• Dated 26^th August, 2025

No further recovery action permissible if 10% of demand deposited as per CBIC Circular 224/18/2024-GST

Brief Facts:

A demand of Rs 2,05,62,445 was confirmed by the adjudicating authority, against which an appeal was filed before the Commissioner (Appeals) after making the mandatory pre-deposit of 10% of the disputed tax in compliance with Section 107(6) of the CGST Act. Since the Appellate Tribunal had not been constituted, the assessee was unable to pursue the remedy of appeal under Section 112. In the meantime, the Department issued recovery notices for the balance demand.

Assessee's Contention:

It was argued that in terms of Circular No. 224/18/2024-GST, once 10% of the disputed tax has been deposited, no further recovery proceedings can be undertaken until the Tribunal becomes functional, and therefore the recovery notices were unlawful.

Department's Contention:

The Department submitted that the recovery notices had been issued as it was unaware of the deposit made by the assessee.

Decision:

The High Court held that since the assessee had already deposited 10% of the disputed demand in line with Circular No. 224/18/2024-GST, further recovery was impermissible. The recovery notices were accordingly set aside and the writ petition was disposed of in favour of the assessee.

BTA's Comment:

This ruling makes it clear that in the absence of a functional Appellate Tribunal, recovery proceedings cannot be pressed once the taxpayer has deposited 10 % of the disputed amount in accordance with Section 112(8) read with Circular No. 224/18/2024-GST. The decision provides significant relief to taxpayers during the transitional phase of GST litigation and emphasizes that departmental authorities must verify compliance with pre-deposit requirements before resorting to recovery action.

Case Reference: Kusum Healthcare Pvt. Ltd. v. Assistant Commissioner (2025) 32 Centax 475 (Del.) – W.P.(C) No. 3889 of 2025, decided on 09.07.2025

Author: Mohammed Rayyan

Edited by: Shaily Gupta