Goods and Services Tax Appellate Tribunal (GSTAT), Hyderabad: Deciding the question of admission of the appeal, the Bench comprising Sushil Kumar Sharma, Member (Judicial) and Duvvuri Krishna Srinivas, Member (Technical) held that the appellant was not liable to make any statutory pre-deposit under Section 112(8), Central Goods and Services Tax Act, 2017 (CGST Act) for admission of its appeal, as the penalty proceedings had commenced before the amendment introduced by the Finance Act, 2025 came into force.
Background
The appellant, Reddy Veeranna Constructions (P) Ltd., was issued a show-cause notice dated 29 September 2022 alleging that it had issued fake invoices without actual supply of goods or services. Pursuant thereto, the adjudicating authority passed an order-in-original dated 28 August 2023, imposing penalties under Section 122 read with Section 20, Integrated Goods and Services Tax Act, 2017 (IGST Act) and Section 125 read with Section 20, IGST Act.
The appellant preferred an appeal before the first appellate authority, which was dismissed by order-in-appeal dated 12 January 2024, affirming the penalties.
Aggrieved thereby, the appellant filed an appeal before the GST Appellate Tribunal. At the stage of scrutiny, the Registry issued a defect memo pointing out certain procedural defects and the non-payment of statutory pre-deposit under Section 112(8), CGST Act.
The appellant rectified the procedural defects but contested the requirement of pre-deposit, contending that the Finance Act, 2025 Amendment introducing a mandatory pre-deposit in penalty-only appeals became effective only from 1 October 2025 and was inapplicable to proceedings initiated much earlier.
Analysis, Law and Decision
The Tribunal examined Section 112(8), CGST Act governing pre-deposit before the Appellate Tribunal. It observed that prior to 1 October 2025, the provision contemplated payment of the admitted dues and 10 per cent of the disputed tax. There was no statutory requirement of pre-deposit where the dispute involved only penalty without any demand of tax.
The Tribunal noted that the Finance Act, 2025 inserted a proviso to Section 112(8), effective from 1 October 2025, mandating payment of 10 per cent of the penalty in appeals arising solely against penalty orders.
The Tribunal observed that in the present case the show-cause notice was issued on 29 September 2022, the order-in-original was passed on 28 August 2023 and the order-in-appeal was passed on 12 January 2024. Thus, the entire proceedings had commenced and substantially concluded long before the amendment came into force.
Relying upon the decision of the Calcutta High Court in Barjinder Singh Kohli v. State of W.B., WPA 19676 of 2025, decided on 3-11-2025 the Tribunal held that prior to the Finance Act, 2025 there existed no statutory obligation to deposit any portion of the penalty while preferring an appeal in a penalty-only matter. Since the amendment neither expressly nor by necessary implication provided retrospective operation, the newly introduced condition could not be applied to pending proceedings.
The Tribunal further relied upon the Supreme Court decision in Hoosein Kasam Dada (India) Ltd. v. State of M.P., (1953) 1 SCC 299, reiterating that the right of appeal is a substantive vested right, which accrues when the original proceedings commence. A subsequent amendment imposing an additional condition for maintaining an appeal cannot retrospectively curtail such vested right unless the legislature clearly manifests such intention.
The Tribunal therefore held that no statutory pre-deposit was required for admission of the present appeal. However, it clarified that the order was confined to the issue of admission and would not prejudice the merits of the appeal. It further observed that if, at the stage of final hearing, it ultimately concluded that pre-deposit was legally payable, the appellant would be bound to comply with such direction.
Accordingly, the Tribunal admitted the appeal without insisting upon pre-deposit, issued notice to the respondents and directed the matter to be listed after 4 weeks.
[Reddy Veeranna Constructions (P) Ltd. v. Commr. (GST), APL/623/HYD/2026, decided on 28-07-2026 (GSTAT, Hyderabad)]
Coram
Sushil Kumar Sharma, Member (Judicial)
Duvvuri Krishna Srinivas, Member (Technical)
Advocates who appeared in this case:
For the Appellant: Muktinutalapati Ramachandra Murthy (In Person)
For the Respondents: Departmental Representative.
