The Delhi High Court, in M/s Krishija Optics Limited & Ors. v. Additional Commissioner, CGST Delhi North & Anr., has permitted the petitioners to seek adjustment of an amount seized during a GST search towards the mandatory pre-deposit required for filing a statutory appeal under Section 107 of the Central Goods and Services Tax Act, 2017.
The matter was decided by a Division Bench comprising Justice Anil Kshetrapal and Justice Shail Jain in W.P.(C) 10189/2026 on 24 July 2026.
Background of the Case
During a search conducted at the petitioners’ premises on 20 October 2020, the GST authorities seized an amount of Rs. 38,84,400 belonging to the petitioners. In an earlier round of litigation, the Delhi High Court had directed the authorities to release the seized amount.
The respondents subsequently challenged that direction by filing a Special Leave Petition and a review petition. Both proceedings were dismissed. However, the seized amount had not been released when the present writ petition was filed.
In the meantime, an assessment order dated 20 March 2026 was passed against the petitioners, creating a tax demand of Rs. 2,09,08,677.
The petitioners initially sought implementation of the Court’s earlier order directing release of the seized amount. Alternatively, they requested that the seized sum, together with accrued interest, be adjusted towards the pre-deposit required for filing an appeal under Section 107 of the CGST Act.
Adjustment Towards Section 107 Pre-Deposit
During the hearing, the petitioners confined their request to adjustment of the seized amount towards the statutory pre-deposit. Counsel appearing for the GST authorities raised no objection to this request.
The Delhi High Court accordingly directed that, if the petitioners file an appeal under Section 107 of the CGST Act together with an application seeking adjustment of the seized amount towards the required pre-deposit, the application must be allowed.
The Court clarified that the petitioners would remain responsible for paying any differential amount required to complete the prescribed pre-deposit.
Key Legal Principle
The order recognises that an amount already seized and retained by the GST authorities may, with the authorities’ consent and subject to the Court’s direction, be appropriated towards the statutory pre-deposit for filing an appeal.
This approach prevents an assessee from being required to arrange the entire pre-deposit separately when a substantial amount belonging to it is already lying with the department. At the same time, the assessee must deposit any shortfall so that the complete statutory requirement under Section 107 is satisfied.
The decision is particularly relevant in cases where money seized during search proceedings continues to remain with the department while an appeal against a subsequent adjudication or assessment order is being pursued.
Why This Judgment Matters
The ruling is relevant for advocates, Chartered Accountants, Company Secretaries, GST practitioners, tax consultants, corporate tax teams and businesses dealing with search proceedings and appellate remedies under the CGST Act.
It highlights a practical mechanism through which an amount already held by the GST department may be utilised towards the appeal pre-deposit, thereby facilitating access to the statutory appellate remedy without compelling the taxpayer to deposit the same amount twice.
