No Double Pre‑Deposit for the Same GST Demand: Commentary on Vaneeta Impex Private Limited v. Union of India & Ors.

I. Introduction

The Delhi High Court’s decision in Vaneeta Impex Private Limited v. Union of India & Ors., Neutral Citation 2025 DHC 10136-DB (decided on 17 November 2025), addresses an increasingly common problem under the Goods and Services Tax (GST) regime: overlapping proceedings and demands by Central and State GST authorities on the same transactions, and the consequent duplication of the statutory pre‑deposit requirement for appellate remedies.

While the Court does not finally adjudicate the substantive issue—namely, whether a second demand by the Central GST (CGST) authorities is barred under Section 6(2)(b) of the CGST Act, 2017 when the State GST (SGST/DGST) authorities have already proceeded on the same transactions—it delivers an important and pragmatic holding: for the same disputed tax amount, the assessee cannot be compelled to make a statutory pre‑deposit twice (once under SGST and again under CGST) for availing appellate remedies.

The ruling thus sits at the intersection of:

• The doctrine of alternative remedy under Articles 226 and 227 of the Constitution;
• The cross‑empowerment and bar on parallel proceedings under Section 6(2)(b) of the CGST Act; and
• The mechanics of the pre‑deposit requirement under Section 107 of the CGST Act for appeals.

Against the backdrop of the Supreme Court’s recent decision in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate (SLP (C) No. 6092 of 2025), the Delhi High Court fashions a measured relief: it directs the assessee to pursue the statutory appeal under Section 107 CGST, but simultaneously waives the second pre‑deposit and saves the appeal from limitation.

II. Factual Background and Procedural History

1. Parties

• Petitioner: Vaneeta Impex Private Limited (a registered GST assessee).
• Respondents: Union of India and others, including:
  • Central GST authorities (CGST, Delhi North Commissionerate); and
  • State GST authorities (DGST – Delhi Goods and Services Tax Department) indirectly involved via the factual matrix.

2. Core Tax Proceedings

The controversy arises out of alleged wrongful availment of Input Tax Credit (ITC) for the Financial Year 2017–2018 in respect of purchases from, inter alia, M/s RCI Industries & Technologies, described as a cancelled dealer.

1. DGST (State) Proceedings under Section 73:
   • A Show Cause Notice (SCN) dated 28 September 2023 was issued by the Sales Tax Officer, Ward 201, Zone 11, Delhi SGST.
   • It culminated in an order dated 4 December 2023 by the Assistant Commissioner, DGST (Ward-201, Zone-11), under Section 73 of the CGST/Delhi GST Act.
   • The DGST order raised a total demand of ₹1,19,24,387/-.
   • Within this, the SCN had included a tax demand of about ₹56.78 lakhs towards ITC from cancelled dealers, including M/s RCI Industries & Technologies.
   • The Petitioner has already filed an appeal before the State Appellate Authority and has paid the mandatory pre‑deposit of 10% of the disputed portion (around ₹56 lakhs) for that appeal.
2. CGST (Central) Proceedings under Section 74:
   • The CGST Department (Delhi North Commissionerate) issued an SCN under Section 74 of the CGST Act on 4 August 2024.
   • This SCN alleged fraudulent availment of ITC by the Petitioner from M/s RCI Industries & Technologies.
   • It culminated in an Order-in-Original (OIO) dated 27 January 2025 passed by the Additional Commissioner (the “impugned OIO”).
   • The OIO raised a tax demand of ₹56,50,646/- and an equivalent penalty for FY 2017–2018.
   • A Form DRC-07 (summary of the order) was issued on 3 February 2025.

3. The Writ Petition

Challenging the impugned OIO, Vaneeta Impex filed W.P.(C) 15169/2025 under Articles 226 and 227 of the Constitution, arguing in substance that:

• The CGST demand was “identical” or substantially overlapping with the DGST demand arising from the same set of transactions (particularly ITC from M/s RCI Industries & Technologies) for the same tax period.
• In light of Section 6(2)(b) of the CGST Act and the Supreme Court’s interpretation in Armour Security (India) Ltd., a second proceeding and demand by CGST was barred.
• Requiring a second pre‑deposit under Section 107 CGST for appeal against the OIO, when 10% had already been paid in the SGST appeal for the same amount/transactions, would be unjust and duplicative.

