Pagariya Auto Private Limited vs. Union of India and Others [TU-IDT-11-HC-2026]
Background of the Case
The present writ petition before the Bombay High Court (Aurangabad Bench) arose from a GST demand challenged by Pagariya Auto Private Limited. The petitioner approached the High Court contending that the issue involved in the matter was squarely covered by the earlier judgment of the Bombay High Court in Star Engineers (I) Pvt. Ltd. v. Union of India, wherein relief had been granted in cases involving bona fide and inadvertent errors under the GST regime.
During the course of hearing, the Revenue argued that although the GST Appellate Tribunal had not yet been constituted, the Government had already issued notifications and circulars providing that taxpayers intending to challenge appellate orders must deposit an additional 10% of the disputed tax amount over and above the earlier statutory pre-deposit made before the First Appellate Authority. The department further submitted that upon such deposit, coercive recovery proceedings would remain stayed.
Arguments by the Appellant (Taxpayer)
The petitioner submitted that the issue involved in the present matter was fully covered by the decision of the Coordinate Bench in Star Engineers (I) Pvt. Ltd., which had consistently been followed by various Benches of the Bombay High Court. It was argued that the alleged discrepancy arose due to a bona fide and inadvertent mistake and therefore the petitioner should not be compelled to deposit an additional 10% amount merely because the GST Appellate Tribunal had not yet become operational.
The petitioner further contended that insistence on further pre-deposit despite settled judicial precedents would impose an unjust financial burden upon taxpayers, particularly when the demand itself was disputed on substantial legal grounds.
Respondent’s Response (Revenue Department)
The Revenue opposed the grant of interim relief and relied upon various judicial precedents as well as Government notifications and circulars issued in view of the non-constitution of the GST Appellate Tribunal. The department submitted that in such circumstances taxpayers desirous of challenging appellate orders are required to deposit an additional 10% of the disputed tax amount in addition to the earlier statutory deposit already made before the Commissioner (Appeals).
The department argued that once such additional deposit is made, the taxpayer would become entitled to protection from coercive recovery proceedings during pendency of the dispute.
Court Findings and Decision
The Bombay High Court was not impressed with the submissions advanced by the Revenue and prima facie accepted the petitioner’s contention that the matter was covered by the judgment in Star Engineers (I) Pvt. Ltd. The Court observed that where the alleged discrepancy arises out of a bona fide and inadvertent mistake, the taxpayer should not be compelled to make an additional 10% pre-deposit merely because the GST Appellate Tribunal has not yet been constituted.
Accordingly, the High Court issued notice in the writ petition and granted ad-interim relief in favour of the petitioner by staying coercive action against the assessee without insisting upon the additional 10% deposit sought by the department. The ruling provides significant interim relief to taxpayers facing similar demands in absence of a functional GST Appellate Tribunal.
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