Delhi High Court Refuses to Grant Waiver of GST Pre-deposit [Read Order]

The Petitioner, M/s Impressive Data Services Private Limited, filed a writ petition seeking exemption from the statutory requirement of pre-deposit under Section 107(6) of the Central Goods and Services Tax Act, 2017, for filing an appeal. A Show Cause Notice (SCN) dated 14th June, 2022, was issued regarding alleged wrongful availment of Input Tax Credit (ITC) for FYS 2017-18, 2018-19, and 2019-20. The Petitioner contends that errors occurred during the GST regime transition due to accounting mistakes, and that no ITC was actually availed on the disputed amounts. It also claims that ITC was never claimed from two specific suppliers: M/s DST Kumar Traders and M/s Vinay Sales Corporation. The Petitioner further submits that it has substantial receivables (over Rs. 6.4 crores) and securities (worth Rs. 4 crores) pending from government departments.

Issues Framed

Whether the High Court can grant a waiver of the pre-deposit requirement under Section 107(6) of the CGST Act, 2017.

Petitioner’s Arguments:

Petitioner argued that the alleged ITC was never claimed; the error was clerical/accounting in nature. He is also facing Financial hardship as large sums are due from government departments.

Respondent’s Arguments:

Department relied on the binding nature of Anjani Technoplast Ltd. v. CCE, (2017) 348 ELT A132 (SC), upheld by the Supreme Court, which mandates pre-deposit as a prerequisite to maintainability.

Further Department Cited Diamond Entertainment Technologies (P.) Ltd. v. Commissioner of Central Goods and Tax Commissionerate, Dehradun, W.P.(C) 10091/2019, which reiterates strict compliance with the statutory requirements of pre-deposit.

Court’s Decision & Rationale

• The Court held that Section 107(6) of the CGST Act does not confer any discretion to the Court or Appellate Authority to waive the mandatory 10% pre-deposit of the disputed tax amount.
• The Court distinguished the Petitioner’s reliance on Shubh Impex, noting it has been overruled or rendered per incuriam due to non-consideration of Anjani Technoplast.
• Emphasised that it is bound by the Supreme Court’s endorsement of Anjani Technoplast under Article 141 of the Constitution.

The Delhi Court declined to grant a waiver but permitted the Petitioner to present its claim before the Appellate Authority regarding the Rs. 20 lakhs allegedly lying with the Department and Amounts/securities lying with government entities.

Read the official notice below for more related information