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GST - Refund of Pre-deposit to the extent of dropped demand - Finality of Appellate Proceedings - Scope of Circular No. 125/44/2019-GST - The Adjudicating Authority assessed tax liability which was challenged before the First Appellate Authority who partly allowed the appeal and dropped demand to the extent of 64 percent - Petitioner filed a refund application seeking refund of pre-deposit to the extent of demand dropped - Refund Authority relied on Circular No. 125/44/2019-GST dated 18.11.2019 and rejected the refund application on the ground that the appellate proceedings have not attained finality as the petitioner had expressed intention to challenge the appellate order before the GST Appellate Tribunal – Whether the Petitioner is entitled to refund of pre-deposit to the extent of demand dropped when the Petitioner proposes to challenge only the part of order which has gone against it and proceedings have attained finality to the extent of dropped demand - HELD - The reasoning in the impugned order that proceedings have not attained finality is erroneous as proceedings have attained finality to the extent of the demand dropped. The authority ought to have kept in mind that the petitioner proposes to challenge only that part of the order which has gone against it and to the extent of dropped demand the proceedings have attained finality. The reasoning that proceedings have not attained finality merely because the Petitioner proposes to challenge the part which has gone against it is fallacious - The Petitioner would be squarely covered by Circular dated 18th November, 2019 as refund of pre-deposit is admissible in respect of the dropped demand which has attained finality. Once the demand stood set aside a statutory right accrued in favour of the Petitioner to receive refund of the amount paid towards pre-deposit - The Order-in-Appeal is binding on the Respondent under Section 107(16) of the CGST Act, 2017 and therefore Respondent cannot refuse consequential refund of pre-deposit attributable to the demand set aside - The continued retention of such amount is wholly unauthorized and offends Article 265 of the Constitution - Pre-deposit bears the character only of a security deposit being a statutory condition precedent for hearing of the appeal and needs to be returned to the appellant whether the appellant succeeds fully or partly. The impugned order is quashed and set aside with direction to process the refund application expeditiously – The writ petition is allowed
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