Taxpayer Can't Approach High Court To Avoid Mandatory Pre-Deposits While Availing Appellate Remedy: Kerala HC
The Kerala High Court has recently held that a taxpayer cannot seek to avoid mandatory pre-deposits as a remedy to an appeal under Section 107 of the State Goods and Services Tax Act, 2017. Justice Bechu Kurian Thomas observed that granting such relief would render the provisions of the Act redundant."Once the petitioner undertakes the remedy of a statutory appeal under section 107 of the...
The Kerala High Court has recently held that a taxpayer cannot seek to avoid mandatory pre-deposits as a remedy to an appeal under Section 107 of the State Goods and Services Tax Act, 2017.
Justice Bechu Kurian Thomas observed that granting such relief would render the provisions of the Act redundant.
"Once the petitioner undertakes the remedy of a statutory appeal under section 107 of the Act, petitioner cannot thereafter turn around and approach this Court seeking reliance upon subsequent events, to avoid the mandatory pre-deposits. Such a practice, if permitted, would render the provisions of the statute redundant."
The petitioner had approached the Court challenging a series of monthly assessment orders issued under section 62 of the Central Goods and Services Tax Act, 2017.
In the impugned orders, it was stated that since the petitioner had failed to furnish returns from November 2017 to May 2019 in spite of notice under section 46, assessments were carried out for this period.
Advocates M.K Hajara and C. Ramachandran appearing for the petitioner urged that the assessment orders issued were illegal since the petitioner had requested cancellation of registration and that the Proper Officer had cancelled the registration effective from 31.12.2017.
On this ground, they argued that the assessment orders were issued without authority.
However, Senior Government Pleader Dr. Thushara James resisted the petition.
Upon perusal of the order of cancellation of petitioner's registration, the Court noticed that the effective date of cancellation of registration is stipulated as 31.12.2017. However, the application for cancellation was submitted only after the assessment orders were issued.
Moreover, it was found that the petitioner had already preferred appeals before the Appellate Authority under section 107 of the State Goods and Services Tax Act challenging the order of assessment.
After filing the appeal, which mandates a pre-deposit of 10%, a defect was pointed out that the petitioner had not deposited the mandatory pre-deposit.
The petitioner thereby contended that since the order of cancellation of registration enabled him to have his entire assessment orders set aside, the mandatory pre-deposit, if paid, would cause prejudice to him, especially since the petitioner will stand to lose the court fee payable on the appeal.
The Court also noted that this appeal was preferred as early as March 2020, so the liability to make the pre-deposit befalls on the date of filing of the appeal.
This liability cannot be eschewed from reckoning on the basis of subsequent events, which as claimed by the petitioner to be beneficial to it, the Judge noted.
"The subsequent events can, at the most, be utilised for availing the appropriate benefits while the appeal is considered on merits but not to overcome the mandate of pre-deposit under section 107 of the Act."
Therefore, the Single Judge observed that the petitioner was not entitled to a remedy from the High Court merely to avoid the mandatory pre-deposits payable to the appellant court.
As such, it was held that since the petitioner had already invoked the appellate remedy, the said appeal ought to be pursued as contemplated by law. The petition was thereby dismissed.
Case Title: Nico Tiles v. State Tax Officer & Ors.
Citation: 2022 LiveLaw (Ker) 124