Facts of the Case

The petitioner, M/s Welcut Industries, filed a writ petition challenging the Order-in-Appeal dated 23.05.2025 whereby a demand of ₹27,000 was confirmed against the petitioner. The said order was appealable before the GST Appellate Tribunal under Section 112 of the CGST Act. However, although the Tribunal had been constituted, it was not yet functioning, thereby rendering the statutory appellate remedy ineffective at that stage.

In the absence of an operational Tribunal, the petitioner apprehended coercive recovery proceedings despite being otherwise entitled to a stay upon filing an appeal with the prescribed pre-deposit.

Issues Involved

Whether recovery proceedings should be stayed against an appellate order when the statutory remedy of appeal before the GST Appellate Tribunal is unavailable due to non-functioning of the Tribunal, and whether interim protection could be granted subject to deposit in accordance with CBIC Circular dated 11.07.2024.

Petitioner’s Arguments

The petitioner contended that it was willing to file an appeal under Section 112 of the CGST Act and make the prescribed pre-deposit; however, due to the non-functioning of the GST Appellate Tribunal, it was prevented from availing the statutory remedy. It was argued that recovery in such circumstances would be unjust and contrary to the statutory scheme.

Respondent’s Arguments

The Revenue submitted that the impugned Order-in-Appeal was appealable and relied upon the CBIC Circular dated 11.07.2024, which provides a mechanism for taxpayers to deposit the pre-deposit amount and obtain stay of recovery till the Tribunal becomes functional.

Court Order / Findings

The Delhi High Court noted that the impugned order was appealable before the GST Appellate Tribunal but acknowledged that the Tribunal, though constituted, was not yet operational. The Court took note of the CBIC Circular dated 11.07.2024, which clarifies that where appeals cannot be filed due to non-operation of the Tribunal, taxpayers may deposit an amount equivalent to the prescribed pre-deposit under Section 112(8) of the CGST Act and furnish an undertaking to file an appeal once the Tribunal becomes functional.

In view thereof, the Court directed the petitioner to deposit 10% of the demanded amount by 15.11.2025. Subject to such deposit, the impugned Order-in-Appeal dated 23.05.2025 was directed to remain stayed. The Court further clarified that upon the GST Appellate Tribunal becoming operational, the petitioner would be entitled to file an appeal, and the amount deposited would be treated as the statutory pre-deposit for such appeal.

Important Clarification

The High Court clarified that interim protection from recovery is being granted purely on account of non-availability of the appellate remedy due to non-functioning of the GST Appellate Tribunal. The deposit directed by the Court shall stand adjusted as pre-deposit at the time of filing appeal before the Tribunal.

Final Outcome

The writ petition was disposed of. The petitioner was directed to deposit 10% of the demand amount by 15.11.2025, subject to which recovery pursuant to the Order-in-Appeal dated 23.05.2025 shall remain stayed. The petitioner was granted liberty to file an appeal before the GST Appellate Tribunal once it becomes functional, and the deposited amount shall be treated as the requisite pre-deposit for such appeal.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/75409102025CW154952025_185553.pdf


Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.