Adjustment of Pre-Deposit for GSTAT: No Fresh Payment Required if 10% Already Paid

The Legal Issue

Whether a taxpayer is required to pay a fresh pre-deposit when filing an appeal before the GST Appellate Tribunal (GSTAT) if the amount already deposited during the first appeal (Section 107) exceeds the statutory requirement for the second appeal (Section 112).

Facts of the Case (Jharkhand High Court)

Order-in-Original: A massive demand of approximately ₹2.38 crores was initially raised against the assessee.
First Appeal (Section 107): To maintain the first appeal, the assessee made a mandatory pre-deposit of 10% of the disputed tax, amounting to ₹23.85 lakhs.
Order-in-Appeal: The First Appellate Authority “scaled down” (reduced) the demand significantly. The confirmed demand was now only ₹40 lakhs.
The Conflict: The assessee wanted to challenge this ₹40 lakh demand before the Tribunal. The Registry/Tribunal typically expects a pre-deposit for filing. The assessee argued that since they had already deposited ₹23.85 lakhs (which is much more than 20% of the revised ₹40 lakh demand), no further money should be blocked.

The Decision

The Jharkhand High Court ruled in favor of the assessee, establishing a practical approach to pre-deposits:

Adjustment Rule: The Court held that pre-deposit is a security for the appeal, not a repetitive tax. If a sum has already been deposited at the first stage, it must be adjusted against the requirements of the second stage.
Excess Deposit: Since the initial deposit of ₹23.85 lakhs was already lying with the Government and far exceeded any potential pre-deposit required for a ₹40 lakh dispute, the Court ruled that there was “no question of making any further pre-deposit.”
Mandatory Acceptance: The Tribunal was directed to accept the appeal without insisting on any fresh payment.
Outcome: In favour of the assessee.

Key Takeaways & Statutory Context

The 10% + 10% Formula: Under the current amended Section 112(8) (effective from August 2024), the total pre-deposit required to reach the Tribunal is generally 20% of the disputed tax (10% paid at the first appeal + an additional 10% for the Tribunal).
Scaling Down Benefit: If you win partially at the first appeal and the tax amount drops, your “disputed tax” for the Tribunal is the reduced amount. If your first 10% (calculated on the higher original amount) covers the total 20% of the new lower amount, you should not have to pay more.
Circular 224/18/2024: The CBIC has clarified that payments made during the “Tribunal-less” period (via DRC-03 or DRC-03A) will be adjusted against the pre-deposit once the GSTAT is fully functional.

HIGH COURT OF JHARKHAND

Ashirwad Food Industries

Union of India^*

Rajesh Shankar, J.

W.P.(T) No. 469 of 2026

FEBRUARY 9, 2026

Ms. Amrita Sinha, Mrs. Shweta Suman and Ms. Pragunee Kashyap, Advs. for the Petitioner. P.A.S. Pati, Sr. SC, CGST for the Respondent.

ORDER

1. Heard learned counsel for the parties.

2. With the consent of and at the request of the learned counsel for the parties, we dispose of this petition finally.

3. The petitioner challenges Order-in-Appeal No. 227-232/CGST/RAN/2025 dated 30.06.2025 to the extent the Commissioner, Central Goods and Services Tax (CGST) has confirmed the demand raised in the Order-in-Original No. 138/GST/ADC/RAN/2024-25 dated 04.02.2025 along with the interest and penalty.

4. As against the above order, the petitioner has the remedy of an appeal before the G.S.T Appellate Tribunal (GSTAT). However, this Appellate Tribunal, does not appear to be fully functional. Therefore, the petitioner has invoked the extraordinary jurisdiction of this Court to challenge the impugned order.

5. Mr. P.A.S. Pati, learned counsel for the respondents, submits that though the Appellate Tribunal is presently not taking up appeals for adjudication, still, some of the members have already been appointed and e-filing of appeals is permitted. He refers to a provisional acknowledgment for submission of a departmental appeal dated 28.01.2026 on record in support of his submission. Further, Mr. Pati states that if a pre-deposit of 20% is made, then, the department does not initiate any coercive measures to enforce the demand.

6. Ms. Amrita Sinha, learned counsel for the petitioner, submits that at the first appellate stage, the petitioner had made a pre-deposit of Rs.23,85,182/- because the demand in the order in original was approximately Rs.2.38 crores. She submits that the first appellate authority has considerably scaled down the demand which is now approximately Rs.40,00,000/-. Accordingly, she submits that the pre-deposit of 20% would come to around Rs.8,00,000/-. She further points out that since the petitioner has already made a predeposit of approximately Rs.23.85 lakhs, the Tribunal should not now insist upon any further pre-deposit.

7. We have perused the documents on record and based upon the same, we find substance in the contention advanced by Ms. Amrita Sinha. Considering the deposit of Rs.23.85 lakhs already made at the first appellate stage, we agree that there would be no question of making any further pre-deposit for instituting an appeal against the impugned order dated 30.06.2025.

8. Ms. Sinha states that the petitioner will appeal the impugned order dated 30.06.2025 within a maximum of four weeks from today. If such appeal is indeed filed within four weeks from today, then, the Tribunal should decide the appeal on its own merits and in accordance with law without adverting to the issue of limitation. This is because the petitioner was bonafide pursuing the matter before this Court and even two dates, the Tribunal is not taking up the appeals for disposal. The petitioner’s impression about inability to file the appeal on this ground cannot be said to be unreasonable or lacking in bonafide.

9. In case there are any issues about the system not accepting the petitioner’s appeal within four weeks from today, then, the petitioner, is allowed to file the appeal in the physical format. The same should be accepted by the Tribunal without insisting upon any fresh pre-deposit.

10. All contentions of all parties on merits are, however, left open for the Tribunal to decide. This Court has not adverted to the rival contentions on merits of the matter.

11. This writ petition is disposed of in the above terms without any costs order.

12. All concerned to act on an authenticated copy of this order.