2026 (2) TMI 219 - HC - GST

Benefit of Circular No.224/18/2024-GST pre-deposit undertaking treated as compliance; refund ordered after withholding pre-deposit amount

Para 6 of Circular No.224/18/2024-GST conditions a prohibition on recovery pending appeal on fulfilment of two preconditions: (i) deposit of the ... Benefit of Circular No.224/18/2024-GST - pre-deposit u/s 112 - undertaking / intimation to appellate authority treated as compliance - prohibition on recovery pending filing of appeal - refund of amount recovered after withholding pre-deposit - HELD THAT:- Though the petitioner would contend that the tax liability cannot be enforced by way of recovery by virtue of Para No.6 of the Circular, learned HCGP would contend that for the circular to be made applicable, two preconditions that required to be fulfilled are that (i) the taxpayer must make a deposit of an amount of pre-deposit as contemplated u/s 112 of the CGST Act and (ii) must provide an undertaking to the proper officer. It is only when these two conditions are fulfilled, the condition in would come into play. Taking note of the submissions made by both sides, it is not in dispute that the petitioner has furnished an intimation to the appellate authority as per Annexure-D within a period of 7 days from the communication of summary of demand at Annexure-C. Insofar as the question of pre-deposit, though certain contentions have been raised, petitioner submits that keeping open the legal question of requirement of pre-deposit, in the present case he would concede for the amount of pre-deposit to be retained with the revenue and would accept an order whereby the remaining amount is refunded. Taking note of the facts as well as the contents of Annexure-D, it would be appropriate to dispose of the writ petition by treating the intimation at Annexure-D to be sufficient for the purpose of para No. 6 in the peculiar facts of the present case. Accordingly, the respondent - Authorities are directed to refund the amount recovered pursuant to summary of demand at Annexure-C after withholding the pre-deposit amount as contemplated under Section 112 of the CGST Act. It is clarified that insofar as the amount directed to be refunded, petitioner foregoes the claim of any interest on the same. Writ petition is accordingly allowed. Issues: Whether the petitioner is entitled to refund of the amount recovered pursuant to the summary of demand (AnnexureC) in view of para 6 of Circular No. 224/18/2024-GST, having furnished an intimation/undertaking to file appeal (AnnexureD) and subject to retention of the predeposit amount under Section 112 of the CGST Act, 2017.Analysis: Para 6 of the circular provides that where a taxpayer furnishes an undertaking to file an appeal, recovery proceedings ought not to be initiated; however, the benefit is conditioned on deposit of the predeposit amount or provision of the undertaking/declaration to the proper officer. The petitioner furnished an intimation to the appellate authority within seven days (AnnexureD) and, for the present, agreed that the predeposit amount may be withheld by the revenue. The respondent contested applicability of the circular on grounds that the declaration was not made to the proper officer and that predeposit was not paid. Having regard to the factual record, AnnexureD, and the petitioner's concession to forego the predeposit and interest, it is appropriate in the peculiar facts of the case to treat AnnexureD as sufficient for para 6 and to direct refund of amounts recovered after withholding the predeposit amount.Conclusion: The petitioner is entitled to refund of the amount recovered pursuant to the summary of demand (AnnexureC) after withholding the predeposit amount as contemplated under Section 112 of the CGST Act, 2017; the petitioner foregoes any claim to interest on the refunded amount.