Difficulty in set off of amount / Section 129 / Rule 138

[Veeresham Veerabomma]

Respected Experts greetings of the day !!!

One of my clients furnished a Bond against the detention of the vehicle. Subsequent to the detention dealer furnished a BOND for the entire amount, i.e., 200% penalty. Now the dealer wants to file and appeal for the same. However, he could not set off the amount for which he furnished the Bond amount. There is no option seems in The Portal to set off the Bond amount. The portal only showing Pre-deposit of 25% amount by way ITC credit ledger or Cash. Kindly shed light on my query to enable me in smooth filing of APL - 01

[Sadanand Bulbule]

Dear querist,

In view of the specific provisions of Section 107 [6], the mandatory deposit shall be paid via ITC or CASH only. The said provisions are reproduced as under:

Section 107 (6)-No appeal shall be filed under sub-section (1), unless the appellant has paid-

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.

Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.

As such, a BOND furnished cannot be reckoned on par with the pre-deposit paid via ITC or in CASH to admit an appeal petition as valid and complete.

[KASTURI SETHI]

Bond is only a promise to pay money at a future date but not paid at present. For filing an appeal, pre-deposit is an absolutely must. Thus there is a great gulf between 'PAID' and 'Promise to pay'. Furnishing of bond cannot qualify the condition of pre-deposit.

I concur with the reply of Sh.Sadanand Bulbule, Sir.

[Shilpi Jain]

Agreed. Bond does not mean the amount has already been paid.

[Padmanathan KV]

Since you are filing appeal, I am assuming the adjudication is completed and penalty was confirmed. So, was the bond encashed/ payment made against the demand?

[KASTURI SETHI]

Bond-amount cannot be encashed by the department until the time limit for filing appeal is over. Thereafter, after fulfilling the condition of pre-deposit stay order is automatic.

[Veeresham Veerabomma]

Thank you all. I got clarity on the issue raised by me and am sorry for the delay in replying.

AI Summary

Client Confused Over GST Appeal Process: Bonds Can't Replace Mandatory Pre-Deposit Under Section 107(6) A client faced issues with setting off an amount related to a bond furnished against a vehicle detention penalty under GST regulations. The bond was for 200% of the penalty, and the client sought to appeal but found no portal option to set off the bond amount. Experts clarified that under Section 107(6), appeals require a mandatory pre-deposit via ITC or cash, not bonds. Bonds are promises of future payment and don't satisfy the pre-deposit requirement. The client acknowledged the responses, gaining clarity on the appeal process.