GST Payer uses Writ Petitions as Tool to Bypass 10% Pre-Deposit: Allahabad HC notes Henderson Principle, Dismisses Petition [Read Order]

The Allahabad High Court has dismissed a writ petition holding that the petitioner intentionally used multiple writ petitions as a strategy to evade the mandatory 10% pre-deposit required under Section 107(6)(b) of the GST ( Goods and Services Tax ) Act to maintain a statutory appeal.

Justice Jaspreet Singh, relying on the Henderson Principle and the doctrine of constructive res judicata, held that the taxpayer repeatedly re-agitated issues that should have been raised earlier, by abusing the process of law.

The background of the matter is that the orders passed were under Section 74 of theGST Act for the Assessment Years 2021-22 and 2022-23 against the petitioner M/s Simla Gomti Pan Products Pvt. Ltd.

The petitioner initially filed a writ petition directly before a Division Bench challenging the assessment order of June 12, 2024, instead of filing an appeal. The writ was dismissed on 4 September 2024 with liberty to file an appeal.

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Instead, the taxpayer challenged the dismissal before the Supreme Court, which also rejected the Special Leave Petition on 4 November 2024. According to the Court, this conduct itself showed a purposeful act to bypass the statutory appellate mechanism which required a 10% deposit of disputed tax.

After the dismissal of the SLP, the petitioner filed a delayed appeal before the Appellate Authority on November 6, 2024 without making the mandatory pre-deposit. The delay condonation application admitted that the petitioner lacked funds to make the deposit and had approached both the High Court and Supreme Court only to avoid the statutory requirement.

The appeal was dismissed, prompting the petitioner to file a second writ petition. A Coordinate Bench permitted reconsideration of the appeal only on the limited aspect of limitation, referring to the Supreme Court’s rulings in M.P. Steel Corporation and Suryachakra Power Corporation.

However, when the matter returned to the Appellate Authority, the appeal was dismissed again not on limitation, but for non-compliance with pre-deposit requirements. The petitioner again approached the High Court, this time arguing that the Appellate Authority failed to consider its financial hardship and ought to have waived the deposit requirement.

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The Court rejected this contention, noting that no relief for exemption from pre-deposit was ever sought in any earlier writ petition, including in the earlier round before the Coordinate Bench.

Since the question of pre-deposit was always central to the petitioner’s case and repeatedly acknowledged by the petitioner it should have been raised in earlier proceedings. The Court held that raising such issues in successive writ petitions is barred by constructive res judicata and constitutes an abuse of process.

The judge, Invoking the Henderson Principle, as explained by the apex Court in Celir LLP v. Sumati Prasad Bafna (2024), observed that all issues that could and ought to have been raised earlier must be taken at the earliest opportunity. Also, the litigants cannot file repetitive proceedings to piecemeal their grievances.

Since the petitioner failed to seek exemption from pre-deposit when it had the chance before the Division Bench, before the Supreme Court, and even before the Coordinate Bench it could not be permitted to seek the same relief in a fresh writ petition.

While dismissing the petition, the bench called it “a deliberate attempt… to evade the pre-deposit,”. Accordingly, the writ petition was dismissed as misconceived.

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