(2023) taxcode.in 178 HC
IN THE HIGH COURT OF BOMBAY
Vinod Metal, a proprietorship and Ors.
v.
The State of Maharashtra and Ors.
Writ Petition No. 17026 of 2023 with Writ Petition No. 17031 of 2023 with Writ Petition No. 17037 of 2023 with Writ Petition No. 17039 of 2023 with Writ Petition No. 17043 of 2023 with Writ Petition No. 17048 of 2023 with Writ Petition No. 17050 of 2023 with Writ Petition No. 17059 of 2023
Decided on 18-Jul-23
Justice G. S. Kulkarni and Justice Jitendra Shantilal Jain
Judgment/Order:
Oral Judgment
(Per G.S. Kulkarni, J.) :-
The Petitioner in these proceedings under Article 226 of the Constitution of India has approached this Court making a grievance in regard to the functionality of the GSTN Portal, which according to the Petitioner, has prevented it from lodging/filing of a statutory appeal under the provisions of Section 107 of the Central Goods and Services Tax Act, 2017 (for short “the CGST Act”), in a situation wherein the Petitioner had intended to take the benefit of the voluntary deposit of the CGST made by the Petitioner under the provisions of sub-section (5) of Section 73 of the CGST Act, in relation to the compliance of the provisions of sub-section (6) of Section 107 of the CGST Act. Such provision mandates that no appeal shall be filed under sub-section (1) of Section 107 of the CGST Act, unless the appellant has paid in full such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as admitted by him; and a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order, in relation to which an appeal is intended to be preferred.
2. To appreciate the contentions as urged by the Petitioner, it would be necessary to note the provisions of Section 73 of the CGST Act, which provide for determination of tax not paid or short paid or erroneously refunded, etc. and the provisions of Section 107 of the CGST Act, which provides for appeals to appellate authority. The said provisions reads thus:
“Section 73-Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful- misstatement or suppression of facts. –
(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under subsection( 3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section (1) or subsection (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
(11) Notwithstanding anything contained in sub-section (6) or subsection (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.”
“Section 107 – Appeals to Appellate Authority.- (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.
(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.
(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.
(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.
(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and
(b) a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.
(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.
(8) The Appellate Authority shall give an opportunity to the appellant of being heard.
(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.
(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.
(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order:
Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:
Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74.
(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.
(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed:
Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.
(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.
(15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf.
(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.”
(emphasis supplied)
3. The Petitioner has contended that for the purpose of the pre-deposit for an appeal intended to be filed by the Petitioner under Section 107 as per sub-section (6) of Section 107 of the CGST Act, the amount as deposited by the Petitioner under sub-section (5) of Section 73 of the CGST Act needs to be accepted towards fulfillment of such pre-deposit, as the said amount is already made, it cannot be contended by the Revenue, that such deposit is not available, when it comes to the compliance of sub-section (6) of Section 107 of the CGST Act. It is contended that, in a given circumstance, it may be unjust and/or unwarranted that the assessee is required to shell out an additional amount so as to comply the mandate of pre-deposit as per sub-section (6) of Section 107 of the CGST Act. This, of course, would depend in facts and circumstances of the case. It is submitted that in any event, such adjustment of the amount voluntarily deposited needs to be accepted, as the assessee has not sought the refund of such amount, but is seeking an adjustment of the said amount towards the pre-deposit for filing an appeal under Section 107 of the CGST Act. It is contended that it would be also unjust and arbitrary that such an adjustment is not permitted and the doors of the appellate authority are closed for such assessee in denying such an adjustment. Further in such situations, the electronic filing Portal itself would not open or would remain closed, in respect of such assessee, who seek adjustment of the voluntary payment of tax already made and who intend to take benefit of such voluntary deposit for the compliance of sub-section (5) of Section 107 of the CGST Act. In support of such contention and the principle, which is sought to be canvassed by the Petitioner, reliance is placed on a decision of the Supreme Court in the case of VVF (India) Ltd. vs. State of Maharashtra1, being a decision rendered in the context of the provisions of Section 26(6A) of the Maharashtra Value Added Tax Act, 2002 (for short “the MVAT Act”).
4. Mr. Thakar, learned Counsel for the Petitioner, would submit that the issue canvassed by the Petitioner insofar as the principle is concerned, would stand covered by such decision, as in similar circumstances, the Supreme Court has recognized that an amount, which was deposited by the appellant therein anterior to the order of assessment cannot be excluded from consideration, when it comes to the necessary deposit of 10% of the amount of tax disputed being a condition for filing of an appeal. Mr. Thakar would, accordingly, submit that, in the peculiar circumstances as in the present case, such an amount, which is deposited with the Revenue prior to the passing of the order sought to be challenged in appeal, needs to be considered. He submits that the Petitioner, hence, ought to be permitted to file an appeal, on the portal being made available, which ought not to be closed or, in the alternative, manual filing of an appeal, being appropriately registered in the system ought to be permitted. It is his submission that in the situations in hand, such technicalities imbeded in the electronic system governing filing of appeals cannot defeat a statutory remedy of an appeal and render the assessee remediless.
