Facts of the Case

Nishant Ispat Private Limited's appeal against an order dated 05.02.2025 under Section 74 of the WBGST/CGST Act was dismissed by the appellate authority on 28.07.2025 for non-compliance with the mandatory pre-deposit under Section 107(6). The petitioners contended that even before the appeal was lodged (on 24.04.2025), the department had already recovered Rs.10,76,006 on 14.03.2023 from their electronic credit ledger, on the strength of an earlier adjudication order dated 27.05.2022 which had itself been dropped on 22.06.2022 — the department's own instructions, produced in Court, confirmed this recovery had proceeded due to a flaw in Form GST DRC-08.

Issues Involved

  1. Whether an amount already recovered by the department — even erroneously, under a subsequently dropped order — counts towards satisfying the mandatory pre-deposit under Section 107(6) for a later appeal against a fresh demand based on the same show cause notice.

Petitioner's Arguments

  • A sum in excess of 10% of the tax in dispute already stood recovered from the electronic credit ledger before the appeal was even filed, so the pre-deposit condition stood satisfied.

Respondent's Arguments

  • Produced written instructions confirming that, due to a flaw in Form GST DRC-08, the demand under the (subsequently dropped) 2022 order had remained shown as unpaid, and recovery proceedings had realised the entire tax amount from the petitioners' electronic credit ledger.

Court Order / Findings

  • Found it undisputed that, by the date the appeal against the fresh Section 74 order was lodged, a sum exceeding 10% of the tax in dispute had already been recovered by the respondent authorities.
  • Held that the requirement of putting in the statutory pre-deposit already stood satisfied by that recovery, even though it had originally been made under an order later dropped.
  • Set aside the appellate order dated 28.07.2025 that had dismissed the appeal for non-compliance with pre-deposit, and remanded the matter for the appeal to be considered and decided on merits, without insisting on any further pre-deposit.
  • Directed that, since recovery of the balance is deemed stayed under Section 107(7) upon the 10% deposit being satisfied, the amount recovered in excess of 10% be refunded to the petitioners upon verification, within four weeks, while leaving all points on the appeal's merits open.

Important Clarification

  • For the purpose of the mandatory pre-deposit under Section 107(6) of the CGST/WBGST Act, any amount already recovered by the department towards the disputed tax — even if recovered erroneously under an order that was subsequently dropped — counts towards satisfying that pre-deposit requirement; an appeal cannot be dismissed for non-compliance with pre-deposit where more than 10% of the disputed tax already stands recovered by the time the appeal is filed.

Sections Involved

  • Section 74, CGST/WBGST Act, 2017 — determination of tax by reason of fraud/wilful misstatement/suppression.
  • Section 107(6) & (7), CGST/WBGST Act, 2017 — pre-deposit for appeal and automatic stay of balance recovery.
  • Form GST DRC-08 — rectification/summary of order giving effect to a dropped demand.

Decision – In Favour of

In favour of the Assessee.

Case Details

High Court at Calcutta, Constitutional Writ Jurisdiction (Appellate Side); WPA 20458 of 2025; Coram: Justice Om Narayan Rai; Order dated 03.12.2025.

Link to Download the Order

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