Amount Recovered or Paid including GST Pre-deposit in Appeal can be Reduced/Adjusted towards 10% Pre-deposit to be Paid: Madras HC [Read Order]

In a recent ruling, the Madras High Court held that amounts recovered or paid, including pre-deposits made in Goods and Services Tax ( GST ) appeal, can be reduced or adjusted against the mandatory 10% pre-deposit requirement.

The petitioner, Tvl.Shri Vasupujya Jewels, a registered taxpayer under the GST Act, 2017, contested discrepancies in their returns, including mismatches between GSTR-3B, GSTR-1, and GSTR-2A. Despite filing a response to a notice issued under Form GST DRC-01, the reply was rejected due to a lack of supporting documents.

The petitioner argued that the assessment order and notices were uploaded only on the GST portal without proper service, depriving them of a fair opportunity to participate in the proceedings.

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The petitioner requested one final chance to address the discrepancies and relied on a prior High Court judgment in Sree Manoj International vs. Deputy State Tax Officer, where the matter was remanded upon payment of 10% of the disputed taxes. The petitioner expressed willingness to deposit 10% of the disputed amount, which was not opposed by the respondent’s counsel.

The High Court set aside the impugned order and directed that the petitioner deposit 10% of the disputed taxes within four weeks. It further instructed that any amounts already recovered or paid, including pre-deposits, be adjusted against this 10% requirement.

The court instructed the assessing authority to check the payments and inform the petitioner of any remaining balance within one week. It further directed that the entire process, including verification and payment of the balance, be completed within four weeks.

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Justice Mohammed Shaffiq clarified that if the petitioner failed to comply with these conditions, would result in the restoration of the impugned order.

The court directed that any bank account attachments or garnishee proceedings be lifted once the petitioner complies with the order. It also stated that the disputed order would act as a show-cause notice, and the petitioner must submit objections within four weeks. If they fail to do so, the assessment order will be reinstated.

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