On an earlier date (26 September 2025), the Court noted that the impugned OIO involved several parties (including M/s Mica Industries Ltd. and M/s RCI Industries & Technologies) and that certain orders had been passed by the Court in relation to this OIO in proceedings involving other assessees. Counsel for the Petitioner later made detailed submissions, relying especially on the Supreme Court’s decision in Armour Security (India) Ltd..

III. Summary of the Judgment

1. Non‑interference on Merits; Direction to Avail Statutory Appeal

The Delhi High Court does not quash or stay the impugned OIO under Article 226. Instead, it directs the Petitioner to avail the statutory appellate remedy under Section 107 of the CGST Act.

2. Key Relief: No Second Pre‑Deposit for the Same Amount

Recognising that:

• The DGST proceedings had already led to a demand including the same ITC component (~₹56 lakhs),
• The Petitioner had already paid a 10% pre‑deposit in the DGST appeal in relation to that amount, and
• The CGST OIO demanded ₹56,50,646/- on the same ITC from M/s RCI Industries & Technologies,

the Court holds that requiring a second pre‑deposit of 10% of the same amount under Section 107 CGST would result in duplication. Therefore:

• The Petitioner is permitted to file an appeal under Section 107 of the CGST Act without any pre‑deposit in respect of the CGST OIO dated 27 January 2025 and DRC-07 dated 3 February 2025.

3. Extension of Time / Protection from Limitation

The Court further directs that:

• The Petitioner may file the CGST appeal on or before 31 January 2026.
• If the appeal is filed by that date, the Appellate Authority shall:
  • Entertain and decide it on merits, and
  • Not dismiss it on the ground of limitation.

4. Procedural Directions

The Court also directs that a notice for personal hearing in the appeal shall be afforded to the Petitioner on the specific email and mobile number provided in the order. The writ petition and pending applications are then disposed of on these terms.

IV. Precedent and Authorities Cited

1. Statutory Framework

(a) Section 6(2)(b), CGST Act, 2017

Although the full text of Section 6(2)(b) is not reproduced in the judgment, its well‑known gist is that:

Where a proper officer under the SGST Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the CGST Act on the same subject matter (and vice versa), in view of cross‑empowerment.

This provision aims to prevent duplication of proceedings by both Central and State GST authorities on the same “subject matter”.

(b) Section 73 and Section 74, CGST Act

• Section 73: deals with determination of tax not paid/short paid, or ITC wrongly availed or utilized, without any allegation of fraud, wilful misstatement or suppression of facts.
• Section 74: applies when tax not paid/short paid or ITC wrongfully availed/used is due to fraud or wilful misstatement or suppression. It carries higher penalties and a longer limitation period.

In this case:

• The DGST demand is under Section 73, based on scrutiny of returns.
• The CGST demand is under Section 74, characterized by the Revenue as an “intelligence-based action” alleging fraudulent misrepresentation.

(c) Section 107, CGST Act – Appeals to Appellate Authority

Section 107 provides for appeals to the first appellate authority against an OIO. Salient aspects (in broad terms) are:

• Appeal to be filed within a prescribed limitation period (ordinarily 3 months from the date of communication, with a limited power to condone delay).
• The appellant must pay:
  • the admitted amount of tax, interest, fine, fee and penalty, and
  • a pre‑deposit of 10% of the disputed tax amount (subject to a monetary cap).

In this case, the Court, exercising writ jurisdiction, relaxes the pre‑deposit requirement for the CGST appeal because it would otherwise lead to a double pre‑deposit on the same amount.

2. Supreme Court’s Decision in Armour Security (India) Ltd.

Both sides rely on the Supreme Court’s decision in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate (SLP (C) No. 6092 of 2025). The Delhi High Court reproduces and refers to paragraph 96, in particular clauses (vii), (ix), and (x). Based on the extracts:

96. We summarize our final conclusion as under: - […]

(vii) The expression "subject matter" refers to any tax liability, deficiency, or obligation arising from any particular contravention which the Department seeks to assess or recover.

[…]

(ix) Where the proceedings concern distinct infractions, the same would not constitute a "same subject matter" even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted.

