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M/s VINOD METAL vs. THE STATE OF MAHARASHTRA & ORS. 

W.P.(C) NO. 17026 OF 2023, HIGH COURT OF JUDICATURE AT BOMBAY

Background: 

1. Basic Idea of the Sections Involved: 

Section 73(5): The person chargeable with tax may, before service of notice, pay the amount of tax along with interest payable thereon on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer. 

Section 107 – Appeals to Appellate Authority 

Section 107(6) –  It is mandatory for the Appellant to deposit a sum equal to ten per cent of the amount of tax in dispute arising from an order subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed. 

2. Issue in hand:

 The petitioner approached the court under Article 226 of the Constitution of India, raising concerns about the functioning of the GSTN Portal which prevented the petitioner from filing a statutory appeal under Section 107 of the CGST Act, 2017 as the petitioner intended to use the voluntary deposit made earlier to comply with the provisions of sub-section (6) of Section 107

Simple Summary:

1. When filing an appeal on the GSTN Portal against an order demanding pre-deposit, a tab is provided on the portal to facilitate making this required Pre-deposit. 

2. Petitioner on the same matter had earlier deposited a certain amount voluntarily but under protest. Now at the Appeal stage where Pre-Deposit is mandatory petitioner seeks adjustment of the Voluntary payment made with the requirement of Pre-deposit.

3. The GSTN Portal functionality for filing appeal does not provide for such adjustment. 

4. Hence, the Appellant is left remediless as the Appeal cannot be filed without making the Pre-Deposit, the only option available with the Petitioner is to make an additional payment towards Pre-Deposit for filing the Appeal. 

Hence the Appeal before the Hon’ble High Court. 

Arguments of Petitioner:

1. The petitioner argued that the amount voluntarily deposited by them under Section 73(5) of the CGST Act should be considered for the pre-deposit required under Section 107(6) of the CGST Act.

2.  They contended that this adjustment should be allowed as it is unjust & unwarranted to require additional payment for pre-deposit when the petitioner had already made a voluntary deposit.

3. Relied on a precedent, where the Supreme Court had interpreted similar provisions in the context of the Maharashtra VAT Act and had allowed adjustment of a payment made “under protest” for pre-deposit purposes.

Arguments of Respondent: 

1. The respondent (the Revenue) and the counsel for the Union of India argued against the petitioner’s request for adjustment stating that the provisions of Section 73(5) and Section 107(6) operate differently and that the two amounts should not be interchanged for the purpose of pre-deposit. 

2. GSTN Electronic portal has application throughout the country and such a prayer as made by the Petitioner would disturb as to what is prevalent.

Judgement: 

1. Section 73 deals with determination of unpaid tax or erroneously refunded tax, while Section 107 governs appeals against decisions or orders under the CGST Act.

2. The court emphasized that procedural rules should not obstruct the effective access to the remedy of an appeal. 

3. 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. 

4. 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. 

5. 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.