The Central Goods and Services Tax Act, 2017 provides for filing appeals. The first appeal lies with the Commissioner of Appeals and the second appeal lies with the GST Appellate Tribunal. One of the conditions for filing an appeal is the payment of deposit at the prescribed rate.
Pre deposit in First appeal
Section 107 0f the Act provides for filing the appeal before the First Appellate Authority against any decision or order passed within 3 months from the date on which the said decision or order is communicated to such person. Section 107 (6) of the Act provides that no appeal shall be filed unless the appellant has paid-
- in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and
- a sum equal to 10% of the remaining amount of tax in dispute arising from the said order subject to a maximum of Rs.20 crores (from 01.11.2024, before that it is Rs.25 lakhs) in relation to which the appeal has been filed.
The proviso to Section 107 (6) provides that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant. This proviso has been amended vide Section 125 of the Finance Act, 2025, dated 29.03.2025. The amended proviso provides that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to 10% of the said penalty has been paid by the appellant.
Pre deposit in appeal to Tribunal
Section 112 of the Act provides that if any person is aggrieved by the appellate order of the First Appellate Authority may file an appeal before the GST Tribunal within 3 months from the date on which the order sought to be appealed against is communicated to the person or the date, as may be notified by the Government, on the recommendations of the Council, for filing appeal before the Appellate Tribunal under this Act, whichever is later.
Section 112 (8) of the Act provides that no appeal shall be filed before the Appellate Tribunal unless the appellant has paid-
- in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and
- a sum equal to 10% (w.e.f. 01.11.2024; before that it is 20%) of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order subject to a maximum of Rs.20 crores (w.e.f. 01.11.2024; before that it is Rs.50 crores) in relation to which the appeal has been filed.
The proviso to this section provides that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty, in addition to the amount payable under the proviso to sub-section (6) of section 107 has been paid by the appellant.
Likewise, under the IGST Act, for all the inter-state transactions, the maximum cap for the pre-deposit amounts is Rs.50 crores and Rs.100 crores before first appellate authority and appellate tribunal, respectively.
Pre deposit for two appeals
In ‘Amit Gupta v. Principal Commissioner, Delhi CGST, Delhi North’ – 2025 (6) TMI 993 – Delhi High Court, the Petitioner is permitted to file two appeals challenging the orders dated 28th January 2025 and 1st February 2025, before the Appellate Authority under Section 107 of the Central Goods and Service Tax Act, 2017. However, insofar as the prescribed pre-deposit is concerned, the said amount shall be paid only in respect of the total amount as mentioned in the Order-in-Original dated 28th January, 2025 i.e. Rs. 81,41,737/- which is a sum of two amounts i.e. Rs. 64,31,703/- and Rs. 17,10,034/-. No pre-deposit would be required to be made in respect of the Order-in-Original dated 01st February, 2025.
Pre deposit through electronic credit ledger
The pre deposit may be made through electronic cash ledger. The same could not be paid through electronic credit ledger. The Madras High Court allowed to pre deposit through electronic credit ledger.
In ‘Ford India Private Limited v. The Joint Commissioner and another’ – WP No. 35448 of 2023 – Madras High Court – decided on 22.11.2024, the petitioner is manufacturing and supplying passenger cars, parts, components and engines. The petitioner is paying the tax regularly and also in filing the required returns. On 24.03.2023 the Department issued a show cause notice to the petitioner demanding the differential duty between GSTR – 1 and GSTR – 3B. The petitioner filed a reply with the department. Again on 30.05.2023 the petitioner was issued with a show cause notice.
The Adjudicating Authority confirmed the demand as shown in the show cause notice, vide their order dated 24.10.2023. Being aggrieved against the order of the Adjudicating Authority, the petitioner filed an appeal before the First Appellate Authority. For the purposes of 10% pre deposit to the tune of Rs.32.88 lakhs, the petitioner debited the Electronic Credit Ledger. The First Appellate Authority issued a Deficiency Memo dated 27.11.2023, directing the petitioner to make the payment of pre-deposit only by way of debiting the Electronic Cash Ledger within 7 days from the date of receipt of the Deficiency Memo.
The petitioner filed a writ petition challenging the deficit memo. The petitioner contended the following before the High Court-
- The Electronic Credit Ledger can be utilized for payment of 10% of tax in dispute as pre-deposit under Section 107(6)(b) of TNGST Act as per the Circular No.172/04/2022-GST, dated 06.07.2022.
- The statutory appeal form in APL-01 provides for the mechanism to pay the pre-deposit using the Electronic Credit Ledger as well, which is evident from Sl.No.15(b) therein.
The Department submitted the following before the High Court-
- The pre-deposit is to be paid only through Electronic Cash Ledger but not through the Electronic Credit Ledger.
- The Electronic Credit Ledger should only be used for the payment of output tax and cannot be misconstrued and the payment of pre-deposit for filing an appeal should only be made from the Electronic Cash Ledger.
- The pre-deposit is not equal the payable tax.
- The Electronic Credit Ledger can be used only for making payments towards tax, interest, penalty, fees or any other amounts and not the tax in dispute.
- The High Court observed that a reading of the Sectio 107(6), Section 49(4), 49A and 49B of the TNGST Act would show that the amount available in the Electronic Credit Ledger may be used for making any payment towards output tax. The word used in the above provision is ‘may’ and it is not ‘shall’. In the event if the word ‘shall’ be used, the amount available in the Electronic Credit Ledger shall be utilized only for the purpose of payment of output tax. Further, in terms of Section 107(6) of TNGST Act, if 10% of the disputed tax has to be paid, it means that the deposit is made only towards discharging liability of output tax. Rule 86(2) of TNGST Rules provides that Electronic Credit Ledger shall be debited to the extent of discharge any liability in accordance with the provisions of Section 49 or 49A or Section 49B.
The Circular dated 06.07.2022, issued by the Department shows that input tax credit can be utilized not only for payment of the self-assessed output tax but also payable as a consequence of the proceeding instituted under the provisions of GST Laws.
The Gujarat High Court also held that the pre deposit may be paid through electronic credit ledger in their judgment dated 17.10.2024 in ‘Yasho Industries Limited v. Union of India and another’ in R/Special Civil Application No. 10504 of 2023. The Gujarat High Court relied on the decision of the Bombay High Court in ‘Oasis Realty’ case. An appeal was filed before the Supreme Court against the order of Gujarat High Court in SLP (Civil) petition No. 17547 of 2025. The Supreme Court, vide their order dated 19.05.2025 held that that the impugned order passed by the High Court in R/SCA No. 10504/2023 would not call for any interference and therefore dismissed the same. Thus, the Supreme Court upheld the payment of pre deposit through Electronic Credit Ledger.
Refund of pre deposit
The pre-fixed deposit amount shall be returned in case the aggrieved taxpayer is proven right through the proceedings. Such refund of deposit is vested right of the assessee as held by Jharkhand High Court in ‘BLA Infrastructure Private Limited v. State of Jharkhand’. The said Court held that the refund of pre deposit cannot be rejected by the Department citing limitation. The High Court observed that that when the Constitution of India restricts levy of any tax without authority of law, the retention of the same on the ground of statutory restriction, which is in conflict with the Limitation Act, appears to be being misread by the authorities of the GST Department.
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