GST Appeal Cannot Be Rejected Solely on Delay When Mandatory Pre-Deposit Has Been Made: High Court

The Calcutta High Court has ruled in favour of GSPR Developers Pvt. Ltd. and held that its GST appeal should not have been dismissed only on the ground of delay when the company had shown sufficient reasons for the delay and had already paid the mandatory pre-deposit required under the law.

The dispute started after the company was served with a GST adjudication order on 27 February 2025. The company stated that the order was communicated only to its Chartered Accountant, who had sole access to the GST portal. The Chartered Accountant is said to have not informed the management of the Company about the order and the proceedings.

The company said it only became aware of the matter on 29 May 2025 when recovery proceedings were initiated by the tax department. As per the recovery notice, the company’s bank accounts were debited by some Rs 74 lakh through garnishee proceedings.

Upon learning about the order, the company filed an appeal before the First Appellate Authority and deposited Rs. 14,58,320 as mandatory pre-deposit under Section 107(6) of the CGST Act. However, the appellate authority dismissed the appeal on 19 September 2025 holding that it was beyond the prescribed period of limitation and the delay could not be condoned.

The company challenged this decision before the High Court. It argued that the delay was not intentional but occurred because its Chartered Accountant failed to communicate the order. The company further contended that once the mandatory pre-deposit had been paid, the appeal should have been heard on merits rather than being dismissed on a technical ground.

The State opposed the petition and argued that the appeal had been filed beyond the maximum period allowed under Section 107 of the CGST Act. According to the State, the appellate authority had no power to condone such delay and the recovery proceedings were initiated lawfully after the appeal period had expired.

After considering the submissions of both sides, the Court observed that the petitioner had shown sufficient cause for the delay. The Court noted that the order had been received by the Chartered Accountant, who failed to inform the company, and that the company came to know about the proceedings only after recovery action had begun.

The Court further noted that the company has already paid the mandatory pre-deposit and Rs 74 lakh had already been recovered from its bank accounts. The Court observed that the appeal was dismissed on the ground of limitation only by taking a hyper technical view without examining the circumstances and substantial compliance of the statutory requirements.

The High Court held that the statutory right of appeal should not be rendered meaningless when the mandatory pre-deposit has been made and recovery has already taken place.

Accordingly, the Court quashed the appellate authority’s order rejecting the appeal and condoned the delay in filing the appeal. It directed the First Appellate Authority to admit the appeal and decide it on merits.

The Court further directed the appellate authority to hear and dispose of the appeal within three weeks from the date of communication of the order and to pass a reasoned decision after giving the company an opportunity of hearing.

As an interim measure, the Court ordered that the garnishee proceedings and freezing of the company’s bank accounts would continue until the appeal is finally decided by the appellate authority.

The Court also clarified that the company would not be entitled to seek further adjournments. If it fails to cooperate in the hearing, the appellate authority would be free to decide the appeal ex parte.

With these directions, the writ petition was disposed of by the High Court.