TaxTMI 
TaxTMI 
No 10% Pre-Deposit for Penalty-Only GST Appeals Where SCN Preceded the 01.10.2025 Amendment
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....o 10% Pre-Deposit for Penalty-Only GST Appeals Where SCN Preceded the 01.10.2025 Amendment<br>By: - Kamal Aggarwal<br>Goods and Services Tax - GST<br>Dated:- 8-8-2026<br>The Hon'ble High Court of Delhi has held that the substituted proviso to Section 107(6) of the CGST Act, 2017, requiring a 10% pre-deposit for appeals against penalty-only orders with effect from 01.10.2025, does not govern appeals arising from adjudicatory proceedings initiated by a Show Cause Notice issued before that date. The right of appeal, being a substantive right that vests at the commencement of the lis, carries with it the appellate conditions prevailing on that date, and a subsequent amendment cannot burden it absent express or necessarily implied legislativ....
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....e intent. The Hon'ble High Court of Delhi has, in the case of Gaurav Jain & Anr. Versus Joint Commissioner (Appeals-II) CGST Delhi Zone & Anr. - 2026 (8) TMI 85 - DELHI HIGH COURT, held that the ten per cent pre-deposit condition introduced by the substituted proviso to Section 107(6) of the Central Goods and Services Tax Act, 2017 ("CGST Act") does not apply where the Show Cause Notice giving rise to the appeal was issued before the amendment came into force, even though the Order-in-Original was passed thereafter. Facts The Petitioners were issued a Show Cause Notice ("SCN") dated 25.06.2025 under Section 122(1A) of the CGST Act, proposing personal penalties, without any accompanying demand of tax. On the date of the SCN....
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...., Section 107(6) of the CGST Act did not prescribe any percentage-based pre-deposit for an appeal against a penalty-only order. By the Finance Act, 2025, the proviso to Section 107(6) was substituted with effect from 01.10.2025, requiring a deposit of ten per cent of the penalty as a pre-condition for filing an appeal against any penalty-only order. The Order-in-Original in the present case was passed only on 16.12.2025, after the substituted proviso had come into force, imposing penalties on each Petitioner. Applying the substituted proviso would have required a pre deposit by each Petitioner before the Appeal could even be registered. The Petitioners first approached the Appellate Authority seeking waiver or reduction of the pre-dep....
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....osit on hardship grounds. The Appellate Authority declined the request, correctly noting the absence of any statutory or inherent power to waive the condition. The present Writ Petition was thereafter recast at the preliminary hearing to contend that the substituted proviso was inapplicable altogether, since the SCN pre-dated it. Court's Analysis & Holding The Hon'ble Court held that the right of appeal, though a creature of statute, is substantive rather than procedural, and once vested cannot be impaired or subjected to a more onerous condition absent express or necessarily implied legislative intent. The relevant extract of the judgement is reproduced below for ready reference:- "The right of Appeal is a creature of stat....
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....ute...Once vested, it cannot be taken away, impaired or subjected to a more onerous condition unless the legislature has manifested such an intention expressly or by necessary intendment." On perusal of the above, it can be seen that although an appeal can ordinarily be filed only after an adverse order, the right to pursue the matter through the appellate hierarchy attaches to the lis at its commencement, the adverse order merely rendering that right capable of exercise. The Court traced this principle to Hoosein Kasam Dada (India) Ltd. Versus The State of Madhya Pradesh and Others - 1953 (2) TMI 35 - Supreme Court, where a mid-proceeding amendment introducing a deposit condition was held inapplicable to an appeal arising from proc....
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....eedings commenced under the unamended law, notwithstanding that both the assessment order and the appeal post-dated the amendment. This was elaborated further in Videocon International Ltd. Versus Securities & Exchange Board of India - 2015 (2) TMI 735 - Supreme Court, which described the appellate remedy as a "package" - comprising the forum, scope, and conditions of appeal - that vests as a whole at the commencement of the lis and is not altered by the date of the eventual order or of filing. Applying this framework, the Bench held that the SCN dated 25.06.2025 constituted the commencement of the lis, and that the appellate package available on that date carried no percentage-based pre-deposit condition for a penalty-only ord....
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....er under Section 122(1A). The subsequent replies and personal hearing, though occurring after 01.10.2025, were merely later steps in a proceeding already initiated and did not shift the relevant date. On waiver, the Court agreed that an Appellate Authority has no inherent power to relax a statutory pre-deposit - following M/s Tecnimont Pvt. Ltd. (Formerly known as Tecnimont ICB Private Limited) Versus State of Punjab & Others - 2019 (9) TMI 788 - Supreme Court, and M/s. Impressive Data Services Private Limited Versus Commissioner (Appeals-I), Central Tax GST, Delhi - 2025 (4) TMI 1510 - DELHI HIGH COURT - but held that this question did not arise once the substituted proviso was found inapplicable. Our Take This decision ....
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....is significant for the large volume of GST adjudications straddling the 01.10.2025 amendment, where SCNs issued before that date are culminating in orders passed after it. The Court's adoption of the "appellate package" doctrine confirms that the conditions governing an appeal - including pre-deposit - crystallise at the SCN stage and are not reopened by the date of the final order or of filing. It is important to note, however, that the Bench has expressly left open the constitutional validity of the substituted proviso for cases where the SCN itself post-dates 01.10.2025; taxpayers in that category cannot draw comfort from this ruling and, absent any power of waiver with the Appellate Authority, may need to test the provision's va....
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....lidity directly before the constitutional courts. It is a reminder to litigants and practitioners to identify the date of the Show Cause Notice with precision and to raise the temporal-applicability objection at the earliest stage of the proceedings, rather than first seeking waiver on hardship grounds, which - as this decision confirms - does not itself determine or foreclose the applicable statutory regime. =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....