Refund of Pre-deposit in VAT to be made in cash in GST Regime u/s 142(6)

Last updated: 08 April 2026

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The Madras High Court has ruled that pre-deposits made under the previous VAT regime, even if paid using Input Tax Credit (ITC), must be refunded in cash following the implementation of GST. This decision, based on Section 142(6) of the CGST Act, clarifies that departmental circulars cannot override statutory provisions. Therefore, if a tax demand is dropped, the pre-deposit must be returned to the taxpayer in cash, as ITC from the VAT regime cannot be carried forward or adjusted under GST.

Court :
Madras High Court

Brief :
The Hon'ble Madras High Court in Larsen and Toubro Ltd. v. Deputy Commissioner (ST)-II [W.P. Nos. 28371, 28375 and 28378 of 2021 dated September 26, 2024] held that any pre-deposit made under the VAT regime by debiting input tax credit (ITC) must be refunded in cash after the implementation of GST. The department cannot refuse to refund by relying on departmental circulars when Section 142(6) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") mandates refund.

Citation :
W.P. Nos. 28371, 28375 and 28378 of 2021 dated September 26, 2024

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Attached File : 671907_5960_larsen_and_toubro_ltd_v_deputy_commissioner_.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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