Quick answer: In Trivitron Healthcare Private Limited v. Deputy Commissioner, Division VI, CGST & Central Excise Commissionerate, Belapur, decided on 7 October 2026 in Writ Petition No. 12365 of 2026, a Division Bench of the Bombay High Court (M. S. Karnik and Sandesh D. Patil, JJ.) held that a net refund of Rs. 64,01,750, sanctioned under Section 54 of the Central Goods and Services Tax Act, 2017 for July to September 2023, could not be appropriated against an assessment demand for the financial years 2017-18, 2018-19 and 2019-20. The assessee had paid the full 20% pre-deposit contemplated by Sections 107(6) and 112(8) of the Act, so recovery of the balance demand stood stayed under Section 112(9), a position the Court tied to the CBIC circular of 11 July 2024. The Court reversed the appropriation, directed restoration of the sum within four weeks of uploading of the order, and expressly confined itself to that relief.
Key Takeaways
- A stayed demand cannot be recovered by adjusting a refund. Once the assessee has deposited the statutory amount for an appeal to the GST Appellate Tribunal, recovery of the balance is stayed, and the Court treated the adjustment of a refund against that demand as recovery the Department could no longer make.
- The 20% pre-deposit may be built in two instalments, one by cash challan and one from the Electronic Credit Ledger. The petitioner paid 10% through Form GST DRC-03 at the first-appeal stage and a further 10% through its Electronic Credit Ledger on 19 August 2025. The Court treated the full 20% as discharged.
- A rectification application is a real remedy, and a reasonless rejection is vulnerable. The Department rejected the petitioner’s rectification application on 10 December 2025 without engaging with the pre-deposit argument; the writ challenged that rejection together with the refund rejection order.
- Appellate proceedings on the refund itself continue separately. The Court restored only the Rs. 64,01,750 appropriated and left the disallowed Rs. 21,97,190.45 and the underlying 2017-20 demand for the First Appellate Authority and the Tribunal.
- The reasoning is short and rests heavily on a circular. Practitioners should cite the order for its result and read it alongside Section 112(9) rather than treat it as a full construction of the Department’s power to withhold or adjust refunds.
1. Introduction
A refund is the one moment at which the GST Department holds the assessee’s money rather than the reverse, and officers have long treated it as an opportunity: where a refund is due and an older demand is outstanding, the one is set against the other. The assessee receives a sanction order on paper and nothing in the bank. Whether that adjustment is lawful depends on whether the older demand is truly recoverable, and that depends on whether the assessee has done what the statute asks in order to appeal.
Trivitron Healthcare addresses that boundary. The petitioner had lost its first appeal against a demand of Rs. 1,12,34,474 for three financial years, had paid a pre-deposit, and was waiting, as many assessees were, for the GST Appellate Tribunal to become functional. Meanwhile it claimed a refund for a later period. The Department sanctioned the refund in part and then appropriated all of it against the demand under appeal. The Bombay High Court held that, on those facts, the appropriation could not stand.
The judgment is a short per curiam order. It does not construct a general theory of appropriation, and it does not discuss the provisions of Section 54 of the Central Goods and Services Tax Act, 2017 (the “CGST Act”) on withholding and deduction of refunds. Its value lies in three linked propositions: the 20% pre-deposit may be satisfied in two stages, payment of that amount stays recovery of the balance by operation of law, and appropriating a refund against the stayed demand is a form of recovery the stay forecloses. Section 2 sets out the facts and holding, Section 3 analyses the reasoning and what it leaves open, Section 4 draws out practical consequences, and Section 5 concludes.
2. Case summary and background
The demand. An assessment order dated 30 August 2022 was passed by the Additional Commissioner, CGST and Central Excise, Belapur, for the financial years 2017-18, 2018-19 and 2019-20, raising a demand of Rs. 1,12,34,474 against the petitioner (paragraph 2). The petitioner appealed to the Commissioner of Central Tax (Appeals), Raigarh, making a pre-deposit of 10% of the demand through Form GST DRC-03 (paragraph 2). The First Appellate Authority rejected the appeal, and the petitioner received the order on 10 July 2023 (paragraph 3).
The wait for the Tribunal. A second appeal lies to the GST Appellate Tribunal, which had not yet become functional. On 20 October 2023 the petitioner communicated its intention to appeal as and when it did (paragraph 3). On 11 July 2024 the Central Board of Indirect Taxes and Customs issued a circular clarifying that recovery would remain stayed on payment of the prescribed pre-deposit. The judgment calls it Circular No. 224/19/2024-GST in paragraph 3 and Circular No. 224/18/2024 dated 11 July 2024 in paragraph 13; the date and described effect are the same.
