Pre-Deposit of Demand Under GST2019-06-02T09:13:43+05:30

Updated as on 31/05/2019 19:54:49

PRE-DEPOSIT FOR DEMAND UNDER GST

Have you ever thought, how to file an appeal under the GST Act if you agree or disagree with the demand raised by the department?

deposit is being made by the client under the box

This page will help you to understand the following topics related to pre-deposit for filing an appeal under GST.

  1. Is pre-deposit mandatory for filing the appeal under the GST Act?
  2. How much pre-deposit required for filing the appeal?
  3. What is the maximum limit for pr-deposit in the GST Act?
  4. Can Input tax credit be used for the pre-deposit purpose?
  5. How to get a refund for the pre-deposit under GST Act?
  1. Is pre-deposit mandatory for filing the appeal under the GST Act?

Yes, as per section 107(6) pre-deposit is mandatory for filing an appeal under GST.

  1. How much pre-deposit required for filing the appeal?

As per the GST Act, no appeal shall be entertained unless both the conditions are satisfied simultaneously:-

Conditions

1. the person had paid the full amount of taxes, interest, fine, penalty and fees for the order which he had accepted.

2. the person had paid the 10% of the remaining amount of taxes in disputes.

Let’s see an Example:

Huge Ltd. had got an order, and in that order, the department had raised the two demands for (i) ₹ 30 lacs and (ii) ₹ 25 lacs.

The Huge ltd. had accepted the 30 lacs demand and didn’t filed an appeal against it but for ₹ 25 lacs company had filed an appeal?

The consequence will be:

The Huge ltd. had to deposit ₹ 30 lacs and ₹ 2.5 lacs (₹25 lacs * 10%) = ₹ 32.5 lacs as a pre-deposit before filing an appeal.

  1. What is the maximum limit for pre-deposit in the GST Act?

The maximum limit for pre-deposit as per GST act is ₹ 25 crores.

For instance:

Huge Ltd. had got an order, and in that order, the department had raised the demand for ₹ 300 crores?

Consequences:

As per 10% rule; the pre-deposit shall be ₹ 30 crores (₹ 300 crores * 10%), but there is a maximum limit for pre-deposit ₹ 25 cores so that the pre-deposit will be ₹ 25 crores.

  1. Can Input tax credit be used for the pre-deposit purpose?

Yes, ITC can be used for the pre-deposit purpose for filing an appeal under GST.

  1. How to get a refund for the pre-deposit under GST Act?

If an appeal is decided in favour of the assessee, the pre-deposit will be refunded by the department within 60 days starting from the date of appeal is decided in favour of assessee.  Refund d within 60 days then the department is liable to pay interest on refund amount @ 6% p.a. (maximum rate).

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