Orissa High Court on GSTAT Non-Functioning and Mandatory Pre-Deposit Under Section 112(8)

Background of the Dispute

In Ajit Kumar Pati Vs Principal Commissioner (Orissa High Court), the assessee approached the Orissa High Court invoking its writ jurisdiction against an adjudication and appellate order passed under the GST law.

The lis arose from an order dated 24th February, 2025, issued by the Superintendent, Balasore III Range, Balasore Division, for the tax periods spanning April, 2020 to March, 2021. The proceedings had been initiated and concluded under Section 73 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017 (collectively referred to as the “GST Act”).

That original order came to be confirmed by the First Appellate Authority through an order dated 26th December, 2025. Instead of approaching the Goods and Services Tax Appellate Tribunal (GSTAT) at that time, the assessee filed a writ petition before the High Court.

Core Contention of the Assessee

The learned counsel for the assessee submitted that:

  • The GST legislation provides a statutory remedy of further appeal to the Goods and Services Tax Appellate Tribunal (GSTAT) under Section 112.
  • However, at the relevant point when the First Appellate order was passed, the GSTAT had not been constituted or made operational.
  • Due to this non-availability of the Tribunal, the assessee contended that he had no effective appellate remedy and therefore had to knock the doors of the High Court under Article 226.

In essence, the grievance was not about the absence of a statutory forum in the statute, but about the non-functionality of that forum in practice at the crucial time.

Stand of the Department

The learned Junior Standing Counsel appearing for the CT & GST Department did not dispute the factual position regarding:

  • Non-constitution and non-functioning of the GSTAT at the earlier time when the impugned order was passed and confirmed, and
  • The resultant practical difficulty faced by aggrieved persons in availing the statutory appellate remedy.

However, the Department emphatically argued that:

  • Even where the appellate forum had become functional later, the statutory conditions attached to filing an appeal cannot be relaxed or bypassed.
  • Specifically, Section 112(8) of the GST Act imposes a pre-deposit requirement.
  • This requirement mandates that before an appeal can be filed before the GSTAT, the assessee must:
    • Pay in full the admitted amount of tax, interest, fine, fee and penalty, and
    • Deposit 10% of the remaining disputed tax (over and above the amount already required under Section 107(6)), subject to a cap of twenty crore rupees.

The Department contended that the non-functioning of the Tribunal at an earlier stage does not dilute or dispense with this mandatory pre-deposit condition.

Statutory Framework: Section 112(8)

The High Court extracted and relied upon the exact wording of Section 112(8) of the GST Act, which reads as follows:

“(8) 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, in addition to the amount paid under sub-section (6) of Section 107, arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed.”

The Court accepted that this is a clear statutory embargo: no appeal is maintainable before the Tribunal unless the above financial conditions are satisfied.

Government Notification Enabling GSTAT Appeals

Notification Under Section 112(1)

The Court was informed that the Department of Revenue, Ministry of Finance had issued S.O. No.4220(E) dated 17th September, 2025 in exercise of powers under Section 112(1) of the **Central Goods and Services Tax Act, 2017`.

This notification is of substantial significance because it: