Recovery is Stayed if Taxpayer Pays 20% Pre-deposit and Files Undertaking to Appeal at GSTAT.

The Dispute: The Appellate Vacuum

The Conflict: The petitioner had lost their first appeal under Section 107. Under normal circumstances, the next step is an appeal to the GSTAT under Section 112.

The Problem: Although the GSTAT has been officially constituted and members were appointed (joining in early 2026), the system for physical hearings and full adjudication is still stabilizing.
The Threat: The Department initiated recovery proceedings (attachment of assets/accounts) because there was no “official” stay order from a Tribunal.
The Petitioner’s Plea: They sought an interim stay from the High Court, citing that they shouldn’t be penalized for the delay in the Tribunal’s operationalization.

The Judicial Verdict: Compliance over Litigation

The High Court disposed of the writ by directing the petitioner to follow the “Explicit Guidelines” already provided by the government (Circular No. 18/2024 and Notification S.O. 4220(E)):

1. The Undertaking Requirement

The Court held that the petitioner must file a written undertaking/declaration with the Jurisdictional Proper Officer. This document must state that the taxpayer intends to file an appeal before the GSTAT as soon as it is fully operational or within the notified timelines (currently June 30, 2026 for legacy cases).

2. The Statutory Pre-deposit (The 20% Rule)

To trigger an automatic stay of recovery, the taxpayer must pay the mandatory pre-deposit under Section 112(8):

The Amount: 20% of the disputed tax (this is inclusive of the 10% already paid during the first appeal). Essentially, a fresh 10% must be deposited.
The Deadline: The Court granted a strict 15-day window from the receipt of the order to make this deposit if not already paid.

3. Automatic Stay under Section 112(9)

The Court clarified that once the undertaking is filed and the pre-deposit is made, the recovery of the balance demand remains stayed by operation of law. The High Court’s intervention is no longer needed because the statute itself provides the protection.

Strategic Takeaways for Taxpayers in 2026

Don’t Wait for the Tribunal to “Call” You: If you have an adverse order from the First Appellate Authority, initiate the pre-deposit and undertaking immediately. This is the only way to prevent bank account attachments.
The June 30, 2026 Deadline: For all orders communicated before April 1, 2026, the government has notified June 30, 2026, as the unified deadline to file your appeal in Form APL-05.
DRC-03 to DRC-03A: If you paid your pre-deposit via DRC-03 by mistake, use the new Form DRC-03A (available in 2026) to adjust that payment against the specific demand to ensure the “Stay” is reflected in the system.
Lapse of Protection: If you fail to make the 10% additional deposit within the court-mandated 15 days, the Department is legally free to “empty” your bank accounts for the full 100% demand.

HIGH COURT OF CHHATTISGARH

Maa Kali Industries Proprietorship Firm

State of Chhattisgarh^*

Rakesh Mohan Pandey, J.

WPT No. 56 of 2026

APRIL 17, 2026

Vikram Sharma, Adv. for the Petitioner. Ms. Anuradha Jain, Dy. Govt. Adv. for the Respondent.

ORDER

1. Heard on admission.

2. Admit.

3. With the consent of the parties, matter is heard finally.

4. This Petition has been filed against the order dated 04.11.2022 passed by Respondent No.3 and order dated 28.03.2024 passed by respondent No. 2 under Section 107(11) of the Chhattisgarh Goods & Services Tax Act, 2017 and attachment notice dated 16.01.2026.

5. At the outset, learned Counsel for the petitioner submits that Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing has already issued a circular i.e. Circular No.224/18/2024-GST dated 11.07.2024 under the subject heading “Guidelines for recovery of outstanding dues, in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation” and laid down the policy where the Appeal against such order of the appellate authority could not be filed under Section 112 of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) due to non- constitution of Appellate Tribunal (for short ‘the Tribunal’). He further submits that as prescribed at para-4 of the said circular, “in order to facilitate the taxpayers to make the payment of the amount of predeposit as per sub-section (8) of Section 112 of the CGST 3 Act and to avail the benefit of stay from recovery of the remaining amount of confirmed demand as per sub-section (9) of section 112 of the CGST Act, it is clarified that in cases where the taxpayer decides to file an Appeal against the order of appellate authority and wants make the payment of the amount of pre-deposit as per subsection (8) of Section 112 of the CGST Act, he can make the payment of an amount equal to the amount of pre-deposit by navigating to Services Ledgers Payment towards demand from his dashboard. The taxpayer would be navigated to Electronic Liability Register (ELL) Part-II in which he can select the order, out of the outstanding demand orders, against which payment is intended to be made. The amount so paid would be mapped against the selected order and demand amount would be reduced in the balance liability in the aforesaid register. The said amount deposited by the taxpayer will be adjusted against the amount of pre-deposit required to be deposited at the time of filing appeal before the Appellate Tribunal.”

