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 pre-deposit contemplated under Section 112 and (ii) provision of an undertaking to the proper officer. The court found the taxpayer had furnished the required intimation within seven days and, on the taxpayer's concession to allow retention of the pre-deposit, treated the intimation as satisfying para 6 in the facts of the case. Result: authorities directed to refund amounts recovered after withholding the pre-deposit; taxpayer waived interest.

---

---

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.

---