GST appellate recovery must be adjusted against the principal demand before deciding the appeal, with pre-deposit duly considered.

Where GST appellate proceedings did not properly account for a recovery already made from the taxpayer's credit ledger against the same section 74 demand, and the pre-deposit was also not duly considered, the appellate order could not be sustained. The High Court noted that any such recovery should first be adjusted against the principal tax demand, and that the appellate authority had to examine both the recovery and the pre-deposit before deciding the appeal. The matter was remanded for fresh consideration after correcting these omissions.

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Issues: Whether the appellate order could be sustained when an amount recovered from the petitioner's credit ledger had not been adjusted against the principal tax demand and the petitioner's pre-deposit was not duly considered.

Analysis: The petitioner had challenged the appellate order passed in the GST appeal arising from an order under section 74 for the relevant tax period. It was noted that a sum had already been recovered from the petitioner's credit ledger against the same demand, yet that recovery was not appropriately reflected or given credit in the appellate proceedings. The Court held that, if such recovery had been made, it ought to have been adjusted against the principal tax demand at the first instance. In the absence of clarity on this aspect, the order could not be sustained and the matter required reconsideration by the appellate authority, which was also directed to take into account the recovery made and the pre-deposit already paid.

Conclusion: The appellate order was set aside and the matter was remanded to the appellate authority for fresh consideration after accounting for the recovery and pre-deposit.

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