6. He further submits that earlier also, prior to the amendment of the CGST Act, by Act 8 of 2023, which came into force with effect from 01.08.2023, a circular has been issued on 03.12.2019 whereby, limitation has already been extended. As per circular dated 11.07.2024, it is now mandatory that the tax payer also needs to file an undertaking/declaration with the jurisdictional proper officer that he will file Appeal against the said order of the appellate authority before the Tribunal, as and when it comes into operation and referred to relevant paras i.e. paras-5 & 6, which read as under:-

“5. The taxpayer also needs to file an undertaking/declaration with the jurisdictional proper officer that he will file appeal against the order of the appellate authority before the Appellate Tribunal, as and when it comes into operation, within the timelines mentioned in section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019. On providing the said undertaking and on payment of an amount equal to the amount of pre- deposit as per the procedure mentioned in para 4 above, the recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as per provisions of sub-section (9) of section 112 of CGST Act. 6. In case, the taxpayer does not make the payment of the amount equal to amount of predeposit or does not provide the undertaking/ declaration to the proper officer, then it will be presumed that taxpayer is not willing to file appeal against the order of the appellate authority and in such cases, recovery proceedings can be initiated as per the provisions of law. Similarly, when the Tribunal comes into operation, if the taxpayer does not file appeal within the timelines specified in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019, the remaining amount of the demand will be recovered as per the provisions of law.”

7. He further submits that the Government of India, Ministry of Finance, Department of Revenue, vide Notification No. S.O. 4220(E) dated 17th September, 2025, issued in exercise of the powers conferred by sub-section (1) of section 112 of the Central Goods and Services Tax Act, 2017, has notified 30th June, 2026 as the date up to which an appeal may be filed before the Goods and Services Tax Appellate Tribunal in respect of all cases where the order sought to be appealed against has been communicated to the person preferring the appeal before 1st April, 2026. In respect of orders communicated on or after 1st April, 2026, which is also adopted by the State Government vide notification dated 06.03.2026, the appeal shall be filed before the Appellate Tribunal within three months from the date of communication of such order.

8. He lastly submits that this petition may be disposed of granting liberty in favour of the petitioner to avail the alternative recovery by filing an undertaking/declaration in terms of circular dated 11.07.2024 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing & circular dated 17.09.2025.

9. Learned State Counsel does not oppose the aforesaid prayer.

10. Having regard to the submissions made by learned Counsel for the parties and particularly considering that there are explicit guidelines for recovery of outstanding dues in cases wherein, first appeal has been disposed of till the Appellate Tribunal comes into operation, this Courts is of the considered opinion that nothing remains for adjudication in this Writ Petition.

11. Accordingly, liberty is reserved in favour of the Petitioner to comply with the necessary conditions of circular No.224/18/2024- GST of the Central Board of Indirect Taxes and Customs dated 11.07.2024 by filing an undertaking/declaration with the jurisdictional proper officer that he would file an Appeal against the order under challenge before the Appellate Tribunal as and when it comes into operation within the time lines mentioned in Section 112 of the CGST Act notification dated 17.09.2025 and shall also pay predeposit as per sub-section (8) of Section 112 of CGST Act within a period of 15 days from the date of receipt of copy of this order, if not already deposited. It is ordered that as per the said circular, if the Petitioner files such undertaking with regard to the pre-statutory deposit, the recovery of the remaining amount of order dated 04.11.2022 and 28.03.2024 shall remain stayed as per sub-section (9) of Section 112 of the CGST Act.

12. It is made clear that if the said amount is not deposited within the aforementioned period, this order shall lose its efficacy.

13. With the aforesaid direction/observation, the instant Writ Petition stands disposed of.