Excess GST Recovery Made under Earlier Dropped Proceedings Counts as Pre-Deposit for Fresh Action on same SCN: Calcutta HC [Read Order]

The Calcutta High Court has held that when the GST ( Goods and Services Tax ) Department has already recovered an amount exceeding the statutory 10% pre-deposit in earlier proceedings that were later dropped, such excess recovery must be treated as satisfying the pre-deposit requirement for any fresh proceedings arising from the same show-cause notice.

Nishant Ispat Private Limited, the petitioner challenged the GST appellate authority’s refusal to entertain its appeal on the ground that the mandatory pre-deposit under Section 107(6) of the CGST/WBGST Act had not been made.

The petitioner argued that the Department had already recovered ₹10,76,006 from its electronic credit ledger on 14 March 2023 with regards to an earlier adjudication order dated 27 May 2022, an order that was later withdrawn on 22 June 2022.

The Department did not dispute that the recovery had been made, stating it to be a “flaw in DRC-08” that resulted in the earlier demand remaining unpaid on record and triggering recovery action.

The High Court noted that a fresh adjudication order under Section 74 was passed on 5 February 2025, allegedly on the basis of the same show-cause notice, and the assessee filed an appeal on 24 April 2025.

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At that point, a sum far exceeding 10% of the disputed tax had already been taken from the assessee. The Court held that the requirement of statutory pre-deposit stood automatically fulfilled on the date the appeal was filed because the Department had already realised more than what Section 107(6) mandates.

The bench Justice Om Narayan Rai, while setting aside the appellate order dated 24 April 2025, remanded the matter to the appellate authority to decide the appeal on merits without insisting on any further pre-deposit.

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According to the court “Thus on the date when the appeal assailing the said order dated February 5, 2025 was lodged by the petitioners, the requirement of putting in the statutory pre-deposit already stood satisfied inasmuch as by that time a sum in excess of 10% of tax in dispute had already been recovered. In such view of the matter, the order dated April 24, 2025 is set aside. The matter is remanded to the file of the appellate authority for considering and deciding the petitioners’ appeal on merits, without insisting on any further pre-deposit.”

Additionally, the court ordered that the amount recovered in excess of 10% of the disputed tax must be refunded to the petitioner after verification, within four weeks.

The Court made it clear that it had not examined the merits of the appeal and that all issues remain open for adjudication before the appellate authority.

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