Getronics Solutions India Private Limited Vs Commissioner of Central Tax

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

In this petition, petitioner seeks for the following reliefs:-

“The petitioner, therefore, most respectfully prays that this Hon’ble Court be pleased to issue a writ, order or direction:

I. Declaring that:

i. the payment of Rs.1,99,10,490/- made under protest during the course of the assessment proceedings satisfies the condition of pre-deposit of 10% of the total disputed tax of Rs.11,15,72,010/-, as required under Section 107(6) of the GST Act; or

In the alternative

ii. the payment of Rs.1,14,14,339/- made by debiting the Electronic Credit Ledger satisfies the condition of pre-deposit of 10% of the total disputed tax of Rs.11,15,72,010/-, as required under Section 107(6) of the GST Act.

II. Quashing the Order-in-Appeal dated 28.02.2024 (Annexure-H) bearing No.A.No.06/2023-24 A-II (COMM) issued by the 1^st Respondent rejecting the appeal in 24/2023-24 GST (Commr.) A-II, filed by the Petitioner; and

III. Restoring the appeal in 24/2023-24 to the file of the 1st Respondent with the direction that the same be heard on merits; and

IV. Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interest of justice and equity.”

2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3. A perusal of the material on record will indicate that in relation to July 2017 to March 2020, respondent No.2 initiated proceedings under Section 74 of the CGST Act against the petitioner during the pendency of which, the petitioner made a payment of 10% of the disputed demand amounting to Rs.1,99,10,490/- under protest and petitioner had paid a sum of Rs.1,99,10,490/- which was in excess of 10% of the disputed demand by way of and under protest and subject to the final outcome of the proceedings. The said proceedings culminated in Adjudication Order-in-Original dated 36.02.2023 confirming the demand of tax, interest and penalty proposed in the show cause notice and raising the total demand of Rs.11,41,38,249/- against the petitioner.

4. The petitioner filed an appeal before the 1^st respondent and informed him that the payment of Rs.1,99,10,490/- during the pendency of the original proceedings was in excess of 10% pre-deposit and the same is to be considered for the purpose of the appeal filed by the petitioner. However, the 1^st respondent – Appellate Authority informed the petitioner that the aforesaid amount, albeit in excess of 10% deposited by the petitioner cannot be treated as a pre deposit of 10% for the purpose of the appeal. As a result of which, the petitioner made an additional payment of Rs.1,14,14,339/- on 02.02.2024 towards pre-deposit for the purpose of the appeal through its Electronic Credit Ledger.

5. It is the grievance of the petitioner that despite having made payment of Rs.1,99,10,490/- during the pendency of the proceedings and additional payment of 10% in a sum of Rs.1,14,14,339/- by utilising the Electronic Credit Ledger, the respondent has proceeded to pass the impugned Order-in-appeal dated 28.02.2024 dismissing the appeal on the ground that the mandatory 10% pre-deposit had not been made by the petitioner who is before this Court by way of the present petition.

6. Learned counsel for the petitioner invited my attention to the judgment of the Apex Court in the case of VVF (India) Vs. State of Maharashtra, – Civil Appeal 7387/2021 dated 12.2021 in order to contend that any amount deposited under protest prior to an order of assessment/adjudication can be adjusted against the mandatory pre-deposit required for filing an appeal under the erstwhile Maharashtra Value Added Tax Act, 2002, which is in pari materia with Section 107(6) of the CGST Act. It is also pointed out that it is permissible for the petitioner to make the mandatory 10% pre-deposit by utilising the 10% in the Electronic Credit Ledger as held by the Co-ordinate Bench of this Court in the case of VK Building Services Pvt. Ltd., VS. Additional Commissioner of GST, Bengaluru – W.P.No.21409/2025 dated 14.08.2025.

7. It is therefore submitted that the impugned order passed by the 1^st respondent- Appellate Authority be set aside and the matter be remitted back to the 1^st respondent for reconsideration of the appeal on merits without insisting on any additional pre-deposit to be made by the petitioner.

8. Per contra, learned counsel for the respondent reiterating the various contentions urged in the statement of objections submits that there is no merit in the petition and the same is liable to be dismissed.

9. As rightly contented by the learned counsel for the petitioner, a sum of Rs.1,99,10,490/- deposited by the petitioner during the assessment/adjudication proceedings is to be adjusted against the mandatory pre-deposit required for filing an appeal under Section 107(6) of the CGST Act as held by the Apex Court in VVF (India) Ltd. supra as hereunder:

11.While analyzing the rival submissions, it is necessary to note, at the outset, that, under the provisions of Section 26(6A), the aggregate of the amounts stipulated in the sub-clauses of the provision has to be deposited and proof of payment is required to be produced together with the filing of the appeal. Both clauses (b) and (c) employ the expression “an amount equal to ten per cent of the amount of tax disputed by the appellant”. The entirety of the undisputed amount has to be deposited and 10 per cent of the disputed amount of tax is required to be deposited by the appellant. In the present case, the appellant disputes the entirety of the tax demand. Consequently, on the plain language of the statute, 10 per cent of the entire disputed tax liability would have to be deposited in pursuance of Section 26(6A). The amount which has been deposited by the appellant anterior to the order of assessment cannot be excluded from consideration, in the absence of statutory language to that effect. A taxing statute must be construed strictly and literally. There is no room for intendment. If the legislature intended that the protest payment should not be set off as the deposit amount, then a provision would have to be made to the effect that 10 per cent of the amount of tax in arrears is required to be deposited which is not the case. Justice Bhagwati in A.V Fernandez v. State of Kerala⁴ , writing for a Constitution Bench, elucidated the principle of strict interpretation in construing a taxing statue as follows:

“29. In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case of not covered within the four corners of the provisions of the taxing statue, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter.”

