Section 107(6) of the GST Act is mandatory. A writ court cannot interfere to direct waiver of its application to allow prosecution of appeal without pre-deposit of tax
[2025] 173 taxmann.com 898 (Delhi)[15-04-2025]
Article 141 of the Constitution of India – Difference in following the law laid by the Supreme Court by a subsequent bench of the Court and by any High Court
MANU/SC/0186/2025
In a recent judgement in Impressive Data Services (P.) Ltd. vs. Commissioner (Appeals-I), Central Tax GST, Delhi [1], the Delhi High Court, while deciding on the question of pre-deposit of disputed tax amount along with appeal under the GST Act held that provisions of section 107(6) of the Act was mandatory. The said section did not allow any discretion to be exercised to reduce or fully waive the mandatory 10% deposit of the disputed tax amount along with the appeal. It also held that insofar as the admitted tax, interest or penalty is concerned, the entire amount would have to be deposited.
The Hon’ble High Court discussed various authorities relied upon by the Petitioner as well as various authorities cited in counter by the Respondent. I will refer to two judgements quoted in support and in counter by the Petitioner and the Respondent which are considered by the High Court in its judgement. Referring to the decision of the Delhi High Court in Shubh Impex v. Union of India[2] relied upon by the Petitioner to impress that the appeal was allowed to be prosecuted on payment of partial pre-deposit, such concession being allowed in consideration of the financial stringency of the appellants, the Court observed that a judgement of a coordinate Bench on a similar issue, albeit under the Excise law, was not brought to the notice of the Court. The coordinate bench of the Delhi High Court in Anjani Technoplast Ltd. v. CCE[3] which was subsequently confirmed by the Supreme Court[4] and relied upon by the Delhi High Court in Diamond Entertainment Technologies (P.) Ltd. v. Commissioner of Central Goods and Tax Commissionerate, Dehradun & Anr[5] had held that the provision of law was clear and unambiguous. Every appeal, before the CESTAT, filed after the amendment of Section 35F/129E would be maintainable only if mandatory pre-deposit were made. Applying the ratio in Anjani Technoplast (supra), the Delhi High Court in Diamond Entertainment (supra), again relating to the excise law, held that where the law statutorily mandates per-deposit, no appeal shall be prosecuted without the pre-deposit.
In final conclusion in the Impressive Data Services matter, decided on 15-04-2025, the Delhi High Court held that it was bound to follow the decision in Diamond Entertainment (supra) by virtue of Article 141 of the Constitution and rejected the Petition to allow waiver of conditions provided under sub-section (6) of Section 107 of the GST Act.
While on this judgement, it is also relevant to discuss the reason for the Hon’ble High Court to invoke Article 141. The Hon’ble Court has observed that the Petitioner’s reliance upon the judgement in Shubh Impex (supra) differed with a judgement relied upon by another coordinate Bench in Diamond Entertainment Technologies (supra), which further relied upon an earlier judgement of the Delhi High Court, confirmed in appeal by the Supreme Court in Anjani Technoplast. Given the fact that there have been two contrasting judgements of the Delhi High Court on the same issue of pre-deposit, one of which stood the test of the Supreme Court, the Delhi High Court in the present Impressive Data judgement was bound to follow what the Supreme Court had finally decided upon.
Article 141 of the Constitution reads as under:
“Article 141 – The law declared by the Supreme Court shall be binding on all Courts within the territory of India.”
Very recently, the Supreme Court has discussed the provisions of Article 141 in Canara Bank v. Ajithkumar G. K.[6] as under
“38. The high courts, we reiterate, must bear in mind the decision of this Court in Director of Settlements, A.P. v. M.R. Apparao MANU/SC/0219/2002 : 2002:INSC:157 : (2002) 4 SCC 638 where certain pertinent observations were made in regard to the binding effect of a decision of this Court. The relevant passage reads:
7. … The law which will be binding Under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (see …). When the Supreme Court decides a principle it would be the duty of the High Court or a subordinate court to follow the decision of the Supreme Court. A judgment of the High Court which refuses to follow the decision and directions of the Supreme Court or seeks to revive a decision of the High Court which had been set aside by the Supreme Court is a nullity. …
(emphasis supplied)
39. The ratio of the decision in Canara Bank (supra) in view of Article 141 of the Constitution was binding on the High Court, no matter whether in such decision this Court considered all the provisions of the scheme of 1993 or not. Even an obiter dictum of this Court could be binding on the high courts. However, being a coordinate bench, we neither feel bound by any obiter dictum nor any principle laid down in an earlier decision which did not have the occasion to consider the issue of financial condition from all relevant perspectives.”
From the two extracted paras relevance of Article 141 can be understood as follows:
1. All High Courts and subordinate courts are bound to follow the principles or decisions laid down by the Supreme Court.
2. Any judgement of a High Court or any lower court in contravention of the decisions of the Supreme Court is a nullity
3. Even obiter dictum of the Supreme Court is binding on all the High Courts
4. However, a Bench of the Supreme Court is not bound to follow an earlier decision of a coordinate Bench or any obiter dictum if such earlier decision or obiter dictum did not have the occasion to consider certain issues which the current Bench is faced with.
5. As a natural consequence of two division benches of the Supreme Court differing on common issues of law, the subsequent differing bench shall refer the matter to the Chief Justice of India for reference to a larger bench.
[1] [2025] 173 taxmann.com 898 (Delhi)[15-04-2025]
[2] (2018) 361 ELT 199 (Del)
[3] Delhi High Court citation not available
[4] Anjani Technoplast Ltd. v. CCE, (2017) 348 ELT A132 (SC)
[5] W.P.(C) 10091/2019(para 8)
[6] MANU/SC/0186/2025 [(date of decision 11.02.2025 – SC)] – paras 38 and 39
