Appeal Dismissal for Shortfall in Pre-deposit Set Aside

Case Title: D N Polymers v. Union of India & Ors.
Court: High Court of Judicature at Bombay, Civil Appellate Jurisdiction
Petition No.: Writ Petition No. 18007 of 2024
Category of Dispute: Input Tax Credit / Appeal Pre-deposit Compliance
Date of Judgement: 9 December 2024
Relevant Section: Section 107(6) of the CGST Act, 2017
Relevant Rules: CGST Appeal Rules relating to pre-deposit compliance

Facts of the Case (with Para Reference)

• The petitioner’s appeal before the Commissioner (Appeals) was rejected on 31 July 2024 for an alleged shortfall of ₹2,00,000 in the mandatory pre-deposit under Section 107(6) of CGST Act (Para 3).

• The petitioner contended that there was no shortfall, and even if there was, the department ought to have given a reasonable opportunity to cure it before dismissing the appeal (Para 4).

• The petitioner argued that dismissal without such opportunity violated principles of natural justice (Para 4).

Question(s) in Consideration (with Para Reference)

• Whether an appeal under Section 107 of CGST Act can be dismissed outright for an alleged shortfall in pre-deposit, without giving the appellant an opportunity to cure the defect? (Para 4)

• Whether failure to grant such opportunity amounts to a breach of natural justice? (Para 5)

Observations of the Court (with Para Reference)

• Although an alternate remedy existed, the Court exercised writ jurisdiction since GST Tribunal is non-functional, leaving the petitioner without an efficacious remedy (Para 5).

• The Court noted that dismissal without informing the petitioner of the deficiency was indeed a failure of natural justice (Para 5).

• Reliance was placed on the precedent of Delphi World Money Ltd. v. Union of India (Writ Petition (L) No. 28914 of 2024), where similar relief was granted (Para 6).

Judgement of the Court (with Para Reference)

• The order dated 31 July 2024 rejecting the appeal was set aside (Para 7).

• The appeal before the Commissioner (Appeals) was restored. The petitioner was given two weeks to make good any pre-deposit deficiency. If deficiencies persist, the department must notify the petitioner within two weeks, and the petitioner shall cure them within the next two weeks (Para 7).

• All merits were kept open for adjudication (Para 8).

• The writ petition was allowed without costs (Para 9).

Between Fine Lines (Simple 5-line Summary)

The Bombay High Court ruled that an appeal cannot be dismissed outright for a small shortfall in pre-deposit.
The taxpayer must be given a fair chance to rectify the deficiency.
Since the GST Tribunal is not operational, writ jurisdiction was exercised.
The appeal was restored before the Commissioner (Appeals) with timelines to cure any defect.
The case reinforces that natural justice prevails over technical lapses.

Summary of Referred Cases

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