In a recent ruling, the Patna High Court allowed a 10% reduced pre-deposit to stay in recovery due to a delay in constituting the Goods and Services Tax Appellate Tribunal ( GSTAT ). Shakti Infotech Pvt. Ltd., the petitioner is a registered company that filed a petition involving a dispute over the pre-deposit amount required to file an appeal with the Goods and Services Tax (GST) Tribunal.

The petitioner submitted that to appeal, they were required to make a pre-deposit of the disputed tax amount, initially set at 20% under the Goods and Services Tax Act. A recent amendment to Section 112 of the Central Goods and Service Tax Act, 2017 reduced the pre-deposit requirement from 20% to 10%, effective from November 1, 2024. Get a Copy of GST Ready Referencer – Practical Guide for Professionals, Click here The petitioner relied on the Patna High Court’s ruling in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others, in which the Court permitted the assessee to deposit twenty percent of the disputed tax amount until the Tribunal was constituted and an appeal was filed, along with a stay on recovery proceedings.

The petitioner further submitted that the GST Tribunals had not yet been constituted, preventing appeals from being filed before the effective date of this amendment. The counsel sought to deposit the reduced 10% pre-deposit amount to stay recovery actions, citing the imminent amendment and tribunal delay. The bench comprising Chief Justice Krishnan Vinod Chandran and Justice Partha Sarathy recognized the delay in constituting the GST Tribunal and there was no possibility of an appeal being filed before 01.11.2024. Get a Copy of GST Ready Referencer – Practical Guide for Professionals, Click here Therefore, the court directed the petitioner to deposit 10% of the disputed tax amount to stay the recovery proceedings until the tribunal was constituted.

The court highlighted that the stay on recovery would be temporary, requiring the petitioner to file an appeal immediately once the tribunal is operational. The court ordered that if the petitioner failed to appeal within the specified timeframe post-formation of the tribunal, tax authorities could proceed with recovery. The court directed to lift the bank account upon a 10% deposit of disputed tax. The petition was disposed of with directions and liberty.