Facts of the Case:

In this case, the petitioner, engaged in the business of manufacturing articles of iron and steel and parts of motor vehicles, as well as exports under Advance Authorisation, was subjected to proceedings under Section 74 of the CGST Act, 2017. During investigation, the petitioner deposited an amount of ₹31,95,976/- under protest through Form GST DRC-03 dated 03.06.2024, representing IGST refund on exports made against advance licence. The said amount was not appropriated towards any confirmed demand or proceedings.

An appeal was filed before the first appellate authority against the adjudication order. However, the appeal was dismissed on the ground of non-compliance with the mandatory pre-deposit requirement of 10% of the disputed tax as prescribed under Section 107(6) of the CGST Act.

The petitioner contended that the amount already deposited under protest should have been adjusted towards the pre-deposit requirement and relied on Supreme Court decision in VVF (India) Ltd. v. State of Maharashtra and Allahabad High Court ruling in M/s R.M. Dairy Products LLP v. State of U.P., both of which held that amounts paid under protest prior to assessment could be adjusted towards statutory pre-deposit for appeal.

Issue:

Whether an amount deposited under protest during investigation can be treated as compliance with the mandatory pre-deposit of 10% of the disputed tax required under Section 107(6) of the CGST Act, 2017, for filing an appeal.

Held that:

The Court stated that the provision mandates deposit of 10% of the disputed tax amount for maintaining an appeal. There is no statutory restriction preventing adjustment of amounts earlier deposited under protest against such pre-deposit requirement. The Court relied upon VVF (India) Ltd. v. State of Maharashtra , wherein the Supreme Court held that amounts paid under protest prior to assessment can be considered for the purpose of computing mandatory pre-deposit, since the statute nowhere excludes such adjustment. 

Further, stated that as the petitioner’s amount of ₹31,95,976/- deposited under protest had not been appropriated against any other demand, it was liable to be adjusted towards the 10% pre-deposit for maintaining the appeal.

The impugned orders were set aside, and the matter was remanded to the first appellate authority with direction to treat the protest amount as pre-deposit and decide the appeal on merits.

This judgment reinforces that deposits made under protest during investigation can be validly utilized towards the mandatory pre-deposit requirement under Section 107(6) of the CGST Act, 2017.

Case Name: M/s Wintage Engineers & Consultants Private Limited Versus Union Of India And 2 Others dated 28.10.2025

To read the complete judgement 2025 Taxo.online 2856