12. The High Court, while rejecting the petition, placed reliance on the fact that there has to be a proof of payment of the aggregate of the amounts, as set out in clauses (a) to (d) of Section 26(6A). The second reason which weighed with the High Court, is that any payment, which has been made albeit under protest, will be adjusted against the total liability and demand to follow. Neither of these considerations can affect the interpretation of the plain language of the words which have been used by the legislature in Section 26(6A). The provisions of a taxing statute have to be construed as they stand, adopting the plain and grammatical meaning of the words used. Consequently, the appellant was liable to pay, in terms of Section 26(6A), 10 per cent of the tax disputed together with the filing of the appeal. There is no reason why the amount which was paid under protest, should not be taken into consideration. It is common ground that if that amount is taken into account, the provisions of the statute were duly complied with. Hence, the rejection of the appeal was not in order and the appeal would have to be restored to the file of the appellate authority, subject to due verification that 10 per cent of the amount of tax disputed, as interpreted by the terms of this judgment, has been duly deposited by the appellant.

10. Under these circumstances, I am of the considered opinion that the 1^st respondent clearly fell in error in holding that the petitioner had not made the mandatory pre-deposit and the deposit already made by the petitioner under protest cannot be construed/ treated/considered for the purpose of disposal of the appeal on merits and consequently the impugned order deserves to be set aside on this ground alone.

11. Learned counsel for the petitioner is also correct in her submission that notwithstanding the fact that the petitioner had already made the aforesaid payment of Rs.1,99,10,490/- during the pendency of adjudication proceedings which was in excess of 10% mandatory pre-deposit, the additional payment of 10% on 02.02.2024 in a sum of Rs.1,14,14,039/- by the petitioner towards mandatory pre-deposit by utilising the balance available in the Electronic Credit Ledger is also permissible and the same would constitute a valid pre-deposit as held by the Co-ordinate Bench of this Court in the case of VK Building Services Pvt. Ltd., supra as hereunder:

“4. The said order of the Gujarat High Court was tossed by the Union of India before the Apex Court only to be rejected by affirming the findings rendered by the Division Bench of the High Court of Gujarat by the following order:

“2. In Special Leave Petition (C) Nos. 25437/2023 and 324/2024, the assessees have preferred the petitions before this court which have been entertained. When the Revenue has preferred Special Leave Petition (C) D. No. 508/2025, reliance has been placed on the fact that the assessee’s petitions have been entertained by this court and therefore on that basis notices were issued in the case of Chief Commissioner of CGST and C.E. v. Shiv Crackers.

3. Today, Shri Abhishek A Rastogi, learned counsel for the respondent/caveator has brought to our notice the fact that initially notices were issued by this court in the special leave petitions filed by the assessees. The respondent(s) ought not to have relied upon those cases for the purpose of seeking notice(s) in their petitions also. In the circumstances, he submitted that there is no merit in this special leave petition. He also brought to our notice the fact of the rule 96(10) of the CGST has been deleted in the year 2024.

4. We have heard learned counsel for the petitioner(s)/Department. The Department’s contention is that since similar matters are pending before this court, this case also may be tagged with those cases.

5. As already noted, the aforesaid cases initially filed before this court are of the assessees and not of the Department. In the circumstances, we find that the impugned order passed by the High Court in R/SCA No. 10504 of 2023 [ Reported as Yasho Industries Limited v. Union of India, (2025) 143 GSTR 553 (Guj).] would not call for any interference. Hence, the special leave petition is dismissed.”

5. In the light of the issue standing covered by the judgment rendered by the High Court of Gujarat as affirmed by the Apex Court, the issue in the subject case need not detain this Court for long or delve any further deep into the matter. The petition deserves to succeed with the obliteration of the order of the Appellate Authority and the restoration of the appeal filed by the petitioner on the file of the Appellate Authority.

6. For the aforesaid reasons, the following:

 ORDER 

i. The order dated 11.12.2023 passed by the 1^st respondent in appeal in GST A.NO.277/2023 GST ADC A1 stands quashed.

ii. The appeal filed by the petitioner in FORM GST APL-01 dated 29.6.2022 stands restored.

iii. The Appellate Authority shall answer the appeal on its merit and take the issue to its logical conclusion.

Ordered accordingly and Writ Petition is allowed.

12. Viewed from this angle also, I am of the considered opinion that the impugned order at Annexure-H dated 28.02.2024 passed by the 1^st respondent deserves to be set aside and the matter be remitted back to the 1^st respondent for reconsideration of afresh on merits and in accordance with law.

13. In the result, I pass the following:

ORDER 

i. The petition is hereby

ii. The matter is remitted back for reconsideration afresh on merits without insisting on any additional pre-deposit to be paid by the petitioner.

iii. The 1^st respondent shall dispose of the appeal on merits as expeditiously as possible after providing sufficient and reasonable opportunity to the petitioner in accordance with law.