Only preliminary payment of disputed tax amount has to be made

- Sales Tax - Soham Mashruwala

Advance payment of tax amount is mandatory while appealing under GST law. Under the earlier VAT Act appeals were filed even without preliminary filing in exceptional circumstances and a liberal attitude was maintained. At present the department is campaigning to complete the appeals under the old VAT Act and Central Sales Tax Act and the backlog of all appeals is to be exhausted. During the covid pandemic there were haphazard assessment orders and now there is a certain expectation that appeals will be dealt with cautiously. One side is determined to complete the appeal and the other side is reluctant to stay. The merchant stumbles helplessly. Well, the people have to eat the king's burial. GST law has a clear provision for arrears of recovery that no recovery will be taken based on the amount predeposited at the time of appeal and the appeal copy (filed on the GST portal). Now the dispute as to what amount to pre-deposit I Tejas Arecanut Traders Vs. Appeared in the case of Joint Commissioner of Commercial Taxes (2023-VIL-923-KAR) which is discussed in today's article.

The facts of the case

An appeal was filed by the petitioner under the GST Act. At the time of preliminary hearing under section 107, it was decided by the department that the preliminary payment of sufficient amount was not made by the applicant, due to which the appeal was invalidated. Thus, the appeal was dismissed for lack of prima facie aggrieved and a writ petition was filed in the High Court of Karnataka.

Presentation of the applicant

It was submitted by the petitioner that even though the disputed amount includes tax, interest and penalty, but the provision of Section 107(6) states that the tax in dispute has to be paid in advance of 10%. Thus, the 10 percent amount is not only to be paid for tax but all the demands against which there is objection.

Presentation of Govt

By the Supreme Court in Commissioner of Income-tax Vs. Relying on Hindustan Bulk Carriers (2003(3) SCC 57) it was submitted that in the present case the enforcement officer should make preliminary payment of tax, interest, penalty on all.

Judgment of the High Court

It was specifically noted by the High Court that all the undisputed tax, interest and penalty have to be paid while appealing and only 10% of the tax disputed amount has to be paid out of the disputed amount. This provision further states that interest and penalty are subject to tax and are conditional. Thus, only 10% of the tax amount has to be paid in advance.