No GSTAT, No Recovery: Delhi HC stays GST Recovery Proceedings subject to Pre-Deposit [Read Order]
Once the Tribunal starts functioning, the deposited amount shall be treated as the statutory pre-deposit for the appeal.
The Delhi High Court has held that in the absence of an operational Goods and Services TaxAppellate Tribunal (GSTAT), recovery proceedings cannot be initiated against a taxpayer, provided the mandatory pre-deposit under the Central Goods and Services Tax Act, 2017 (CGST Act) is made.
The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain was hearing the petition filed by M/s Welcut Industries challenging an Order-in-Appeal dated 23rd May 2025, by which a total demand of ₹27,000 was confirmed. The petitioner contended that the appellate remedy under Section 112 of the CGST Act was unavailable since the GSTAT, though constituted, was not yet functional.
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During the hearing, counsel for the petitioner, Mr. Aditya Jain, along with Mr. Anshuman Jindal and Mr. Soumyadip Chakraborty, submitted that recovery proceedings were being initiated despite the petitioner’s willingness to deposit the statutory pre-deposit amount as contemplated under Section 112(8) of the Act. Senior Standing Counsel for CGST, Mr. Ruchesh Sinha, appearing with Ms. Upasna Vashishta, represented the respondents.
The Bench referred to the CBIC Circular dated 11th July 2024, which clarified that taxpayers may deposit the prescribed pre-deposit amount towards demand and file an undertaking to appeal once the GSTAT becomes operational. The circular further states that recovery of the remaining amount shall remain upon such deposit, in accordance with Section 112(9) of the CGST Act.
Applying the said circular, the Court directed M/s Welcut Industries to deposit 10% of the demanded amount by 15th November 2025. Upon such deposit, the recovery of the balance demand shall remain until the Tribunal becomes functional.
Once the Tribunal starts functioning, the deposited amount shall be treated as the statutory pre-deposit for the appeal.
The Court accordingly disposed of the writ petition and all pending applications, observing that the stay would continue subject to compliance with the pre-deposit condition.
This judgment reiterates that recovery actions cannot be pursued against taxpayers when the statutory appellate forum is not operational, provided the taxpayer complies with the pre-deposit requirement under Section 112(8) of the CGST Act.
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