The refund. On 21 June 2025 the petitioner applied under Section 54 for a refund for July to September 2023, claiming Rs. 93,76,673 (paragraph 4). A Show Cause Notice in Form GST RFD-08 was issued on 11 July 2025, and a refund rejection order in Form GST RFD-06 dated 11 August 2025 determined a net eligible refund of Rs. 64,01,750 after disallowing Rs. 21,97,190.45 (paragraph 4). The judgment does not reconcile these figures. What mattered was the next step: instead of sanctioning Rs. 64,01,750, the Department adjusted the whole of it against the 2017-20 demand (paragraph 4).
The second instalment. On 19 August 2025 the petitioner deposited a further 10% of the disputed demand through its Electronic Credit Ledger, bringing the pre-deposit to the 20% it said the statute contemplates (paragraph 6). Its case was that recovery of the balance stood stayed under Sections 112(8) and 112(9), so the adjustment was without jurisdiction (paragraph 6).
Rectification and the writ. On 8 December 2025 the petitioner filed a rectification application recording the full payment (paragraph 7). By order dated 10 December 2025 it was rejected “without assigning any reasons and without dealing with the contentions”, as the Court records the petitioner’s case (paragraph 7). The petitioner had separately appealed on 9 November 2025 against the disallowance of Rs. 21,97,190.45 (paragraphs 5 and 14), and it filed its Tribunal appeal against the 2017-20 demand on 15 July 2026 (paragraph 13). The writ challenged the rectification rejection, the refund rejection order and its summary, and the Show Cause Notice (paragraph 1).
The Department’s answer. For Respondent Nos. 1 and 3, Mr. Ram Ochani argued that outstanding demands existed, that the adjustment was made under Section 54, and that it was not contrary to law. He added that the departmental records carried the trade name “Kiran Medical Systems (A Division of Trivitron Healthcare Private Limited)” rather than the petitioner’s name (paragraph 8).
Issues and holding. The Court decided two points. First, the refund could not be appropriated: given the circular and the pre-deposit, “it was not open for the Respondent No. 1 to adjust the amount of Rs. 64,01,750/- towards the alleged outstanding demand” (paragraph 11). Second, the name mismatch did not bar relief and could be examined by the Tribunal (paragraph 12). The petition was allowed, the appropriation reversed, and the sum ordered restored within four weeks of uploading of the order (paragraphs 15 and 17). The Court added that “[o]ur observations are limited only to the reversal of the amount of Rs.64,01,750/- in view of the pre-deposit made and nothing more” (paragraph 16).
3. Legal analysis
3.1 The statutory scheme
Section 107(6) of the CGST Act makes payment of the admitted amount and 10% of the remaining tax in dispute a condition of a first appeal. Section 112(8) applies the same logic to the Tribunal: the appellant must pay the admitted amount and a further 20% of the remaining tax in dispute, in addition to the Section 107(6) payment, subject to a cap. Section 112(9) supplies the consequence: where the Section 112(8) amount is paid, “recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal”. The Court did not set these out; it referred to Sections 112(8) and 112(9) when recording the petitioner’s case and applied the stay at paragraph 13.
Two features of the pre-deposit deserve notice. The Court accepted that the petitioner “has thereby discharged the entire pre-dposit of 20% of the disputed demand” through a first 10% by Form DRC-03 and a second 10% from the Electronic Credit Ledger (paragraphs 6 and 13). That confirms a ledger debit can fund the second tranche, though the Department did not contest the point and the order does not examine it. And paragraph 13 ties the stay to the Tribunal appeal filed on 15 July 2026, while paragraphs 10 and 11 treat the stay as arising from payment and the circular alone. The difference matters for timing, discussed in 3.3.
3.2 Why appropriation is recovery
The Department said the officer was exercising refund jurisdiction under Section 54, not recovery jurisdiction. The Court did not accept that framing, although it did not discuss Section 54 in terms. Its logic is that appropriation achieves what a recovery notice achieves: the Department obtains payment of the demand without the assessee paying it. If Section 112(9) deems “recovery proceedings for the balance amount” stayed, a refund adjustment is a mode of recovery and falls within the stay. Having recorded that recovery “would be stayed on payment of the prescribed pre-deposit”, the Court held that “[t]he Petitioner having paid the pre-deposit, there was no question of effecting recovery on the basis of the demand raised in the Assessment Order” (paragraph 10).
