The Delhi High Court has decided that, without a functioning Goods and Services Tax Appellate Tribunal (GSTAT), authorities cannot begin the process of recovering money from a taxpayer. This decision comes after the court clarified that taxpayers must first make the required upfront payment as outlined in the Central Goods and Services Tax Act, 2017 (CGST Act), before any recovery efforts can take place.
The Division Bench, Justice Prathiba M. Singh and Justice Shail Jain, was hearing the petition filed by M/s Welcut Industries challenging an Order-in-Appeal dated 23rd May 2025, by which a total demand of ₹27,000 was confirmed. The applicant said that the appellate remedy under section 112 of the CGST Act was not present as the GSTAT, though constituted, was not functional till now.
Mr Aditya Jain, the applicant’s counsel in the hearing, along with Mr Anshuman Jindal and Mr Soumyadip Chakraborty, said that the recovery proceedings were being started even after the willingness of the applicant to deposit the regulatory pre-deposit amount as specified u/s 112(8) of the Act. Senior Standing Counsel for CGST, Mr Ruchesh Sinha, appearing with Ms Upasna Vashishta, represented the respondents.
On 11th July 2024, the bench referred to the CBIC circular, which specified that the taxpayers might deposit the specified pre-deposit amount for the demand and submit an undertaking to appeal once the GSTAT become functional. As per the circular, the recovery of the remaining amount shall remain on these deposits as per Section 112(9) of the CGST Act.
The court, applying the specified circular, instructed M/S Welcut Industries to deposit 10% of the demanded amount by November 15, 2025. The recovery of the balance demand on these deposits will remain till the Tribunal becomes operational.
The deposited amount will be considered as the regulatory pre-deposit for the appeal once the Tribunal begins operation.
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Subsequently, the court disposed of the writ petition and all due applications, citing that the stay shall continue subject to adherence to the norms of pre-deposit.
From the judgment, it specified that against taxpayers’ recovery actions could not be pursued when the statutory appellate forum is not functional, provided the taxpayer follows the pre-deposit requirement u/s 112(8) of the CGST Act.
| Case Title | M/S Welcut Industries V/S Commissioner, CGST, Delhi North |
| Case No. | W.P.(C) 15495/2025 |
| For Petitioner | Mr. Aditya Jain, Mr. Anshuman Jindal and Mr. Soumyadip Chakraborty, Advs. |
| For Respondent | Mr. Ruchesh Sinha, Sr. St. Counsel, CGST with Ms. UpasnaVashishta, Adv. |
| Delhi HC | Read Order |
