The Court has framed the question whether compliance with the pre-deposit requirement would entail diversion of liquidation estate funds towards a disputed statutory claim before it attains finality, contrary to the Section 53 waterfall mechanism.
The Delhi High Court has sought the assistance of Additional Solicitor General Raghavendra Shankar on the substantial question of whether a corporate debtor undergoing liquidation under the Insolvency and Bankruptcy Code, 2016 can seek exemption from the mandatory pre-deposit under Section 107(6) of the CGST Act [Moser Baer India Limited (through its Liquidator) v. Union of India & Ors].
The Division Bench of Justice Anil Kshetarpal and Justice Bharat Parashar noted that the petitioner-company is undergoing liquidation pursuant to an NCLT order dated 20.09.2018, and its assets are required to be distributed in accordance with the Section 53 waterfall mechanism. The Liquidator contended that compelling a pre-deposit out of the liquidation estate would divert funds towards a disputed statutory claim that has not yet attained finality.
The question whether statutory pre-deposit provisions under tax legislation must yield to the distribution waterfall under the IBC — or whether they constitute a procedural condition for accessing the appellate remedy that applies regardless of the debtor's insolvency status — has significant implications for both GST litigation and insolvency practice.
2026-juristway.com-2968-HC(Delhi)-GST | High Court of Delhi | WP(C) 13751/2026 | 09.10.2026