(x) The twofold test for determining whether a subject matter is "same" entails, first, determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and secondly, if the demand or relief sought is identical.

From this, several key principles emerge:

1. Meaning of “subject matter” (para 96(vii)):
   • “Subject matter” is not merely the amount of tax; it is the tax liability, deficiency or obligation arising from a particular contravention.
   • Thus, the focus is on the specific contravention and facts on which the Department proceeds, not just on numerical coincidence in the tax demanded.
2. Distinct infractions, same amount (para 96(ix)):
   • Even if two proceedings result in the same or similar tax liability, they may not have the same “subject matter” if they concern distinct infractions.
   • In such situations, the bar under Section 6(2)(b) does not apply.
3. The twofold test (para 96(x)):
   • To decide whether two proceedings involve the same subject matter, one must ask:
     1. Has one authority already proceeded on an identical liability of tax or alleged offence on the same facts? and
     2. Is the demand or relief sought identical in the second proceeding?
   • Both prongs must be satisfied for Section 6(2)(b) to bar the second proceeding.

The Respondent Revenue invokes Armour Security to argue that:

• The DGST proceedings (under Section 73) and the CGST proceedings (under Section 74) concern different “infractions”:
• The State’s action arose from scrutiny of returns (non‑fraud-based), whereas the Central action is fraud-based / intelligence-based.
• Therefore, they are not the “same subject matter” under Section 6(2)(b), even if they deal with the same transactions.

The Petitioner, on the other hand, relies on Armour Security to say that the same ITC and same transactions with M/s RCI Industries & Technologies are being subjected to duplicate demands, which Section 6(2)(b) and the Supreme Court’s interpretation should prohibit.

The Delhi High Court does not conclusively decide this contest. Instead, it sidesteps the substantive Section 6(2)(b) issue, confines itself to procedural relief, and leaves the merits to the Section 107 appellate forum.

V. Legal Reasoning of the Delhi High Court

1. Recognition of Competing Positions on Section 6(2)(b)

The Court records:

• The Petitioner’s reliance on Armour Security to contend that a second CGST demand is barred because DGST has already raised a demand on the same transactions.
• The Respondent’s counter‑argument, also relying on Armour Security, that the nature of infractions and the statutory provisions invoked (Section 73 vs Section 74) are different, meaning the subject matter is not the same.

Without expressly resolving this clash, the Court moves to examine the factual overlap in the two demands.

2. Factual Overlap in the ITC Component

On perusing:

• the DGST SCN dated 28 September 2023 and order dated 4 December 2023, and
• the CGST SCN dated 4 August 2024 and the impugned OIO dated 27 January 2025,

the Court notes that:

• The DGST SCN had raised a demand of ₹56,78,280/- toward ITC from cancelled dealers, one of which is M/s RCI Industries & Technologies, on a scrutiny-of-returns basis.
• The CGST SCN under Section 74 raised a tax demand of ₹56,50,646/- on the ground of fraudulent availment of ITC from M/s RCI Industries & Technologies.
• The Petitioner has already appealed against the DGST order and paid 10% pre‑deposit on the amount of approximately ₹56 lakhs.

Thus, even if the characterization of infractions (fraudulent vs non‑fraudulent) differs, there is a clear factual and monetary overlap in the tax base (i.e., the ITC claim relating to RCI).

3. Balancing Alternative Remedy with Prevention of Procedural Injustice

Ordinarily, High Courts insist that assessees follow the statutory remedy of appeal rather than directly invoking Article 226 against an OIO, unless there is a jurisdictional error or breach of natural justice. Here, the Court adheres to that principle by directing the Petitioner to file an appeal under Section 107.

However, it also confronts a practical difficulty:

• If the Petitioner must again deposit 10% of the same disputed ITC amount for the CGST appeal, it would effectively suffer a double pre‑deposit on the same controversy.
• This would be inequitable and would create a financial disincentive against effectively challenging the CGST order, especially when parallel DGST proceedings already exist concerning the same ITC.

To avoid such procedural injustice, the Court employs its equitable and supervisory jurisdiction under Articles 226 and 227 to:

• Relax the pre‑deposit requirement for the CGST appeal (i.e., allow appeal without any pre‑deposit), and
• Extend/neutralize the effect of limitation by permitting filing till 31 January 2026 and directing that the appeal not be dismissed as time‑barred.