5. On the other hand, Ms. Chavan, learned AGP for the Revenue, has argued on the effect the provisions of Section 73(5) and Section 107(6) of the CGST Act would manifest. It is her contention that the Petitioner would not be correct in bringing about an interplay of both the provisions as they stand distinct and operate differently. According to Ms. Chavan, such an adjustment of the payment of tax of a voluntary deposit to be utilised for rectifying the amount of predeposit cannot be permitted. The legislature itself has now made the remedy of an appeal more effective by providing for a reasonable predeposit of the tax as sub-section (6) of Section 107 of the CGST Act would mandate. It is, thus, contended that the Petitioner ought not to have raised such plea and not deposited the amount of tax as per the requirement of the provisions of sub-section (6) of Section 107 of the CGST Act.
6. Mr. Adik, learned Counsel for the Union of India, would also support the submissions as made by Ms. Chavan, learned AGP for the Revenue. He would submit that the electronic portal has application throughout the country and such a prayer as made by the Petitioner would disturb as to what is prevalent. Thus, such plea of an adjustment of the portal to be made available for such category of the assessee, who intends to take benefit of the voluntary deposit of taxes under sub-section (5) of Section 73 of the CGST Act, ought not to be accepted. He would also, therefore, submit that the petition be not entertained.
7. We have considered the rival submissions. The question is whether the amount as deposited by the Petitioner anterior to the filing of the appeal under the provisions of Section 73(5) of the CGST Act can be taken into consideration for the purpose of compliance of the requirement of pre-deposit under Section 107(6) of the CGST Act.
8. In our view, there is much substance in the contentions as urged on behalf of the Petitioner. There cannot be two opinions, that any procedural rule or technical requirement cannot defeat the availability of a remedy of an appeal, made available to the assessee under a substantive statutory provision nor can such remedy be rendered illusory. The interpretation of the provisions need to be made to recognise the intention of the legislature, which is to aid access to justice, which itself is a fundamental right guaranteed under the Constitution. When it comes to right of an appeal, as guaranteed by a statutory provision, such right needs to be made effective and meaningful. It cannot be frustrated by shackles of complex procedural formalities.
9. In the present case, the Petitioner is in no manner disputing that the Petitioner is required to comply with the provisions of sub-section (7) of Section 107 of the CGST Act, in filing the appeal. In other words, the Petitioner is ready and willing to make the payment/ deposit of the tax as per clauses (a) and (b) of sub-section (6) of Section 107 of the CGST Act. However, the question raised by the Petitioner is that for fulfillment of such condition, the amount of tax, which is voluntarily deposited by the Petitioner, under protest under sub-section (5) of Section 73 of the CGST Act, be permitted to be reckoned for the purposes of a pre-deposit for compliance of subsection (6) of Section 107 of the CGST Act. In our opinion, such request of the Petitioner is not something, which is opposed to law, inasmuch as, on a holistic reading of Section 73 of the CGST Act, it can be said that an amount deposited under sub-section (5) Section 73 of the CGST Act is not an amount, which is deposited in pursuance of any demand or any assessment order. It is certainly a voluntary deposit and which is subject to all the contentions of the assessee. Also such deposit would be accounted in the event of any the liability of the assessee to pay tax, and would be integral to the assessment. Thus, when it comes to the compliance of sub-section (6) of Section 107 of the CGST Act, namely, the mandatory payment of the tax, being a condition precedent, mandated in terms of the provisions of subsections (6)(a) and (6)(b) of Section 107 of the CGST Act, in our opinion the principle as laid down in Supreme Court in VVF (India) Ltd. (supra) would become applicable considering that the provisions of the CGST Act on pre-deposit are not too different from the provisions of the MVAT Act, which fell for consideration of the Supreme Court.
