All about pre-deposit for filing an appeal under GST - TaxGyata

 

Tax laws generally mandate “pre-deposits” to discourage frivolous appeals and also safeguard the interest of revenue. Similarly, under the GST regime, a registered person can file an appeal before the Appellate Authority or Tribunal only after payment of the prescribed amount.

Recent updates

 

7th October 2021

In Jyoti Construction vs. Deputy Commissioner of CT & GST, Jajpur, Orissa High Court held that pre-deposit for appeal under GST to be paid through cash ledger and not from credit ledger.

"The proviso to Section 41(2) of the OGST Act limits the usage to which the electronic credit ledger could be utilized. It cannot be debited for making payment of pre-deposit at the time of filing of the appeal in terms of Section 107(6) of the OGST Act.", the Honorable Court said.  

Pre-deposit for filing an appeal to GST Appellate Authority

Section 107(6) of CGST Act, 2017 provides that no appeal shall be filed before the Appellate Authority, unless the appellant has paid-

(a) full amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order, subject to a maximum of Rs 25 crore (` 50 crore in case of IGST*).

The payment of pre-deposit ensures staying of the recovery proceedings for the balance amount of demand in dispute.

Pre-deposit for filing an appeal to GST Appellate Tribunal

As per section 112(8), no appeal can be filed before the Appellate Tribunal, unless the appellant deposits:

(a) full amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and

(b) 20% of the remaining amount of tax in dispute, in addition to the amount deposited before the Appellate Authority, arising from the said order, subject to a maximum of Rs 50 crore (Rs 100 crore in case of IGST), in relation to which appeal has been filed.

When the appellant has made the pre-deposit, the recovery for the balance amount shall be deemed to be stayed till the disposal of appeal.

Interest on refund of pre-deposit 

If the pre-deposit made by the appellant before the Appellate Authority or Tribunal is required to be refunded, interest shall be payable to the appellant from the date of payment of the amount till the date of refund of such amount. 

illustrations

Sr No	Appeal to	Situation	Mandatory pre deposit
1.	Appellate Authority (AA)	ABC received a Show Cause Notice: ·         Tax demand – Rs 10 lakh ·         Penalty – Rs 10 lakh ·         Interest – Rs 2 lakh ABC admitted: ·         Tax liability - Rs 5 lakh ·         Interest – Rs 50,000	Full amount of tax, interest and penalty as admitted by ABC, i.e. Rs 5.5 lakh and 10% of the tax in dispute, i.e. Rs 50,000 (10% of  5 lakh) Therefore, total pre-deposit to be made by ABC is Rs 6 lakh.
2.	Appellate Tribunal	AA order demanding IGST - Rs 1200 crore. Liability admitted by ABC - Rs 100 crore	Full amount of tax, interest and penalty as admitted by ABC, i.e. 100 crore and 20% of the tax in dispute, i.e. Rs 220 crore (20% of ` 1100 crore) subject to a maximum of 100 crore. Therefore, total pre-deposit to be made by ABC is Rs 100 crore (total liability admitted by the company) plus 100 crore, i.e. Rs 200 crore