision To Exempt Mandatory Pre-Deposit For Appeal: Delhi High Court

The Delhi High Court has recently held that there is no provision under the Central Goods and Services Tax (CGST) Act, 2017, to exempt an assessee from the mandatory pre-deposit required for filing a statutory appeal.

A division bench of Justices Anil Kshetrapal and Shail Jain thus declined to entertain a trader's writ petition challenging cancellation of a GST registration.

According to the petitioner, its GST registration had been cancelled on the allegation that the firm was non-existent and had wrongly availed input tax credit (ITC) amounting to ₹49,89,902. Before passing the impugned order, the authorities had issued a show cause notice, but no reply was submitted by the Petitioner. The Petitioner also did not avail the opportunity of personal hearing.

Before the High Court, Petitioner argued that the impugned order had been passed in violation of the principles of natural justice and ex parte.

Rejecting the contention, the Court noted that the record showed a show cause notice had been issued and an opportunity had been granted to file a reply. It further observed that the Petitioner had also been afforded a personal hearing, which it failed to avail.

The Court held that whether the opportunity granted was adequate was a disputed question of fact that could more appropriately be examined by the appellate authority in the statutory appeal available under Section 107 of the CGST Act.

The Petitioner's counsel then sought exemption from complying with the statutory requirement of pre-deposit for filing the appeal.

However, the Court declined the request, observing that the CGST Act does not contain any provision empowering the Court to exempt an appellant from the mandatory pre-deposit requirement.

“There is no provision under the Act enabling exemption from the requirement of predeposit,” court ruled

For Petitioner: Advocates Gaurav Bhatanagar, Sanjay Sharma

For Respondent: Advocates Govind Narayan Kaushik, SPC with Sakshi Raghav, GP for R2/UOI Advocates Samiksha Godiyal SSC CBIC, Advocates Tenzing Namgyal Bhutia, Ritiwik Narayanan Advs for R-1, 3 to 5