Facts of the Case

The petitioner, M/S Durga Rai Vijay Kumar, Samour Bazar, was subjected to an original order dated 22.11.2017 passed by the Deputy/Assistant Commissioner, Mobile Squad, First Unit, Chandauli, under the Uttar Pradesh Goods and Services Tax Act, 2017. Aggrieved, the petitioner filed a first appeal, being Appeal No. GST-03/18, and deposited what it contended was the requisite pre-deposit for maintaining the appeal. The First Appeal Authority, however, by order dated 2.3.2019, proceeded on the footing that the pre-deposit required under Section 107(6)(b) of the Act was 10% of the total disputed amount, and not merely 10% of the disputed tax component. Aggrieved by this order, the petitioner approached the Allahabad High Court in the present writ petition.

Issues Involved

  1. Whether the pre-deposit required under Section 107(6)(b) of the UPGST Act, 2017, for maintaining a first appeal, is 10% of the disputed tax amount or 10% of the total disputed amount (inclusive of interest, fine, fee and penalty).
  2. Whether the First Appeal Authority was justified in insisting on a higher pre-deposit than what the statute prescribed.

Petitioner's Arguments

  • The petitioner had already deposited 10% of the disputed tax amount involved in the appeal arising from the original order dated 22.11.2017, which was the correct measure of pre-deposit under Section 107(6)(b).
  • The First Appeal Authority misconstrued the provision by treating the pre-deposit requirement as 10% of the total disputed amount instead of 10% of the disputed tax amount alone.
  • The impugned order dated 2.3.2019 was accordingly contrary to the statute and liable to be set aside, with the appeal remitted for a decision on merits.

Respondent's Arguments

  • The State respondents, represented through the learned Standing Counsel, did not dispute on record that the petitioner had in fact deposited 10% of the disputed tax amount arising from the original order dated 22.11.2017.

Court Order / Findings

  • The Court held that the First Appeal Authority had misconstrued the provision of Section 107(6)(b) of the UPGST Act, 2017.
  • For maintaining its appeal, the petitioner was required to deposit 10% of the disputed tax amount, and not 10% of the total disputed amount, as had been directed by the Appeal Authority.
  • The Court noted there was no dispute that the petitioner had already deposited 10% of the disputed tax amount involved in the appeal arising from the original order dated 22.11.2017.
  • The writ petition was allowed. The order dated 2.3.2019 passed by the Appeal Authority in Appeal No. GST-03/18 was set aside, and the matter was remitted to the Appeal Authority to re-hear the appeal on merits and pass a fresh order in accordance with law.

Important Clarification

  • Section 107(6)(b) of the GST law requires a pre-deposit of 10% of the disputed tax amount to maintain a first appeal — not 10% of the total disputed amount, which may separately include interest, fee or penalty components.
  • An appellate order that proceeds on a mistaken computation of the pre-deposit requirement is liable to be set aside on this ground alone, without the need to examine the underlying merits of the tax demand.

Sections Involved

  • Section 107(6)(b), Uttar Pradesh Goods and Services Tax Act, 2017 — prescribes the pre-deposit of 10% of the disputed tax amount as a precondition for maintaining a first appeal against an assessment/demand order.

Decision – In Favour of

In favour of the Assessee. The Allahabad High Court set aside the first appellate order for having misapplied the pre-deposit provision and remitted the appeal for a fresh hearing on merits; the Court did not go into the merits of the underlying tax demand itself.

Case Details

  • Court: Allahabad High Court (Court No. 38)
  • Case No.: Writ Tax No. 460 of 2020
  • CNR: Not available on record
  • Coram: Hon'ble Saumitra Dayal Singh, J.
  • Decision Date: 23.02.2022
  • Disposal Nature: Allowed – impugned first appellate order set aside and remitted for fresh hearing on merits

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