Delayed GSTAT Appeal Filed Without Statutory Pre-Deposit and Stay Undertaking Bars Recovery Refund Claim

By | July 17, 2026
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Delayed GSTAT Appeal Filed Without Statutory Pre-Deposit and Stay Undertaking Bars Recovery Refund Claim

Delayed GSTAT Appeal Filed Without Statutory Pre-Deposit and Stay Undertaking Bars Recovery Refund Claim

Issue

  • Whether an assessee is entitled to a refund of tax recovered by the Revenue after the issuance of an Order-in-Appeal, where the assessee fails to file a timely GSTAT appeal, submit a stay undertaking, or pay the mandatory statutory pre-deposit.

Facts

  • An Order-in-Appeal was passed against the assessee on November 4, 2025.

  • The Revenue proceeded to recover the tax dues 20 days after the passing of the order.

  • A Finance notification dated September 17, 2025, had operationalised the Goods and Services Tax Appellate Tribunal (GSTAT), setting an initial appeal deadline of April 1, 2026, which was subsequently extended to July 31, 2026.

  • The assessee filed an appeal before the GSTAT on June 30, 2026 (approximately seven months after the Order-in-Appeal) and subsequently sought a refund of the recovered amount.

  • The Revenue opposed the refund, pointing out that Circular No. 224/18/2024-GST and the Ninth Removal of Difficulties Order, 2019, mandate filing an appeal within three months along with a statutory pre-deposit and a stay undertaking to block recovery.

Decision

  • The High Court rejected the writ petition, holding that the assessee’s plea for a refund was completely untenable.

  • The Court observed that the assessee failed to file the appeal within the primary three-month window and did not furnish the required stay undertaking or the mandatory pre-deposit during that period.

  • The Court ruled that filing an appeal seven months later—and only after the recovery had already been executed by the department—does not entitle the assessee to a refund of the recovered tax.

  • The Court declared that ignorance of the law cannot be used as an excuse to bypass established statutory timelines.

  • The Court concluded that granting a refund under these circumstances would essentially amount to an impermissible waiver of the mandatory statutory pre-deposit.

Key Takeaways

  • No Automatic Recovery Stay: Filing a GSTAT appeal does not automatically block recovery of tax demands. To secure a stay, taxpayers must strictly comply with the procedural timeline (three months), pay the mandatory pre-deposit, and file a formal stay undertaking.

  • Pre-Deposit is Inviolable: Courts will not permit refunds of legally recovered dues if it bypasses or acts as a backdoor waiver of the pre-deposit requirements mandated by Section 112.

  • Ignorance of Circulars is Fatal: Taxpayers must monitor and adhere to administrative guidelines, such as Circular No. 224/18/2024-GST. A failure to act within these procedural frameworks prior to department recovery cannot be remedied after the fact.

