Karnataka High Court
M/S Tejas Arecanut Traders vs Joint Commissioner Of Commercial Taxes on 20 December, 2023
1
R
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 20TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 104505 OF 2023(T-RES)
BETWEEN:
M/S TEJAS ARECANUT TRADERS
LOCATED AT KHATA NO.70/C
SHOP NO.1, VINAYAKA COMPLEX, OPP KSRTC BUS
STAND SIRIGERE
TQ: CHITRADURGA, CHITRADURGA-577541
KARNATAKA
THROUGH ITS PROPRIETOR
MR. KOLALARA SOMASHEKARAPPA MOHAN
AGED ABOUT 40 YEARS
S/O K N SOMASHEKHARAPPA,
MOHANKUMAR RESIDENT OF DODDIGANAHAI
B SHELAR CHITRADURGA, KARNATAKA
Digitally signed by
MOHANKUMAR B
SHELAR
Date: 2023.12.27
...PETITIONER
11:20:14 +0530
(BY SRI.SAMEER GUPTA, ADVOCATE FOR
KUM.GAYATRI.S.R, ADVOCATE)
AND:
1. JOINT COMMISSIONER OF COMMERCIAL TAXES
(APPEALS)
DHARWAD DIVSION,
HUBLI-580001
2
2. ASSISTANT COMMISSIONER OF COMMERCIAL
TAXES, (ENFORCEMENT-1),
HUBLI-580001
...RESPONDENTS
(BY SRI.SHIVAPRABHU.S.HIREMATH, AGA FOR R1 & R2)
THIS WP IS FILED UNDER ARTICLES 226 & 227 OF
THE CONSTITUTION OF INDIA PRAYING TO I) ISSUE A
WRIT, ORDER, OR DIRECTION IN CERTIORARI QUASHING
THE IMPUGNED ORDER STAYING M/S. TEJASARECANUT
TRADERSGST/2023-24/APPEAL ORDER NO. DATED.
28.06.2023 (ANNEXURE-A) ORDER U/S 107(1) AND R/W
107(6)(A)(B) OF CGST AND SGST ACTS 2017 WHICH HAS
BEEN PASSED WITHOUT JURISDICTION AND ETC.,
THIS PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 19.09.2023, COMING ON FOR
PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT
MADE THE FOLLOWING:
ORDER
The captioned petition is filed seeking following
reliefs:
"i) Issue a writ, order, or direction in certiorari
quashing the impugned order bearing M/s.
TejasArecanut TradersGST/2023-24/Appeal Order
No. dated. 28.06.2023 (Annexure-A) Order U/s
107(1) and R/w 107(6)(A) & (B) of CGST and
SGST Acts 2017 which has been passed without
jurisdiction.
ii) Issue a writ, order or direction in the nature of
mandamus directing the Respondent No. 1 to
admit the appeal filed by the petitioner.
iii) Issue any other writ order or direction, which
this Hon'ble Court may deem fit and proper under
the facts and circumstances of the present case.
iv) Grant costs and interest and
v). Grant such further and other reliefs as the
nature and circumstances of the case may
require."
2. In the captioned petition, the appellate
authority while examining the maintainability of the
appeal under Section 107(6) of the Central Goods and
Services Tax Act, 2017 (for short "CGST Act") has
declined to admit the appeal on the ground that
petitioner has failed to comply the mandate of pre-
deposit and therefore, has declined to admit the
appeal filed by the petitioner under Section 107(6) of
the CGST Act.
3. The learned counsel for the petitioner
reiterating 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, he would point out that the impugned order
is in disregard to Section 107(6) of the CGST Act.
4. The counsel on record while referring to
Section 107(6) of the CGST Act would contend that
petitioner has challenged the entire demand confirmed
in the confiscation order and therefore, he would
contend that the expression "tax in dispute" provided
under Section 107(6) of the CGST Act does not
include interest, penalty, fine and fee. While referring
to the language of Section 107(6) of the CGST Act, he
would contend that deposit of 10% of the disputed tax
amount means only tax amount and not entire
composite amount comprising tax, fine, penalty and
fee. Therefore, he would vehemently argue and
contend that the appellate authority has wrongly
calculated pre-deposit of Rs.14,11,163/- which is 10%
of total demand that is Rs.1,41,11,633/-. To
substantiate his grounds, he has placed reliance on
the judgment rendered by the High Court of Patna in
the case of Carbon Resources (P) Limited .vs. The
State of Bihar and others [Civil Writ Jurisdiction
Case No.2412 0f 2023] as well as the judgment
rendered by the High Court of Allahabad in the case of
Durga Raj Vijay Kumar .vs. State of U.P.1.
Referring to these judgments, he would point out
that appellate authority was not justified in
including other components while determining pre-
deposit namely, fine, penalty and fees. He
would further point out that confiscating Officer
has determined tax at Rs.6,71,983/- and
2022(66) GSTL.321 (All.)
petitioner has already deposited 10% of the tax
already determined by the Enforcement Officer.
5. Per contra, learned AGA has filed statement
of objections and 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. Reliance is placed on the
judgment rendered by the Apex Court in the case of
Commissioner of Income Tax .vs. Hindustan Bulk
Carriers2.
2003(3) SCC 57
6. Heard the learned counsel for the petitioner
and the learned AGA. Perused the material on record.
