Facts of the Case:

In this case, appellant was subjected to proceedings under the CGST Act involving 12 allegations, including irregular availment of ITC, non-payment of tax and irregular transitional credit. The adjudicating authority, vide Order-in-Original dated 22.12.2023, confirmed nine demands, dropped three demands and also ordered recovery of applicable interest and penalties. The appellant thereafter preferred an appeal before the First Appellate Authority, which modified the order by upholding seven demands along with interest/penalties and setting aside two demands. Aggrieved by the appellate order, the appellant approached the GSTAT.

At the stage of admission, the Registry pointed out that the appellant had not made the statutory pre-deposit required under Section 112(8) of the CGST Act. The appellant contended that an amount of ₹83,43,942 had already been paid during the course of investigation and subsequently appropriated in the Order-in-Original, and therefore the said amount should be treated as the required pre-deposit. The appellant relied upon the Supreme Court decision in VVF (India) Ltd. v. State of Maharashtra, contending that amounts paid under protest prior to assessment could be adjusted towards mandatory pre-deposit.

The Department opposed the contention, submitting that the amount of ₹83,43,942 represented self-assessed tax liability paid belatedly through GSTR-3B and was merely appropriated against the confirmed demand. According to the Department, such payment did not acquire the character of statutory pre-deposit merely because it was subsequently appropriated in the adjudication order.

Issue:

Whether the tax amount paid by the appellant through belated GSTR-3B returns during investigation and subsequently appropriated in the Order-in-Original could be treated as a disputed amount/pre-deposit for the purposes of Section 112(8) of the CGST Act, thereby dispensing with the requirement of making the prescribed GSTAT pre-deposit?

Held That:

The GSTAT rejected the appellant’s contention and held that the amount of ₹83,43,942 was admitted tax liability and not a disputed amount paid under protest. Consequently, it could not be treated as the statutory pre-deposit required for admission of the appeal under Sections 107(6) and 112(8) of the CGST Act.

The Tribunal examined the appellant’s conduct throughout the proceedings and found that the amount represented tax which had been paid belatedly through GSTR-3B during the course of investigation. The SCN itself had proposed demand of ₹83,43,942 under Section 73 and appropriation of the amount already paid. In its reply to the SCN, the appellant did not dispute the tax demand or the proposed appropriation. Rather, it accepted its liability to pay interest of ₹19,242 on the delayed payment. Even before the First Appellate Authority, the appellant admitted that the tax had already been paid through GSTR-3B and contested essentially the imposition of penalty.

The Tribunal further noted that, in the statement of facts and grounds filed before the GSTAT, the appellant itself described the payment as having been made voluntarily/belatedly through GSTR-3B. Such averments were inconsistent with the subsequent claim that the amount was a disputed liability paid under protest. The appellant was also unable to produce any contemporaneous document demonstrating that the payment of ₹83,43,942 had been made under protest or that its liability in respect of the said amount had been contested before the adjudicating or appellate authorities.

The Tribunal distinguished the Supreme Court’s decision in VVF (India) Ltd. v. State of Maharashtra, observing that in that case the amounts had been deposited under protest before the assessment order and the Supreme Court permitted adjustment of such protest payments towards the statutory pre-deposit. In the present case, however, there was no evidence of any such protest. Merely filing replies to the SCN, statement of facts or grounds of appeal, without specifically disputing the liability or establishing payment under protest, could not convert an admitted tax payment into a disputed amount.

The Tribunal also rejected the argument that the First Appellate Authority had treated the ₹83,43,942 payment as pre-deposit. The appellate order contained no discussion or finding granting waiver of the statutory pre-deposit. Since the requirement under Sections 107(6) and 112(8) is mandatory, the Tribunal held that an appeal cannot be validly entertained without fulfilment of the prescribed pre-deposit condition.

The Tribunal referred to the statutory scheme under which, at the first appellate stage, the appellant is required to pay the admitted amount in full and 10% of the remaining disputed tax under Section 107(6). At the GSTAT stage, a further 10% of the remaining disputed tax, subject to the statutory ceiling, is required under Section 112(8), in addition to the amount already deposited under Section 107(6). The Tribunal also relied upon the decision of the Orissa High Court in M/s. Triveni Engineers v. Assessing Authority, CT&GST, wherein the statutory pre-deposit was treated as a condition precedent to entertainability of the appeal, and noted that the SLP against that decision was dismissed by the Supreme Court.

Accordingly, the GSTAT held that the appellant had failed to establish that ₹83,43,942 was a contested liability or a payment made under protest. The amount paid through GSTR-3B was therefore to be treated as admitted liability and could not be adjusted towards the mandatory pre-deposit. The Tribunal further observed that it appeared that even the pre-deposit requirement at the first appellate stage had not been fulfilled and that the First Appellate Authority had erred in entertaining the appeal without such deposit.

The appellant was consequently directed to make the requisite pre-deposits under Sections 107(6) and 112(8) before admission of the GSTAT appeal. Ten days’ time was granted for making the payment, after which the Registry was directed to scrutinise the proof of payment and place the matter before the Bench for consideration of admission.

Case Name: VENSHIV CHEMICALS PVT LTD Versus N. J. KUMARESH, THE PRINCIPAL COMMISSIONER OF CENTRAL TAX, OFFICE OF THE PRINCIPAL COMMISSIONER OF CENTRAL TAX HYDERABAD GST BHAVAN BASHERBAGH HYDERABAD & ORS. dated 08.09.2026

Citation No. 2026 Taxo.online 2709