The Delhi High Court has recently clarified an important issue concerning the pre-deposit requirement for filing GST appeals, particularly where the underlying proceedings began before an amendment to Section 107(6) of the CGST Act came into effect.
In the case, the petitioners were issued a Show Cause Notice (SCN) dated 25 June 2025, proposing quantified penalties under Section 122(1A) of the CGST Act, without raising any tax demand.
Subsequently, an Order-in-Original (OIO) dated 16 December 2025 was passed, imposing a penalty of approximately ₹346.55 crore on each petitioner. By the time the OIO was issued, the amended provisions of Section 107(6) had already come into force with effect from 1 October 2025, introducing a requirement to make a 10% pre-deposit of the penalty for filing an appeal in such circumstances.
The petitioners challenged this requirement before the Delhi High Court, arguing that their right of appeal had already vested when the SCN was issued, i.e., on 25 June 2025, before the amendment came into effect.
What Did the Delhi High Court Hold?
The Court held that the right of appeal is a substantive right and does not depend merely on the date on which the final adjudication order is passed.
According to the Court, the lis (legal dispute) commenced with the issuance of the SCN on 25 June 2025. Since the proceedings had commenced before the amended Section 107(6) came into force on 1 October 2025, the unamended provision would govern the petitioners’ appellate rights.
Consequently, the subsequent amendment introducing the 10% penalty pre-deposit requirement could not be applied retrospectively to these proceedings.
Key Takeaway
The Delhi High Court directed the Appellate Authority to entertain the appeals without insisting upon the additional 10% pre-deposit of penalty, subject to payment of any amount admitted by the petitioners under Section 107(6)(a).
The ruling reinforces an important principle in tax litigation: where an appellate right has already accrued in respect of an existing lis, a subsequent amendment affecting that right may not be applied retrospectively unless the law clearly provides otherwise.
For taxpayers facing GST adjudication proceedings, the date on which the SCN was issued may therefore become significant when determining which version of the appellate pre-deposit provisions applies.