That is a defensible reading. A stay that left the Department free to intercept refunds would be hollow for regular claimants such as exporters and assessees under inverted duty structures. The weakness is that the conclusion is reached by assertion. As general background not discussed in the judgment, Section 54 itself allows an officer to withhold or deduct unpaid dues from a refund, and that power is generally understood to reach only dues not stayed by an appellate authority, the Tribunal or a court. A judgment that engaged that language would have answered the Department’s counsel directly and given assessees a firmer citation. As written, the order rests on Section 112(9) and the circular and leaves Section 54 untouched.
3.3 The circular, and the timing gap
A circular issued under Section 168(1) of the CGST Act binds departmental officers; it cannot create a statutory stay. The better reading of paragraphs 10, 11 and 13 is that the circular was invoked in support. It confirms the Department’s own position that payment of the pre-deposit stays recovery even though the Tribunal is not functional, and it shuts out the argument that nothing could be stayed because no appeal lay before a working forum. Section 112(9) speaks of a stay “till the disposal of the appeal”; where no Tribunal exists, a literal reading leaves a gap, and the circular fills it administratively.
The chronology raises a point the Court did not address. The appropriation was dated 11 August 2025; the second 10% was paid on 19 August 2025, eight days later; the Tribunal appeal followed on 15 July 2026. When the appropriation was made, the full 20% had not been deposited. The Court nevertheless reversed it. The most coherent explanation is that the Court tested the position at the rectification stage: by 8 December 2025 the officer had been told the full 20% was paid and the adjustment contravened Sections 112(8) and 112(9), and rejected the application without reasons. Alternatively, the Court treated the appropriation as continuing and tested it as at the date of decision. The order does not say which, and a Department resisting a similar claim will point to the gap.
3.4 Name mismatch and maintainability
The Court recorded the petitioner’s explanation: the trade name had been amended in the departmental records on 18 May 2018, the appeal portal auto-populates the entity name from the registration number so the appellant cannot amend it, and “the GST Registration number which is the only unique controlling number has always been the same” (paragraph 12). It held that “[t]hese are issues that can be gone into and decided by the Tribunal” (paragraph 12). The approach is pragmatic: a registration is identified by its GSTIN, and a display-name mismatch is an administrative artefact. But the Court deferred the point rather than deciding it, so it is not authority that such mismatches never defeat maintainability.
3.5 Alternative remedy
The order is silent on the alternative-remedy bar. The rejection of a rectification application could ordinarily be challenged by appeal under Section 107, and the petitioner had a parallel appeal pending against the refund disallowance (paragraph 14). The Court entertained the writ without recorded objection and without reasoning. The likely explanation is that the Department was taking money whose recovery the statute had stayed, and that an unreasoned rejection left no timely remedy within the statutory structure; but the Court did not say so.
3.6 What remains open
The order does not decide the merits of the 2017-20 demand, the Rs. 21,97,190.45 disallowance, the construction of Section 54 on withholding and deduction, or the legal status of the circular. The Court directed that “[t]he Tribunal as well as the Appellate Authority” decide the appeals “on its own merits and in accordance with law” (paragraph 16). The retrieved text carries no neutral citation and no reportable designation; as a short per curiam order, it is best cited for its narrow result. The reasoning concerns the CGST Act as it stood for the 2023 refund period and the 2024 circular, and it would not survive an amendment that expressly authorised adjustment of refunds against stayed demands, a point the Court never reached.
4. Practical significance
Sequence the pre-deposit before the refund. Where a demand is under appeal and a refund is in the pipeline, complete the 20% under Section 112(8) before the refund order is passed. In Trivitron the eight-day gap was not treated as decisive, but it is where a future litigant is most likely to be challenged.
Use of the Electronic Credit Ledger. The Court accepted a second tranche funded from the ledger as satisfying the requirement. Assessees holding unused credit have a supporting order, though the point was uncontested. Document the debit and keep the acknowledgement for use before the Tribunal.
Rectification as a first step. The petitioner put the full-payment facts and the Section 112(8) and 112(9) argument before the officer in writing. The unreasoned rejection then became part of the writ record. Assessees facing an adjustment should do the same, ask for a reasoned order, and then choose between appeal and writ.