HIGH COURT OF GUJARAT
Mahesh Enterprises
v.
State of Gujarat
A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.
R/SPECIAL CIVIL APPLICATION NO. 7422 of 2026
JULY  7, 2026
A.S. Tripathi for the Petitioner. Raj Tanna, AGP for the Respondent.
ORDER
A.S. Supehia, J. – Pursuant to the order dated 16.06.2026 it is informed by learned advocate Mr.A.S.Tripathi that the petitioner has filed an appeal before the Goods and Services Tax Appellate Tribunal (for short ‘the Tribunal’) on 30.06.2026. However, it is submitted that as per the decisions of Andhra Pradesh High Court in case of Penna Cement Industries Ltd. v. State of Andhra Pradesh 103 GST 331/84 GSTL 507 (Andhra Pradesh)/(2024) 15 Centax 248 (A.P.), in the case of Purulia Metal Casting (P.) Ltd. v. Asstt. Commissioner of State Tax, Purulia  (Calcutta), judgment of High Court of Calcutta, (2022) 1 Centax 293 (Cal.) and Patna High Court in case of Sita Pandey v. State of Bihar 99 GST 801/77 GSTL 334 (Patna)/(2023) 10 Centax 25 (Pat.) the amount which is already recovered from the petitioner is required to be refunded since the last day of filing the appeal as fixed by the notification dated 17.09.2025 is 30th June and now extended to 31st July. Thus, it is urged that the amount which has been recovered pursuant to the Appellate order dated 04.11.2025 may be ordered to be refunded to the petitioner.
2. Per contra, learned AGP Mr. Raj Tanna while placing reliance on the circular issued by the Central Board of Indirect Taxes and Customs dated 11.07.2024 bearing Circular No.224/18/2024-GST has submitted that the amount which is recovered from the petitioner is not required to be refunded since the petitioner has not followed the timeline as prescribed in the circular and has filed the appeal beyond the period of 03 months.
3. It is not in dispute that the petitioner has challenged the Appellate Order i.e. Order-in-Appeal dated 04.11.2025 before the Tribunal on 30.06.2026. By the notification dated 17.09.2025 issued by the Ministry of Finance, Department of Revenue the Appellate Tribunal has been conferred the power to examine the Appellate orders and the appeal was required to be filed before 01.04.2026, which is now extended till 31st of July. After the Order-in-Appeal dated 04.11.2025 was passed, almost a period of 20 days, the amount of tax has been recovered from the petitioner. The petitioner did not file an appeal before the Appellate Tribunal, and the same is filed on 30.06.2026. That is almost after a period of 07 months from the date of passing of the Appellate order. In the meantime, pursuant to the Appellate order the amount of tax has already been recovered from the petitioner, and the petitioner by placing reliance on the judgments of the various High Courts, as mentioned hereinabove, is seeking refund of such amount.
4. At this stage, we may refer to the provisions of the Circular No.224/18/2024-GST, dated 11.07.2024 issued by the Central Board of Indirect Taxes and Customs, promulgating the guidelines for recovery of outstanding dues in cases wherein first appeal has been disposed of and till the Appellate Tribunal comes into operation. The relevant paragraphs are paragraph Nos.4, 5 and 6 :-
“4. In order to facilitate the taxpayers to make the payment of the amount of pre-deposit as per sub-section (8) of section 112 of CGST 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 CGST Act, it is hereby clarified that in cases where the taxpayer decides to file an appeal against the order of the appellate authority and wants to make the payment of the amount of pre-deposit as per sub-section (8) of section 112 of 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.
5. The taxpayer 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 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 pre-deposit 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.”
5. A combined reading of paragraph Nos. 4, 5 and 6 clarifies that if the taxpayers intends to file an application before the Appellate Tribunal within the timeline mentioned in Section 112 of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order 2019 dated 03.12.2019 that is within a period of 03 months, and on providing the an undertaking that he will file the appeal against the order of Appellate Authority within such limitation, and on payment of an amount equal to the amount of pre-deposit as per the procedure mentioned in paragraph-4, the recovery of remaining amount of confirmed demand as per the order of Appellate Authority will stand stayed as per the provisions of sub-section 9 of Section 112 of the CGST Act. The petitioner accordingly has failed to observe the procedure prescribed in the circular and it is contended that the petitioner never knew about such circular. It is trite that ignorance of law is not an excuse. The petitioner, in order to avoid recovery of the tax, was supposed to file the appeal before the Tribunal within a period of 03 months, as prescribed under section 112 of the CGST Act, which he did not do, and the appeal has been filed beyond 07 months, after the amount has been recovered from him pursuant to the Appellate order dated 04.11.2025. Hence, the petitioner is not entitled to refund. In case, any direction of refund is issued, the same will tantamount to waiver of pre-deposit, which is impermissible. The Tribunal is empowered to examine all the issues. The judgments cited by the petitioner will not come to the rescue in wake of the fact that the High Courts have not dealt with the circular dated 11.07.2024. The writ petition accordingly stands rejected.