FACTS OF THE CASE

M/s Welcut Industries (Petitioner) challenged the Order‑in‑Appeal dated 23.05.2025, which confirmed a tax demand of ₹27,000/‑. The order was appealable to the GST Appellate Tribunal, but the Tribunal was not functioning at the relevant time. Consequently, the Petitioner could neither file an appeal under Section 112 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) nor make the statutory pre‑deposit required for such appeal. The respondent tax authorities had also initiated recovery proceedings under Section 78 of the CGST Act for the outstanding amount. 

ISSUES INVOLVED

  1. Whether in the absence of a functional GST Appellate Tribunal, a taxpayer can be compelled to face recovery proceedings when the statutory appeal remedy under Section 112 CGST Act cannot be availed.
  2. Whether the taxpayer should be allowed to make the pre‑deposit amount in view of the appellate mechanism being non‑operational.
  3. Whether recovery proceedings should be stayed if pre‑deposit is made in an alternate prescribed manner.

PETITIONER’S ARGUMENTS

• The Petitioner submitted that since the GST Appellate Tribunal was non‑functional, it was impossible to file an appeal under Section 112 of the CGST Act.
• Consequently, the statutory requirement of pre‑deposit could not be complied with as there was no forum to file the appeal.
• Petitioner argued that initiating recovery in such circumstances was unfair and prejudicial, as it deprived the taxpayer of a statutory right of appeal and corresponding stay on recovery. 

RESPONDENT’S ARGUMENTS

• The Respondent (Commissioner, CGST) contended that in law the demand is due and liability subsists irrespective of the appellate mechanism being non‑functional.
• Recovery proceedings under Section 78 could proceed once the period for pre‑deposit expired.
• The Respondent asserted that absence of a functioning Tribunal does not automatically stay recovery unless pre‑deposit under Section 112(8) is complied with, which wasn’t possible in this case. 

COURT’S ORDER / FINDINGS

The Delhi High Court (Justice Prathiba M. Singh & Justice Shail Jain) held as follows:

The Petitioner was permitted to deposit 10% of the demanded amount (₹27,000/‑) in accordance with the Circular dated 11 July 2024, as a valid method of pre‑deposit.
 Clarified that taxpayers could make the requisite pre‑deposit by navigating to the services section in the electronic liability register (e‑liability register).
 Upon such deposit, the recovery proceedings were stayed under Section 112(9) of the CGST Act — even though the Appellate Tribunal was not yet functional.
 After the Tribunal becomes functional, the Petitioner may file the appeal and the interim deposit will be treated as compliance with the pre‑deposit requirement.
 Petition disposed accordingly. 

IMPORTANT CLARIFICATION

The Court significantly clarified that where appellate forums are non‑operational, a taxpayer may ➤ effect pre‑deposit in an alternate prescribed mode, which confers stay on recovery under Section 112(9), thereby protecting statutory appeal rights. 

SECTIONS INVOLVED

  • Section 112, Central Goods and Services Tax Act, 2017 – Appeals to Appellate Tribunal and pre‑deposit requirements.
  • Section 78, CGST Act – Recovery of tax not paid within prescribed time.
  • GST Circular dated 11 July 2024 – Alternate pre‑deposit compliance process.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/75409102025CW154952025_185553.pdf 

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