Predeposit – Mode Of Payment Quagmire

by Harsh Shah and Ruchita Shah

Under the Central Indirect Tax laws, in the erstwhile regime as well as in the GST regime, an Appellant is required to make a payment of a specified percentage of disputed tax dues (commonly referred to as mandatory pre-deposit) for filing an appeal against an adjudication order / first appeal order. Upon payment of such amount, a stay is granted against recovery of the balance disputed tax dues as per the order appealed against in pendency of the appeal proceedings.

Under the erstwhile Central Indirect tax laws, payment of mandatory pre-deposit using CENVAT credit balance was widely practiced. Even under the GST regime, some taxpayers have adopted a position that mandatory pre-deposit for appeal filing can be paid using electronic credit ledger balance. However, the issue has been litigious and the tax / appellate authorities in various cases have been insisting on payment of mandatory pre-deposit only in cash.