The Gauhati High Court addressed a petition by Mahesh Kumar Agarwala, who challenged an adjudication order under Section 74 of the CGST Act. The order demanded ₹7.59 crore due to alleged wrongful Input Tax Credit (ITC) claims. Agarwala argued that Section 74 was inappropriately applied, as the case did not involve fraud or misstatement, which are prerequisites for invoking the provision. Instead of using the statutory appeal process, which requires a 10% pre-deposit of the disputed tax, Agarwala sought relief from the High Court, proposing alternative security measures.
The central issue was whether the High Court could allow an appeal without the mandatory pre-deposit. The Court observed that the adjudication order included specific findings of misstatement and suppression of facts, such as fake invoices and missing e-way bills. The Court emphasized that it does not reassess evidence or reasoning in writ jurisdiction unless the decision is clearly unreasonable or made in bad faith, neither of which were evident in this case.
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Concluding that the pre-deposit is a statutory requirement, the Court stated that such mandates are generally non-negotiable unless there are exceptional circumstances, which were not demonstrated here. Consequently, the Court refused to waive the pre-deposit and dismissed the petition, allowing Agarwala to pursue a statutory appeal based on its merits.
Order Date - 09 March 2026
Parties : Mahesh Kumar Agarwala Vs Union of India, through the Secretary, Principal Commissioner, Central Goods and Service Tax and Central Excise Commissionerate, Joint Commissioner, Central Goods and Service Tax and Central Excise Commissionerate and Additional Commissioner, Central Goods and Service Tax and Central Excise Commissionerate, Guwahati
Facts -
- Mahesh Kumar Agarwala, proprietor of M/s Ganesh Enterprise, challenged an adjudication order dated 30.09.2025 passed under Section 74 of the CGST Act, which confirmed a demand of ₹7.59 crore along with interest and penalty for alleged wrongful availment of ITC.
- The petitioner argued that Section 74 was wrongly invoked, claiming that the case did not involve fraud, suppression of facts, or misstatement, which are necessary conditions for invoking that provision.
- Instead of filing the statutory appeal, the petitioner approached the High Court mainly because the GST appellate mechanism requires a mandatory pre-deposit of 10% of the disputed tax amount.
- The petitioner therefore sought a direction from the Court to allow filing of the appeal without insisting on the statutory pre-deposit or with a reduced deposit, offering to provide security or bond to safeguard revenue interests.
Issue
- Whether the High Court can permit filing of a GST appeal without complying with the mandatory statutory pre-deposit requirement?
Order -
- The Court noted that the impugned adjudication order contained specific findings, including allegations of misstatement and suppression of facts involving fake invoices and absence of e-way bill records.
- While exercising writ jurisdiction, the Court does not examine the adequacy of evidence or reasoning unless the decision is perverse or mala fide, which was not the case here.
- The requirement of pre-deposit for filing an appeal is a statutory mandate, and courts generally cannot waive such requirements in the absence of exceptional circumstances.
- Since no extraordinary situation was demonstrated, the Court declined to waive the pre-deposit and dismissed the writ petition, leaving the petitioner free to pursue the statutory appeal on merits.
