Facts of the Case

M/s Qadri and Company, a proprietary concern in Shivamogga, challenged a detention order dated 05.12.2022 in Form GST MOV-6 under Section 129(1) of the CGST and KGST Acts read with Section 20 of the IGST Act, a confiscation order dated 15.12.2022 in Form GST MOV-11 under Section 130, and an appellate order dated 04.07.2023 passed under Section 107(11) of the KGST Act dismissing its statutory appeal, before the High Court of Karnataka, Dharwad Bench. Since the GST Appellate Tribunal had not been constituted, the petitioner had no forum to pursue a second appeal and was compelled to approach the High Court instead. During the pendency of the petition, pursuant to an interim order dated 25.09.2023, the petitioner deposited 20% of the differential tax demand raised. The matter was decided by a single Judge on 23.09.2025.

Issues Involved

  1. Whether a taxpayer who has deposited 20% of the disputed tax demand, as required for filing a second appeal under Section 112(8)(a), is entitled to the recovery-stay benefit under Section 112(9) even though the GST Appellate Tribunal has not yet been constituted.
  2. What safeguards or timelines should govern such interim protection pending constitution of the Tribunal.

Petitioner's Arguments

  • The petitioner was constrained to approach the High Court by writ petition solely because the GST Appellate Tribunal, the forum for a statutory second appeal against the confiscation and appellate orders, had not yet commenced functioning.
  • Having already deposited 20% of the differential tax demand as required under Section 112(8)(a) for filing an appeal, the petitioner was entitled to the automatic stay on recovery of the balance amount under Section 112(9).

Respondent's Arguments

  • The order does not record specific opposition to the deposit made or to the applicability of Section 112(9); the relief granted proceeds on the undisputed fact of the 20% deposit and non-constitution of the Tribunal.

Court Order / Findings

  • The Court noted that the petitioner had deposited 20% of the differential demand of tax raised, in terms of the interim order dated 25.09.2023, satisfying the pre-deposit requirement under Section 112(8)(a) of the KGST Act.
  • The Court held that, in view of this deposit, the petitioner is entitled to the benefit of Section 112(9) of the KGST Act, and recovery proceedings for the balance amount are deemed stayed, notwithstanding non-constitution of the GST Appellate Tribunal.
  • The petition was disposed of extending this benefit to the petitioner until 60 days after the GST Appellate Tribunal commences functioning, within which period the petitioner must approach the Tribunal for appropriate relief.
  • The Court clarified that if the necessary appeal is not filed within 60 days of the Tribunal commencing work, the petitioner would lose the benefit of Section 112(9), and that the time period fixed under Section 112 stands extended by two months from the date the Tribunal begins functioning, with all contentions kept open.

Important Clarification

  • A taxpayer who has paid the mandatory 20% pre-deposit for a second appeal under Section 112(8)(a) is entitled to the deemed stay of recovery under Section 112(9), even though the GST Appellate Tribunal has not yet been constituted to actually receive the appeal.
  • Such interim protection is not open-ended — it is conditioned on the taxpayer filing the appeal within a stipulated window (60 days) once the Tribunal commences functioning, failing which the stay benefit lapses.
  • Courts have used this Section 112(9) mechanism as a standard interim relief across the country to bridge the gap created by the delayed constitution of the GST Appellate Tribunal.

Sections Involved

  • Section 112(8) and 112(9), Karnataka GST Act, 2017 — prescribe the pre-deposit for a second appeal and the consequential deemed stay of recovery of the balance amount.
  • Section 129, CGST/KGST Act, 2017 — governs detention and release of goods and conveyances in transit.
  • Section 130, CGST/KGST Act, 2017 — governs confiscation of goods or conveyances and levy of penalty.
  • Section 107(11), KGST Act, 2017 — governs the first appellate authority's power in disposing of appeals.

Decision – In Favour of

Disposed of with directions, in favour of the assessee. The detention and confiscation orders themselves were not disturbed, but the petitioner secured a stay on recovery of the balance demand pending constitution of the GST Appellate Tribunal.

Case Details

Court: High Court of Karnataka at Dharwad
Case No.: Writ Petition No. 104984 of 2023 (T-RES)
Neutral Citation: 2025:KHC-D:12978
Coram: Hon'ble Mr. Justice Suraj Govindaraj
Date of Decision: 23.09.2025

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