4. No Determination of the Section 6(2)(b) Bar on a Second Proceeding

Importantly, the High Court does not declare that the CGST proceedings are barred by Section 6(2)(b). It leaves this question open to be decided in the statutory appeal.

The case thus does not set a direct precedent on when Armour Security mandates that CGST proceedings be quashed due to prior SGST action. Rather, it focuses on minimising procedural and financial prejudice to the assessee while respecting the statutory appellate hierarchy.

VI. Key Legal Principle Emerging from the Case

“No Double Pre‑Deposit for the Same Disputed GST Amount”

The central practical principle derived from this decision is:

Where the same disputed tax amount (e.g., a specific ITC component for a given period and set of transactions) is already the subject of proceedings and appeal under State GST law, and a statutory pre‑deposit has been paid in that appeal, the taxpayer cannot be compelled to make an additional, second pre‑deposit for an overlapping Central GST appeal on the same amount.

While the judgment is case-specific, it establishes a persuasive doctrinal point:

• The purpose of the pre‑deposit under Section 107 is to ensure serious and bona fide appeals and to protect revenue—not to allow duplicative exactions for the same tax dispute.
• Once the revenue’s interest is adequately secured in one jurisdiction (SGST or CGST) for the overlapping amount, a second pre‑deposit on the same base would be disproportionate.

VII. Complex Concepts Simplified

1. What Is “Input Tax Credit” (ITC)?

Under GST, a registered supplier can claim credit for the tax paid on inputs (goods/services purchased). This credit—Input Tax Credit (ITC)—can be set off against the supplier’s output tax liability on sales.

However, ITC can be denied if:

• The supplier from whom goods/services were purchased is a non‑existent or “fake” dealer,
• The dealer’s registration is cancelled, or
• The transaction is otherwise considered fictitious or fraudulent.

In this case, the dispute revolves around ITC claimed by the Petitioner on purchases from M/s RCI Industries & Technologies, a dealer alleged to be problematic/cancelled.

2. Difference Between Section 73 and Section 74 GST Proceedings

• Section 73:
  • Applies when tax is short‑paid, not paid, or ITC is wrongly availed/used, without allegations of fraud or wilful misstatement.
  • Regarded as a “non‑fraud” or “bonafide error” provision.
  • Penalties are generally lower.
• Section 74:
  • Triggered when the short payment / wrongful ITC arises from fraud, wilful misstatement, or suppression of facts.
  • Has harsher consequences—higher penalty, longer look‑back period.
  • Often based on intelligence and investigations, not just return scrutiny.

In Vaneeta Impex:

• DGST: Section 73; labelled as arising from scrutiny of returns.
• CGST: Section 74; an intelligence-based action alleging fraud.

The Respondent capitalises on this distinction to argue that the “infractions” and thus the subject matter of the two proceedings differ under the Armour Security test.

3. What Is “Subject Matter” Under Section 6(2)(b)?

As per Armour Security and as quoted by the High Court:

• “Subject matter” is:
  • Not just a monetary amount, but the tax liability/deficiency/obligation arising from a particular contravention that the authorities seek to assess/recover.
  • Two proceedings are on the same subject matter when:
    1. They are based on the same alleged offence or liability on the same facts, and
    2. The relief/demand is identical.

If these conditions are met, Section 6(2)(b) bars a second set of proceedings by the other authority (CGST or SGST). If the infractions differ (even if the amount overlaps), the bar may not apply.

4. What Is a “Pre‑Deposit” and Why Is It Important?

A pre‑deposit is a statutory condition for filing an appeal against a tax order:

• Under Section 107 CGST, an assessee must deposit:
  • the admitted amount of tax etc., plus
  • 10% of the disputed tax (capped at a specified limit).
• It serves to:
  • discourage frivolous appeals, and
  • protect revenue during the pendency of the appeal.

In Vaneeta Impex, the core grievance is that:

• The Petitioner already paid a 10% pre‑deposit in the DGST appeal for the disputed ITC amount (~₹56 lakhs).
• If they must pay another 10% for the CGST appeal on the same ITC amount, the effective pre‑deposit becomes 20% on the same dispute, which the Court finds unjustifiable.

