The Calcutta High Court in the case of M/S. JYOTI TAR PRODUCTS PRIVATE LIMITED & ANR. VERSUS THE DEPUTY COMMISSIONER OF STATE TAX, SHIBPUR CHARGE WBGST & ORS. vide Case No. WPA 1352 of 2025 dated 07.04.2025, held that tax authorities cannot initiate recovery actions or debit a taxpayer’s electronic ledger once the mandatory pre-deposit for filing an appeal before the GST Appellate Tribunal has been made. The Court emphasizes that once a taxpayer complies with the pre-deposit requirements for an appeal, tax authorities must refrain from initiating recovery actions until the appellate process is concluded. 

Facts of the Case: The Petitioner filed an appeal under Section 107 of the GST Act, depositing the required pre-deposit amount of ₹35,316. However, the appeal was dismissed on December 24, 2024, upholding the initial tax demand and penalty. On December 31, 2024, the company communicated its intention to file a further appeal before the GSTAT. Recognizing that the Appellate Tribunal was not operational, the company made an additional mandatory pre-deposit of 10% of the disputed tax amount, totaling ₹35,316, as stipulated under Section 112(8) of the GST Act and Section 143 of the Finance (No. 2) Act, 2024.

Despite these actions, the tax authorities debited amounts from the company’s electronic cash and credit ledgers, totaling ₹50,330, between January 1 and January 11, 2025.

Issue: Whether recovery of tax dues from the electronic cash and credit ledgers is permissible after the mandatory pre-deposit under Section 112(8) of the CGST/WBGST Act has been made and the taxpayer intends to file an appeal before the GSTAT, which is not yet constituted.

Held: The Court observed that the petitioner has duly complied with the pre-deposit requirements u/s 107 and 112. Recovery was premature and against the mandate of the circular and statute. Since the Tribunal is not yet constituted, the right to appeal is preserved.

The Court held that the recovery actions undertaken by the tax authorities were impermissible, given the company’s compliance with the mandatory pre-deposit requirements and its expressed intention to appeal to the GSTAT. The court directed the authorities to recredit the debited amounts to the company’s electronic ledgers, ensuring that these are reflected in the electronic liability ledger for May 2025.