Facts of the Case:
In this case, the petitioner challenged an adjudication order and intended to file an appeal under Section 107 of the CGST Act, which requires a pre-deposit of only 10% of the disputed tax. However, the adjudicating authority issued two separate DRC-07 demand notices arising from the same order i.e. ne covering tax along with equal penalty and another covering an additional penalty component. This bifurcation effectively compelled the petitioner to file two separate appeals against a single adjudication order and to make an additional pre-deposit on the penalty component, which is not mandated under law.
Issue:
Whether the adjudicating authority could issue multiple DRC-07 demand notices for a single adjudication order, thereby compelling the assessee to file multiple appeals and incur additional pre-deposit obligations, particularly in respect of penalty, which is otherwise not required under Section 107 of the CGST Act.
Held that:
The Court held that the action of the adjudicating authority was unjustified and contrary to the statutory scheme, as the right of appeal flows from the adjudication order and not from the number of demand notices issued. It clarified that under Section 107, only 10% of the disputed tax is required to be deposited for maintaining an appeal, and no pre-deposit is required towards penalty.
The bifurcation of demand was found to be an improper exercise that created an unnecessary procedural obstacle and increased the compliance burden on the assessee. Accepting the Revenue’s request, the Court permitted withdrawal of the defective DRC-07 notices and issuance of a fresh composite DRC-07, and further directed that the limitation period for filing appeal would commence from the date of service of the fresh notice.
The petitioner was allowed to file a single appeal upon deposit of 10% of the disputed tax, and the Court also directed that no coercive recovery be undertaken during the pendency of the appeal.
Case Name: Lava International Limited vs Union of India and 3 Others dated 13.03.2026