5. Order-in-Original (OIO) and Form DRC-07

• Order-in-Original (OIO): The speaking adjudication order passed by the proper officer determining tax, interest, penalty etc. after SCN adjudication.
• Form DRC-07: A summary of the OIO uploaded on the GST portal, used for initiating recovery proceedings.

In this case, the impugned OIO is dated 27 January 2025 and the corresponding DRC-07 is dated 3 February 2025.

VIII. Impact and Significance

1. Practical Protection Against Double Financial Burden

The ruling is significant because it addresses the real and growing problem of assessees facing multiple, overlapping demands from CGST and SGST authorities on the same or substantially same transactions. By holding that:

“For the same amount pre-deposit cannot be charged twice,”

the Court:

• Protects assessees from duplicative financial hardship merely to access appellate remedies in two parallel tax streams (Central and State).
• Signals to tax authorities that coordination between CGST and SGST is necessary where proceedings overlap on the same ITC or tax base.

2. Harmonising the Alternative Remedy Rule with Fairness

The judgment is an example of the High Court harmonising the doctrine of alternative remedy with equitable considerations:

• On one hand, it enforces the rule that assessees must ordinarily use statutory appeals, not writs (thus respecting legislative design).
• On the other, it uses writ jurisdiction to soften the harsh edges of the law where blind application of pre‑deposit norms would result in manifest injustice due to procedural duplication between Centre and State.

3. Guidance for Future Overlapping CGST–SGST Litigation

Though not an exhaustive precedent on Section 6(2)(b), Vaneeta Impex provides:

• A template for assessees to argue that where identical ITC or tax amount is already the subject of State proceedings and pre‑deposit has been made, the Central appeal should be entertained without a second pre‑deposit.
• A signal to lower authorities (both adjudicating and appellate) that they must consider:
  • whether an assessee has already secured the revenue’s interest in another parallel proceeding on the same base amount, and
  • whether insisting on a further pre‑deposit would be contrary to fairness and proportionality.

4. Interaction with Armour Security

This decision also demonstrates how High Courts may implement Armour Security:

• While Armour Security articulates when Section 6(2)(b) bars a second proceeding, High Courts may sometimes choose to:
  • avoid conclusively ruling on the bar at the writ stage, and
  • instead facilitate an effective appeal where the appellant can fully urge the Armour Security/Section 6(2)(b) defence.
• In doing so, they may provide (such as waiving second pre‑deposits or extending appeal periods) to prevent the defence from becoming illusory.

5. Procedural Fairness: Communication and Hearing

By specifically directing the Appellate Authority to:

• Issue notice of personal hearing to the Petitioner on a specified email and mobile number, and
• Entertain the appeal on merits without rejecting it as time‑barred,

the Court ensures that the Petitioner’s rights to effective hearing and appeal are not defeated by technicalities. This underscores that procedural fairness remains central to tax adjudication.

IX. Conclusion

Vaneeta Impex Private Limited v. Union of India & Ors. is a concise but impactful decision which, set against the background of Armour Security (India) Ltd., clarifies an important practical rule under GST litigation:

Where the same disputed tax amount—especially a specific ITC component for a given period and set of transactions—is already under challenge in State GST proceedings and a pre‑deposit has been made there, the assessee should not be compelled to deposit a second 10% under Section 107 CGST for an overlapping Central GST appeal on that same amount.

While the Court does not decide whether Section 6(2)(b) entirely bars the CGST proceedings (that question is left to the appellate forum), it ensures that the Petitioner can meaningfully access that forum without being crippled by duplicative pre‑deposit demands and limitation hurdles.

The judgment thus stands for:

• Respecting statutory appellate remedies (by directing recourse to Section 107),
• Preventing unjust enrichment of the State through duplicate pre‑deposits, and
• Aligning GST procedure with basic fairness and proportionality in the context of dual (Central–State) tax administration.

As GST litigation involving overlapping CGST and SGST actions continues to proliferate, Vaneeta Impex provides a useful precedent and analytical framework for courts and litigants alike on how to deal with pre‑deposit requirements and coordinate remedies when the same tax base is pursued through multiple, parallel proceedings.