Facts of the Case:

In this case, the appellants challenged the First Appellate Authority’s order dated 31.10.2025, which had upheld penalties aggregating to ₹30,34,69,718 under Sections 122(1)(i) and 122(1)(vii) of the CGST Act. The proceedings originated from a DGGI investigation alleging availment of ITC without receipt of goods and issuance of invoices without actual supply. Although the adjudicating authority declined to recover the alleged wrongful ITC/tax demand, it proceeded to impose various penalties under Sections 122(1)(i), 122(1)(ii), 122(1)(vii) and 122(2)(b).

The appellants filed an appeal before the GST Appellate Tribunal on 29.03.2026 under Section 112(1) without making any pre-deposit. The Registry raised an objection on the ground that, pursuant to the proviso inserted in Section 112(8) with effect from 01.10.2025, an appeal against an order demanding penalty without involving any tax could not be filed unless 10% of the penalty was deposited, in addition to the amount payable under Section 107(6).

The appellants contended that the proceedings had commenced with the SCN dated 24.12.2021, much before 01.10.2025. Therefore, the subsequent amendment could not retrospectively impose a new condition on their statutory right of appeal. They also challenged the jurisdiction of DGGI to issue the SCN and impose/propose penalty under Section 122, but the Tribunal confined the present proceedings only to the question of pre-deposit.

Issue:

Whether the 10% pre-deposit requirement introduced in the proviso to Section 112(8) with effect from 01.10.2025 applies to an appeal arising from proceedings initiated through an SCN dated 24.12.2021, where the impugned order is a penalty-only order?

Held That:

The Tribunal held that the 10% pre-deposit requirement under the proviso to Section 112(8) could not be retrospectively applied to the present appeal.

Although the Department contended that maintainability of an appeal has to be determined with reference to the law prevailing on the date of filing of the appeal, the Tribunal relied upon the principle laid down by the Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh, that the right of appeal is a substantive and vested right and cannot be impaired except by express enactment or necessary intendment.

The Tribunal also relied upon the Delhi High Court judgment in Gaurav Jain v. Joint Commissioner (Appeals)-II, CGST Delhi Zone & Anr., which dealt with the amendment to Section 107(6) effective from 01.10.2025. The High Court had held that where the proceedings themselves were instituted before the amendment, the rights and obligations arising from those proceedings would be governed by the law applicable when the proceedings commenced, and the subsequently introduced pre-deposit condition could not be imposed retrospectively.

Applying the same principle to Section 112(8), the Tribunal noted that the lis commenced on 24.12.2021, when the SCN was issued. At that time, Section 112(8) did not prescribe any pre-deposit for an appeal involving only penalty. The subsequent amendment effective from 01.10.2025 could not, therefore, create a fresh condition for an appeal arising from the pre-amendment proceedings.

Accordingly, the Tribunal held that the Registry’s objection was misconceived, set aside the objection for the purpose of admission and directed that the appeal be numbered and placed before the Bench for hearing in the ordinary course. Importantly, the Tribunal clarified that the DGGI jurisdictional challenge and all other merits/contentions were not adjudicated at this stage and were expressly left open for consideration at the final hearing.

Case Name:Hero Wiretex Limited Versus Commissioner Of CGST, Commissioner Of CGST, Hyderabad – 1 & Ors dated 18.09.2026