10. In VVF India Ltd. (supra), the Supreme Court was considering the correctness of the view of the High Court on the interpretation of Section 26(6A) of the MVAT Act. Sub-section (6A) of Section 26 of the MVAT Act is a provision almost in similar terms to sub-section (6) of Section 107 of the CGST Act. Such provision inter alia provided that no appeal against an order passed on or after the commencement of the Maharashtra Tax Laws (Levy Amendment and Validation) Act, 2017 shall be filed before the appellate authority, unless it is accompanied by the proof of payment of an aggregate of the amounts as applicable and as set out in clauses (a) and(d) of subsection (6A) of Section 26 of the MVAT Act. Clause (a) of sub-section (6A) of Section 26 of the MVAT Act provided that in case of an appeal against an order, which involved dis-allowance of a claim, an amount equal to 10 per cent of an amount of tax disputed by the appellant would be required to be made. Thus, the provision, which fell for consideration of the Supreme Court, was materially different from the provisions under the CGST Act with which we are concerned in the present proceedings. The contention, as urged on behalf of the assessee before the Supreme Court, was to the effect that the statutory provision does not stipulate that 10 per cent of the tax in arrears has to be deposited but requires that 10 per cent of the tax disputed by the appellant has to accompany the filing of the appeal, together with the full amount of the undisputed tax. It was contended that since the entirety of the tax, as assessed and demanded, was disputed, 10 per cent of that amount was required to be deposited, together with the appeal and the amount, which was paid “under protest”, cannot be excluded from consideration. In examining such contention, the Supreme Court accepted such contention as made on behalf of the assessee. The Supreme Court, referring to the decision of the Supreme Court in A.V. Fernandez vs. State of Kerala2, held that the approach of the High Court was not correct. While allowing the appeal and permitting such benefit of the amount, which was paid “under protest” for the purposes of the fulfillment of sub-section (6A) of Section 26 of the MVAT Act, the Supreme Court observed thus: “
11. While analyzing the rival submissions, it is necessary to note, at the outset, that, under the provisions of Section 26(6A), the aggregate of the amounts stipulated in the sub-clauses of the provision has to be deposited and proof of payment is required to be produced together with the filing of the appeal. Both clauses (b) and (c) employ the expression “an amount equal to ten per cent of the amount of tax disputed by the appellant”. The entirety of the undisputed amount has to be deposited and 10 per cent of the disputed amount of tax is required to be deposited by the appellant. In the present case, the appellant disputes the entirety of the tax demand. Consequently, on the plain language of the statute, 10 per cent of the entire disputed tax liability would have to be deposited in pursuance of Section 26(6A). The amount which has been deposited by the appellant anterior to the order of assessment cannot be excluded from consideration, in the absence of statutory language to that effect. A taxing statute must be construed strictly and literally. There is no room for intendment. If the legislature intended that the protest payment should not be set off as the deposit amount, then a provision would have to be made to the effect that 10 per cent of the amount of tax in arrears is required to be deposited which is not the case. Justice Bhagwati in A.V Fernandez v. State of Kerala, AIR 1957 SC 657 writing for a Constitution Bench, elucidated the principle of strict interpretation in construing a taxing statue as follows:
“29. In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case of not covered within the four corners of the provisions of the taxing statue, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter.”
12. The High Court, while rejecting the petition, placed reliance on the fact that there has to be a proof of payment of the aggregate of the amounts, as set out in clauses (a) to (d) of Section 26(6A). The second reason which weighed with the High Court, is that any payment, which has been made albeit under protest, will be adjusted against the total liability and demand to follow. Neither of these considerations can affect the interpretation of the plain language of the words which have been used by the legislature in Section 26(6A). The provisions of a taxing statute have to be construed as they stand, adopting the plain and grammatical meaning of the words used. Consequently, the appellant was liable to pay, in terms of Section 26(6A), 10 per cent of the tax disputed together with the filing of the appeal. There is no reason why the amount which was paid under protest, should not be taken into consideration. It is common ground that if that amount is taken into account, the provisions of the statute were duly complied with. Hence, the rejection of the appeal was not in order and the appeal would have to be restored to the file of the appellate authority, subject to due verification that 10 per cent of the amount of tax disputed, as interpreted by the terms of this judgment, has been duly deposited by the appellant.
13. Subject to the aforesaid verification, we allow the appeal and set aside the impugned judgment and order of the High Court of Judicature at Bombay dated 8 November 2019 in Writ Petition No 8834 of 2018. The appeal shall stand restored to the file of the appellate authority.”
(emphasis supplied)
Thus, adverting to the above principles as laid down by the Supreme Court in VVF India Ltd. (supra), we are of the clear opinion that the principles as laid down in such decision squarely apply to the provisions of sub-section (6) of Section 107 of the CGST Act.
11. For the above reasons, the voluntary deposit as made under protest by the Petitioner under the provisions of sub-section (5) of Section 73 of the CGST Act, cannot be excluded from consideration for the purpose of compliance as mandated by sub-section (6) of Section 107 of the CGST Act. We, accordingly, allow the petitions by the following order:
ORDER
(i) The Petitioner is permitted to file an appeal under Section 107 of the CGST Act either by the electronic mode or by manual filing within a period of two weeks from the day a copy of this order is made available.
(ii) The Appellate Authority is directed to register compliance of the provisions of sub-section (6) of Section 107 of the CGST Act by taking into consideration the voluntary deposit made by the Petitioner under sub-section (5) of Section 73 of the CGST Act.
(iii) The appeal of the Petitioner be, accordingly, registered either under the electronic mode or manually, as the Appellate Authority may deem appropriate.
(iv) Needless to observe that as the Petitioner was bonafide pursuing the present proceedings, the appeal, if filed as per the above directions, the same be adjudicated on merits without an objection as to the limitation.
12. All petitions are disposed of in the above terms. No costs.
(G.S. KULKARNI, J.)
(JITENDRA JAIN, J.)
References:
1. 2021 SCC OnLine SC 1202.
2. AIR 1957 SC 657
Original judgment copy is available here.