Delhi HC Waives Pre-Deposit for CGST Appeal as Same ITC Demand Already Raised By State GST [Read Order]

In a recent ruling, the Delhi High Court permitted the petitioner to file an appeal against a Central Goods and Service Tax (CGST) demand without making any pre-deposit, as the same ITC amount had already been the subject of a demand raised earlier by the State GST authorities.

Vaneeta Impex Private Limited filed a writ petition challenging the Order-in-Original dated 27 January 2025 issued by the Additional Commissioner, CGST Delhi North, which raised a demand of ₹56,50,646 along with an equivalent penalty for the financial year 2017-18.

The petitioner explained that the DGST Department had already raised a demand concerning the same transactions for the same period by an order dated 4 December 2023, and an appeal against that order was already pending before the State Appellate Authority. The petitioner also submitted that it had already deposited the statutory 10% pre-deposit for that earlier demand.

Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

The petitioner’s counsel argued that the earlier State GST demand and the subsequent CGST demand both related to ITC availed from RCI Industries & Technologies, and that raising a second demand on the same ITC was impermissible in view of Section 6(2)(b) of the CGST Act and the Supreme Court decision in Armour Security (India) Ltd.

The petitioner’s counsel relied on the show cause notice issued by the DGST Department on 28 September 2023 and the resulting order dated 4 December 2023 to argue that the same subject matter had already been taken up by the State authorities.

The CGST Department counsel pointed out that although the transactions may be similar, the nature of proceedings was distinct. It explained that the DGST demand had been raised under Section 73 on the basis of scrutiny of returns, while the CGST proceedings were initiated under Section 74 alleging fraudulent availment of ITC based on an intelligence-based action.

The department pointed out that the Supreme Court in Armour Security had clarified that different infractions do not constitute the same subject matter even when the tax figures appear similar.

Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain observed that the petitioner had already made the statutory pre-deposit of 10% in the State GST appeal for the same ITC amount. The Court explained that the petitioner could not be required to make another pre-deposit for the same quantum while contesting the CGST order.

The court observed that the appropriate course would be to direct the petitioner to pursue the appellate remedy under Section 107 of the CGST Act without insisting on any further pre-deposit.

The court permitted the petitioner to file the appeal against the CGST order on or before 31 January 2026, directed that no pre-deposit shall be insisted upon, and clarified that the appeal shall not be dismissed on the ground of limitation if filed within the time granted.

The court also directed that a personal hearing be afforded to the petitioner at the email address and mobile number provided in the order. The writ petition was disposed of in these terms.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates