Facts of the Case

The Petitioner, M/s Impressive Data Services Private Limited, filed a writ petition seeking exemption from the mandatory pre-deposit requirement under Section 107(6) of the Central Goods and Services Tax Act, 2017.

A Show Cause Notice was issued alleging wrongful availment of Input Tax Credit (ITC) for the financial years 2017–18, 2018–19, and 2019–20. The Petitioner contended that errors in GST returns occurred during the transition to the GST regime due to accounting mistakes, and no actual ITC was availed on the disputed amounts.

Additionally, the Petitioner argued that certain ITC claims relating to specific entities were never availed and that substantial dues (over ₹6.4 crores) were recoverable from Government Departments, along with securities amounting to ₹4 crores.

Issues Involved

  1. Whether the High Court can waive the mandatory pre-deposit requirement prescribed under Section 107(6) of the CGST Act, 2017.
  2. Whether financial hardship or disputed liability justifies exemption from statutory pre-deposit.

Petitioner’s Arguments

  • Errors in GST returns were inadvertent and arose during the transition phase to GST.
  • No actual wrongful availment of ITC occurred.
  • Certain ITC claims were incorrectly attributed by the Department.
  • The Petitioner was facing financial constraints due to large receivables from Government entities.
  • Reliance was placed on Shubh Impex v. Union of India (2018) to seek waiver of pre-deposit.

Respondent’s Arguments

  • The requirement of pre-deposit under Section 107(6) is mandatory and cannot be waived.
  • The judgment in Shubh Impex is no longer applicable in view of binding precedents.
  • Reliance was placed on:
    • Anjani Technoplast Ltd. v. CCE (2017) (affirmed by Supreme Court)
    • Diamond Entertainment Technologies (P.) Ltd. v. Commissioner of CGST
  • These judgments establish that statutory pre-deposit is compulsory for maintaining an appeal.

Court’s Findings / Order

  • Section 107(6) of the CGST Act clearly mandates:
    • Full payment of admitted dues; and
    • 10% of disputed tax as pre-deposit (subject to statutory cap).
  • The provision does not confer discretion on the Court to waive the pre-deposit requirement.
  • Binding precedents, especially Anjani Technoplast Ltd., must be followed under Article 141 of the Constitution.
  • Earlier judgments granting partial relief (like Shubh Impex) cannot override binding precedent.

Final Order:

  • The request for waiver of pre-deposit was rejected.
  • The Petitioner was relegated to the Appellate Authority under Section 107 of the CGST Act.
  • Liberty was granted to request adjustment of amounts already lying with Government authorities towards pre-deposit.
  • The Court clarified that merits of the case were not examined. 

Important Clarification by Court

  • High Courts cannot waive statutory pre-deposit requirements where the statute mandates payment.
  • Financial hardship alone is not a valid ground for exemption.
  • However, amounts already deposited or lying with authorities may be considered for adjustment by the appellate authority. 

Sections Involved

  • Section 107(6), Central Goods and Services Tax Act, 2017
  • Article 141, Constitution of India

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS15042025CW46622025_212207.pdf 

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