2026-VIL-779-DEL
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SGST High Court Cases

GST - Application of amended pre-deposit requirement in cases involving only penalty - Petitioners were issued Show Cause Notice proposing penalties under Section 122(1A) of CGST Act, 2017. Order-in-Original dated 16.12.2025 imposed penalties without accompanying tax demand. By Finance Act 2025 effective 01.10.2025, the proviso to Section 107(6) was substituted to require 10% deposit of penalty in orders demanding only penalty - Petitioners contended the deposit requirement should not apply as proceedings commenced before 01.10.2025 when no such requirement existed - Whether the amended proviso to Section 107(6) requiring 10% deposit of penalty applies to appeals where adjudicatory proceedings were initiated before 01.10.2025 but final order was passed after that date - HELD - The right of appeal is substantive and vests when the lis commences with initiation of formal adjudicatory proceedings. In tax matters, the lis commences when the Department formulates and asserts a definite proposition of liability and places it for statutory adjudication by issuing SCN - The amended condition cannot burden the pre-existing appellate right. The substituted proviso operates after 01.10.2025 but does not apply retrospectively to pending adjudicatory proceedings. Since SCN issued on 25.06.2025, no 10% deposit requirement existed on the date the lis commenced. Subsequent steps including replies submission and hearing after 01.10.2025 do not postpone the commencement of proceedings - The substituted proviso to Section 107(6) can operate fully in respect of proceedings initiated on or after 01.10.2025 without applying to earlier proceedings - Petitioners are not required to deposit 10% of penalties as condition precedent for filing appeals – The writ petitions are allowed
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