Tax paid under protest can be set-off against pre-deposit - Supreme Court

 In an important decision in VVF India Limited v. The State of Maharashtra, 2021-VIL-92-SC, the Hon’ble Supreme Court has held that amount paid under protest before assessment order can be adjusted again payment of pre-deposit under Maharashtra VAT Laws.

 

Brief of the case

 

·                The taxpayer filed the SLP against the HC decision wherein the Court ruled that 10 percent of pre-deposit is to computed on demand after deducting any amount paid under protest i.e. 10% x (Demand-Protest payment)

 

·                The Apex Court observed that the provision provides for 10 percent pre-deposit on the 'amount disputed by the taxpayer' and not 10 percent on the 'amount in arrear'.

 

·                The Apex Court held that any amount deposited by the taxpayer anterior to assessment is eligible to be set-off from the amount of pre-deposit.

 

 | Remarks

 

·                In our view, the decision can be applied to GST laws as well since the pre-deposit provisions under GST also provides for pre-deposit as a percentage of 'disputed amount' and not 'amount in arrear'.