7. Section 107 sub-clause(6) of the CGST Act
reads as under:
"6. No appeal shall be filed under sub-
section (1), unless the appellant has paid -
(a) in full, such part of the amount of tax,
interest, fine, fee and penalty arising from the
impugned order, as in admitted by him; and
(b) a sum equal to ten per cent of the
remaining amount of tax in dispute arising
from the said order, subject to a maximum of
twenty-five crore rupees, in relation to which
the appeal has been filed."
On reading clause (a) of sub-section (6) of
Section 107 of the CGST Act, what emerges is that
petitioner has to pay in full such part of the amount of
tax, interest, fine, fee and penalty as admitted by
him. The petitioner has to further pay sum equal to
10% of the remaining amount of tax in dispute arising
from the said order in terms of clause (b) of sub-
section (6) of Section 107 of CGST Act.
8. Section 107(6) of the CGST Act outlines the
conditions for filing an appeal mandating the appellant
to fulfill 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. In the context of disputing the
entire tax amount, the 10% pre-deposit requirement
pertains exclusively to the remaining disputed tax
amount as articulated in the statutory language.
Consequently, there exists a statutory basis for
asserting that 10% pre-deposit obligation is confined
to the contested tax quantum excluding penalty, fee
and interest. This interpretation aligns with the legal
principle that penalties are consequential to the
determination of the underlining tax liability.
Therefore, when petitioner disputes the entire tax
amount, the focus on the pre-deposit obligation
remains on the contested tax, recognizing the
subsequent nature of penalty, fee, interest in the
adjudicative process. If a statute provides a thing to
be done in a particular manner, then it has to be done
only in that manner.
The apex court in the case of J.K. Synthetics
Lid. v. CTO3 has observed as follows
"16. It is well known that when a statute
levies a tax it does so by inserting a
charging section by which a liability is
created or fixed and then proceeds to
provide the machinery to make the liability
effective. It. therefore, provides the
machinery for the assessment of the liability
already fixed by the charging section, and
then provides the mode for the recovery and
collection of tax, including penal provisions
meant to deal with defaulters..... Ordinarily
the charging section which fixes the liability
is strictly construed but that rule of strict
construction is not extended to the
machinery provisions which are construed
like any other statute. The machinery
provisions must, no doubt, be so construed
(1004) 4 SCC 276
as would effectuate the object and purpose
of the statute and not defeat the same.
9. The intentional exclusion of disputed interest,
fine, fee, and penalty from sub-clause (b) of Section
107(6) of the CGST Act signifies a crucial legislative
distinction. Analyzing this deliberate separation
provides insights into the lawmaker's clear intent
regarding the nature and scope of the pre-deposit
obligation in appeals. In legal interpretation, statutes
are construed to give effect to the legislative intent.
The absence of any reference to disputed interest,
fine, fee, and penalty in sub-clause (b) suggests a
meticulous legislative choice. If the intention were to
impose a 10% pre-deposit on these consequential
elements, the legislator could have explicitly included
them in sub-clause (b).
10. By isolating "a sum equal to ten per cent of
the remaining amount of tax in dispute" in sub-clause
(b), the legislator conveys a focused pre-deposit
requirement specifically related to the disputed tax
amount. This implies that the legislative design
prioritizes the financial commitment associated
directly with the primary tax liability being contested.
This approach aligns with the legal principle that
penalties, fines, fees, and interest are subsequent to
the determination of tax. In essence, the legislative
intent, as inferred from the wording of the provision,
leans towards requiring a pre-deposit of 10% solely on
the disputed tax amount, reflecting a clear
understanding that these consequential elements are
inherently linked to the imposition of tax and,
therefore, do not warrant a separate pre-deposit
under sub-clause (b).
11. The apex court in the case of Prakash Nath
Khanna v. CIT4, has explained that the language
employed in a statute is the determinative factor of
the legislative intent. The legislature is presumed to
have made no mistake. The presumption is that it
intended to say what it has said. Assuming there is a
defect or an omission in the words used by the
legislature, the Court cannot correct or make up the
deficiency. Where the legislative intent is clear from
the language, the Court should give effect to it.
12. In B. Premanand v. Mohan Koikal [2011] 4
SCC 266 the apex Court has observed as follows:
"32. The literal rule of interpretation really
means that there should be no interpretation.
In other words, we should read the statute as
it is, without distorting or twisting its
language."
13. The appellate authority therefore, was not
justified in calling upon the petitioner to deposit 10%
(2004) 9 SCC 686
of not only tax liability, but, also fine which is imposed
by the Enforcement Officer equivalent to the value of
the goods. If the order passed by the appellate
authority under challenge is accepted, then the
condition under clause (b) giving an option to the
aggrieved person who disputes the entire tax liability
to deposit 10% of the remaining amount of tax in
dispute would be defeated.
14. 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.
15. For the reasons stated supra, I proceed to
pass the following:
ORDER
(i) The writ petition is allowed.
(ii) The impugned order passed by the
appellate Authority calling upon the petitioner
to pre-deposit 10% of Rs.1,41,11,633/- is
hereby set aside.
(iii) Since petitioner has already deposited
10% of the tax liability which is to the tune of
Rs.67,200/-, the appellate authority is hereby
directed to admit the appeal and decide the
same in accordance with law.
Sd/-
JUDGE
*alb/-
