Calcutta High Court: Pre-Deposit under Section 112(8) Halts Further GST Recovery
Background of the Dispute
In Spandan Electrical vs State of West Bengal & Ors., the Calcutta High Court examined whether the GST authorities could continue recovery proceedings once the assessee claimed to have made the statutory pre-deposit required for filing a second appeal before the Tribunal.
The assessee approached the High Court through a writ petition, primarily seeking:
- Refund of
Rs. 2,85,636/-allegedly recovered in excess, and - Restoration of the balance in its electronic cash ledger.
The controversy arose out of an appellate order dated October 14, 2025, passed under Section 107 of the WBGST Act, 2017 / CGST Act, 2017. The assessee asserted that it had complied with the pre-deposit condition prescribed under Section 112(8) and had also lodged an appeal before the Tribunal on January 5, 2026.
Statutory Context: Sections 107(6), 112(8) and 112(9)
Pre-deposit at the First Appellate Stage – Section 107(6)
Under Section 107(6) of the WBGST Act, 2017 / CGST Act, 2017, an assessee challenging an adjudication order before the first appellate authority is required to make a mandatory pre-deposit, typically consisting of:
- The admitted portion of the tax, and
- A fixed percentage (usually 10%) of the disputed tax demand.
This statutory payment is a precondition for the maintainability of the first appeal.
Additional Pre-deposit for Tribunal Appeal – Section 112(8)
When the assessee wishes to carry the matter further to the Tribunal against an order under Section 107, Section 112(8) mandates deposit of an additional specified percentage (again generally 20% of the remaining disputed tax) of the tax in dispute, over and above the amount already paid under Section 107(6).
The assessee in this case claimed to have deposited an amount equivalent to 10 percent of the remaining disputed tax on November 20, 2025, asserting that this satisfied the requirement of Section 112(8).
Consequence of Pre-deposit – Automatic Stay under Section 112(9)
Section 112(9) plays a crucial role in protecting assessees from coercive recovery during the pendency of a Tribunal appeal. It provides that once the pre-deposit stipulated in Section 112(8) is made:
Recovery proceedings for the balance disputed tax amount shall be deemed to be stayed until disposal of the appeal.
Thus, the legislature has created an automatic, statutory stay on recovery of the balance disputed tax once the assessee makes the requisite pre-deposit and files an appeal before the Tribunal.
Assessee’s Contentions Before the High Court
Claim of Statutory Compliance
The assessee, through learned counsel Mr. Dey, argued before the Calcutta High Court that:
- It had already deposited the amount required under
Section 112(8)on November 20, 2025 with a clear intention to challenge the order dated October 14, 2025 passed underSection 107. - Subsequently, the appeal before the Tribunal was also filed on January 5, 2026.
On this basis, the assessee contended that:
- After such pre-deposit, the respondent GST authorities were not legally entitled to pursue any further recovery of the disputed tax based on the adjudication order confirmed by the appellate authority.
- Any sums recovered beyond the statutory pre-deposit thresholds under
Section 107(6)andSection 112(8)were unlawful and must be refunded. - The amount of
Rs. 2,85,636/-in particular, as well as corresponding reductions in the electronic cash ledger, represented such excess recovery.