Facts of the Case

The petitioner, Getronics Solutions India Private Limited, faced proceedings under Section 74 of the CGST Act, 2017 for the period July 2017 to March 2020. During the pendency of adjudication, it paid Rs.1,99,10,490/- under protest — exceeding 10% of the disputed tax of Rs.11,15,72,010/-. The adjudication order dated confirmed a total demand of Rs.11,41,38,249/-. On appeal, the 1st respondent Appellate Authority refused to treat the protest payment as satisfying the mandatory pre-deposit under Section 107(6), CGST Act, compelling the petitioner to additionally deposit Rs.1,14,14,339/- through its Electronic Credit Ledger. Despite both payments, the appeal was dismissed vide Order-in-Appeal dated 28.02.2024 for want of the mandatory pre-deposit.

Issues Involved

  1. Whether an amount paid under protest prior to the adjudication order can be adjusted towards the mandatory 10% pre-deposit under Section 107(6) of the CGST Act.
  2. Whether pre-deposit can validly be made by debiting the Electronic Credit Ledger.

Petitioner's Arguments

  • Relied on the Supreme Court's ruling in VVF (India) Ltd. v. State of Maharashtra, holding that amounts deposited under protest prior to adjudication must be adjusted against the mandatory pre-deposit under a pari materia provision of the Maharashtra VAT Act.
  • Relied on the coordinate Bench ruling in VK Building Services Pvt. Ltd. v. Additional Commissioner of GST, Bengaluru, holding that pre-deposit through the Electronic Credit Ledger is permissible.
  • Sought quashing of the Order-in-Appeal and restoration of the appeal for hearing on merits without any further pre-deposit.

Respondent's Arguments

  • Reiterated the objections raised in the statement of objections and submitted that the petition lacked merit and was liable to be dismissed.

Court Order / Findings

  • Held that the protest payment of Rs.1,99,10,490/- made prior to adjudication had to be adjusted against the mandatory 10% pre-deposit, and the Appellate Authority erred in refusing to treat it as such.
  • Held that pre-deposit made by debiting the Electronic Credit Ledger is also valid, as affirmed by the Supreme Court's dismissal of the Revenue's special leave petition against the Gujarat High Court's ruling in Yasho Industries.
  • Quashed the Order-in-Appeal dated 28.02.2024 and restored the appeal (Form GST APL-01) for reconsideration on merits, without insisting on any additional pre-deposit.
  • Directed the Appellate Authority to decide the appeal on merits expeditiously after affording sufficient opportunity.

Important Clarification

  • A protest payment made before adjudication that exceeds 10% of the disputed tax, and a debit to the Electronic Credit Ledger, both qualify as valid pre-deposit under Section 107(6), CGST Act.
  • An Appellate Authority cannot insist on a further cash pre-deposit once such sums have already been paid by the taxpayer.

Sections Involved

  • Section 107(6), CGST Act, 2017 — mandates a 10% pre-deposit of disputed tax for filing a first appeal.
  • Section 74, CGST Act, 2017 — governs demand proceedings involving fraud, wilful misstatement or suppression of facts.

Decision – In Favour of

The order is in favour of the Assessee, with the appeal restored for a fresh hearing on merits.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No.11470 of 2024 (T-RES)
Coram: Justice S.R. Krishna Kumar
Date of Order: 14.11.2025

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