Choice of remedy. The writ succeeded, but not every adjustment dispute will be entertained. Where the question is purely whether a Section 112(9) stay bars appropriation, a writ is credible. Where the dispute turns on contested facts about the amount or date of deposit, the statutory appeal is safer.
Departmental practice. Officers should check for stayed demands before adjusting a refund. The cost of error, as the four-week restoration direction shows, is an order to return the sum quickly. Recording the pre-deposit and the circular on the file would avoid litigation.
Identity records. Assessees whose trade name differs between the portal and their legal documents should reconcile them or annotate their filings; the objection here consumed court time and was left unresolved.
Drafting a petition. Plead the Trivitron facts: a completed 20% pre-deposit, stayed recovery of the balance, a pending or notified Tribunal appeal, and an unreasoned rectification rejection. Expect the Department to argue the timing gap and its Section 54 deduction power, and lead with Section 112(9), using the circular as support.
5. Conclusion
Trivitron Healthcare is a modest judgment with a useful result. Faced with a Department that had sanctioned a refund and then taken it back against a demand under appeal, the Bombay High Court held that an assessee who has paid the full 20% pre-deposit holds a stayed demand, and that a stayed demand cannot be recovered through the refund process. Rs. 64,01,750 was ordered restored within four weeks, while the merits stayed with the First Appellate Authority and the Tribunal.
Its strength is practical sense: a stay of recovery would mean little if refunds could be intercepted. Its weaknesses are plain. It does not analyse Section 54 on withholding and deduction; it leans on a circular whose number the judgment itself gives in two forms; it leaves the eight-day gap between appropriation and second instalment unaddressed; and it does not explain why a writ was preferable to a statutory appeal. These gaps do not undermine the result on its facts, but they limit the order’s value as a general statement of law.
For assessees, the safe course is to treat the order as confirmation that Section 112(9) protects refunds as well as bank accounts, and to arrange payments so the full pre-deposit precedes any refund order. For the Department, it is a reminder that a circular acknowledging a stay will be enforced against it. The wider question a later bench will probably have to answer is how the deduction power in Section 54 interacts with the deemed stay under Section 112(9) when both operate on the same sum at the same time.
Authorities
Applied by the Court
The Court did not cite or apply any reported judgment. It applied the following statutory provision and circular:
| Authority | Use in the judgment |
|---|---|
| Sections 112(8) and 112(9), Central Goods and Services Tax Act, 2017 | Recorded as the basis of the petitioner’s case and applied in paragraph 13 for the stay of recovery of the balance demand |
| CBIC Circular dated 11 July 2024 (cited as Circular No. 224/19/2024-GST in paragraph 3 and Circular No. 224/18/2024 in paragraph 13) | Relied on in paragraphs 10, 11 and 13 as clarifying that recovery remains stayed on payment of the prescribed pre-deposit |
Cited by counsel, not independently applied
No authority was cited by counsel in the retrieved text beyond Section 54 of the Central Goods and Services Tax Act, 2017, relied on by the Department’s counsel as the source of the adjustment power (paragraph 8).
Legislation considered
| Statute | Provisions | Source |
|---|---|---|
| Central Goods and Services Tax Act, 2017 | Sections 54, 107, 112 | https://www.indiacode.nic.in/ |
Judgment
Trivitron Healthcare Private Limited v. Deputy Commissioner, Division VI, CGST & Central Excise Commissionerate, Belapur, Writ Petition No. 12365 of 2026, High Court of Judicature at Bombay (M. S. Karnik and Sandesh D. Patil, JJ.), decided 7 October 2026 — https://indiankanoon.org/doc/10393613/
FAQ
Can the GST Department adjust a refund against a demand that is under appeal? Not where the assessee has paid the full pre-deposit and recovery of the balance is stayed. The Bombay High Court held that the sum of Rs. 64,01,750 could not be appropriated against the stayed 2017-18 to 2019-20 demand and ordered its restoration within four weeks.
Can the 20% pre-deposit for a Tribunal appeal be paid from the Electronic Credit Ledger? In this case the petitioner paid the second 10% on 19 August 2025 through its Electronic Credit Ledger, and the Court treated the full 20% as discharged. The order does not examine whether any restriction applies, because none was argued.
Does the order decide the merits of the underlying demand or the refund disallowance? No. The Court stated that its observations were limited to the reversal of the Rs. 64,01,750 appropriation and left the appeals to the Tribunal and the First Appellate Authority to be decided on their merits.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.