Amount Deposited ‘Under Protest’ Adjustable Toward 10% Pre-Deposit for GST Appeal u/s 107(6): Allahabad HC [Read Order]

The Allahabad High Court has held that any amount deposited ‘under protest’ can be adjusted toward the mandatory pre-deposit of 10% of the disputed tax amount for filing an appeal under Section 107(6) of the GST ( Goods and Services Tax ) Act, 2017.

While quashing the orders of the GST appellate authority that had dismissed the assessee’s appeal on the ground of non-compliance with the pre-deposit condition and remitted the matter for reconsideration, Justice Piyush Agrawal observed that “amount deposited under protest can be adjusted toward the mandatory pre-deposit requirement for entertaining appeal under Section 107(6) of the GST Act.”

The petitioner, M/S Wintage Engineers & Consultants Private Limited engaged in the business of manufacturing iron and steel articles, had deposited ₹31,95,976/- under protest through DRC-03 during investigation, being the IGST refund amount on exports made against advance authorisation.

Subsequently, an order under Section 74 of the CGST Act was passed, and the petitioner’s appeal was dismissed for failure to make the statutory pre-deposit.

The petitioner contended that the amount deposited earlier under protest ought to have been appropriated toward the 10% pre-deposit requirement, since it was not adjusted against any other liability.

The Court noted that the petitioner had indeed deposited the said amount under protest, which was neither appropriated nor adjusted by the authorities. It stated that such deposits cannot be ignored merely because they were made before the passing of the adjudication order.

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Justice Agrawal observed that “the petitioner can take advantage of the said amount towards the pre-deposit for entertaining the appeal,” depending upon the Supreme Court’s decision in VVF (India) Ltd. v. State of Maharashtra, where it was held that amounts deposited under protest prior to assessment can be adjusted toward the mandatory pre-deposit required for filing an appeal.

The bench also referred to its own previous decision in M/s R.M. Dairy Products LLP v. State of U.P., where it had categorically held that “the amount deposited under protest can be utilised towards pre-deposit of 10% of the amount for entertaining the appeal as required under Section 107(6) of the GST Act.”

Accordingly, the Allahabad High Court held that since the amount of ₹31,95,976/- deposited under protest was still unadjusted, the petitioner was entitled to have it appropriated toward the statutory pre-deposit under Section 107(6).

Thus, the impugned orders were set aside, and the matter was remanded to the first appellate authority with directions to accept the protest deposit as the pre-deposit and proceed to decide the appeal on merits by passing a reasoned and speaking order.

The Court further directed that if any shortfall in the pre-deposit requirement remains after such adjustment, the petitioner must be informed and allowed to deposit the balance amount within 15 days of such intimation. The writ petition was accordingly allowed.

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