The Goods and Services Tax Appellate Tribunal (GSTAT), Chennai Bench, has held that a taxpayer need not make a fresh pre-deposit for a Tribunal appeal when the amount already deposited at the first appellate stage sufficiently covers the cumulative statutory requirement calculated on the tax demand remaining in dispute.

The Bench of Praveen Kumar Jain (Judicial Member) and Shaik Khader Rahman (Technical Member)  found that the company’s earlier deposit of ₹32.94 lakh adequately covered the aggregate pre-deposit of ₹10.78 lakh required for the surviving disputed demand of ₹53.90 lakh. 

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The Tribunal consequently held that no further pre-deposit was necessary and that the filing defect raised by its Registry stood cured. Admission of the appeal was directed after compliance with the accompanying portal, adjustment and undertaking requirements.

The dispute arose from an adjudication order dated October 29, 2021, confirming a tax demand of ₹3,29,47,353, along with interest and penalty.

To pursue its first appeal under Section 107 of the Central Goods and Services Tax Act, 2017, LTM Limited deposited ₹32,94,735 through FORM GST DRC-03 on January 28, 2022. This represented 10% of the original disputed tax.

By an appellate order dated March 31, 2023, the First Appellate Authority remanded a demand of ₹2,75,56,933 and upheld ₹53,90,420. The upheld amount comprised transitional credit of ₹17,965 and input tax credit of ₹53,72,455.

The remanded demand was subsequently reduced to ₹17,43,997 through a fresh adjudication order dated August 13, 2024, and remained the subject of separate proceedings. The appeal before the Tribunal concerned only the ₹53,90,420 upheld by the First Appellate Authority.

The Registry raised a defect seeking the Electronic Liability Register reflecting adjustment of the pre-deposit against the relevant demand ID.

The company argued that the combined pre-deposit requirement under Sections 107(6) and 112(8), calculated on the surviving disputed tax, amounted to ₹10,78,084. Since ₹32,94,735 already stood deposited, it maintained that no additional payment was required.

It also submitted that the appellate order’s demand ID and FORM GST APL-04 had not been generated on the portal, preventing adjustment through FORM GST DRC-03A.

The department verified the earlier payment and confirmed that DRC-04 had been issued. Nevertheless, it argued that Section 112(8)(b) required a separate payment of ₹5,39,042 because the Tribunal-stage deposit must be paid “in addition to” the amount deposited under Section 107(6).

Rejecting the department’s interpretation, the Tribunal held that the relevant measure was the tax arising from the impugned appellate order and remaining in dispute before it.

Accordingly, the calculation had to proceed on ₹53,90,420, rather than on the much larger original demand. The remanded demand was outside the present appeal.

The Bench explained that the words “in addition to” establish a cumulative requirement: 10% attributable to the first appeal and a further 10% for the Tribunal appeal. They do not require a fresh challan where sufficient money already lies with the Revenue against the same disputed demand.

The computation recorded in the order was:

The Tribunal found that the earlier deposit covered both statutory components, satisfying the additional-deposit requirement.

The Bench emphasised that a pre-deposit is a portion of the disputed tax itself, rather than a separate levy. It is adjusted against the demand if the taxpayer’s challenge fails and is refundable with applicable interest if the taxpayer succeeds.

It held that deposits under Sections 107(6) and 112(8) are not isolated compartments and that book adjustment between them is permissible.

The department’s interpretation, the Tribunal reasoned, would require the Revenue to refund the excess deposit with interest and then require the taxpayer to deposit part of that same money again. Such a circular exercise would serve no revenue purpose.

The Bench further observed that Section 112(8) is a procedural condition governing access to an appellate remedy, rather than a charging provision requiring duplicative payment.

The Tribunal relied on the Jharkhand High Court’s ruling in Ashirwad Food Industries v. Union of India, where an earlier deposit exceeded the requirement arising after reduction of the demand.

It also referred to the GSTAT Cuttack Bench’s orders in Manoranjan Dash v. Commissioner, CT & GST, Odisha, including the order affirming its position after the Revenue sought reconsideration. The Bench additionally cited the Madras High Court’s decision in MMTC-PAMP India (P.) Ltd. v. Deputy Commissioner, which accounted for amounts already remitted while determining the remaining pre-deposit requirement.

The order also relied on CBIC Circular No. 224/18/2024-GST dated July 11, 2024, recognising adjustment of qualifying payments, including amounts paid through DRC-03 and adjusted through DRC-03A, towards pre-deposits under Sections 107 and 112.

The Tribunal directed that ₹10,78,084 from the verified earlier deposit be appropriated towards the pre-deposit for this appeal. That amount cannot be counted towards another proceeding. The company’s legal rights concerning the balance were expressly preserved.

Separate deposits relating to other proceedings were excluded from the calculation.

The jurisdictional proper officer was directed to map ₹10,78,084 against the impugned demand in the Electronic Liability Register once the demand ID is generated. The company must then file DRC-03A in accordance with the CBIC circular.

The First Appellate Authority was directed to electronically generate APL-04 within one month of the order. The departmental representative must upload it to the GSTAT portal immediately upon generation. The company must also upload an undertaking preventing reuse or adjustment of the relevant pre-deposit against another demand.

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