In a recent decision, the Karnataka High Court observed that 10% of disputed tax amount to be deposited for filing appeal under Section 107(6) of the CGST Act, 2017
The appellate authority while examining the maintainability of the appeal under Section 107(6) of the Central Goods and Services Tax Act, 2017 (“CGST Act”) has declined to admit the appeal on the ground that petitioner has failed to comply the mandate of predeposit and therefore, has declined to admit the appeal filed by the petitioner under Section 107(6) of the CGST Act.
The counsel for the petitioner reiterated the grounds urged in the writ petition would contend that the order of the appellate authority calling upon the petitioner to deposit 10% of Rs.1,41,11,633/- is one without jurisdiction and therefore, pointed out that the impugned order is in disregard to Section 107(6) of the CGST Act.
The AGA has contended that petitioner by questioning the pre-deposit quantum is virtually seeking to defeat the provisions of the appeal by contending that while preferring an appeal under Section 107(6), 10% of the tax is to be paid and not on 10% of the disputed amount. He would point out that since petitioner is disputing the claim of the Enforcement Officer in entirety, he is bound to pay 10% on entire amount determined by the Enforcement Officer.
Section 107(6) of the CGST Act outlines the conditions for filing an appeal mandating the appellant to fulfil certain financial obligations. Notably, the provision stipulates that the petitioner, in challenging a tax decision, is obliged to pre-deposit the entire amount admitted by him comprising tax, interest, fine, fee and penalty.
A Single Bench of Justice Sachin Shankar Magadum observed that “Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability.”
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