Gaurav Jain & Anr. vs Joint Commissioner (Appeals-Ii) Cgst Delhi Zone & Anr.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 20.07.2026
Judgment pronounced on: 31.07.2026
Judgment uploaded on: 31.07.2026
+ W.P.(C) 8414/2026, CM APPL. 39420/2026, CM APPL.
39421/2026, CM APPL. 43404/2026, CM APPL. 43716/2026
GAURAV JAIN & ANR. .....Petitioners
Through: Mr. Ramchandra Madan, Mr.
Vivek Anand Singh, Mr.
Tushar Nigam and Mr.
Himanshu Yadav, Advs.
versus
JOINT COMMISSIONER (APPEALS-II) CGST DELHI
ZONE & ANR. .....Respondents
Through: Ms. Samiksha Godiyal, SSC-
CBIC with Mr. Tenzing
Namgyal Bhutia and Mr.
Ritiwik Narayanan, Advs.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN
J U D G M E N T
ANIL KSHETARPAL, J.:
1. The present Writ Petition, filed under Article 226 of the
Constitution of India, raises a narrow question concerning the
temporal operation of the proviso to sub-section (6) of Section 107 of
the Central Goods and Services Tax Act, 2017 (hereinafter referred to
as the “CGST Act”), as substituted with effect from 01.10.2025. The
question is whether the requirement of depositing ten per cent of the
penalty for filing an Appeal against a penalty-only order applies where
the adjudicatory proceedings were initiated before the substituted
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proviso came into force, though the Order-in-Original was passed
thereafter.
2. The Petitioners were issued a Show Cause Notice dated
25.06.2025 (hereinafter referred to as the “SCN”), proposing the
imposition of penalties under Section 122(1A) of the CGST Act. The
adjudicatory proceedings culminated in the Order-in-Original dated
16.12.2025 (hereinafter referred to as the “Impugned Order”),
whereby penalties aggregating to ₹346,55,18,856/- were imposed
upon each Petitioner, without any accompanying demand of tax
against them in their individual capacities.
3. An Appeal against the Impugned Order lies before the
Appellate Authority under Section 107 of the CGST Act. By virtue of
the proviso to Section 107(6), as substituted with effect from
01.10.2025, an Appeal against an order demanding penalty without
involving any demand of tax cannot be filed unless the Appellant
deposits a sum equal to ten per cent of the penalty. If the substituted
proviso governs the Petitioners’ Appeals, each Petitioner would be
required to deposit approximately ₹34.66 crore before filing an
Appeal.
4. On the date of issuance of the SCN, Section 107(6) of the Act
did not prescribe any percentage-based pre-deposit for an Appeal
against a wholly disputed penalty-only order under Section 122(1A)
of the CGST Act. The proviso then in force was confined to appeals
against orders passed under Section 129(3). The substituted proviso
has, therefore, introduced a percentage-based pre-deposit in respect of
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the penalty-only order with which this Court is concerned.
5. The present Petition was initially framed as one seeking waiver
or reduction of the pre-deposit and, in the alternative, questioning the
constitutional validity of the substituted proviso. However, when the
matter was taken up at the preliminary hearing, learned counsel for the
Petitioners contended that the substituted proviso would not apply to
the Petitioners’ case since the SCN had been issued on 25.06.2025,
prior to its coming into force. Notice was issued on the said question
and learned counsel for the Respondents sought time to examine the
issue and assist the Court.
FACTUAL MATRIX
6. Since the controversy before this Court is confined to the
condition governing the Petitioners’ statutory appeals, it is
unnecessary to examine the underlying allegations in detail. It would
suffice to notice that the SCN alleged that the Petitioners were key
persons and main beneficiaries of a network of non-existent or
fictitious entities through which Input Tax Credit had allegedly been
wrongfully availed and passed on.
7. The SCN issued to the Petitioners invoked Section 122(1A) of
the CGST Act against each Petitioner and called upon them to show
cause as to why penalties of ₹137,16,19,588/- for the alleged passing
on of Input Tax Credit and ₹209,38,99,268/- for the alleged availment
of Input Tax Credit should not be imposed upon them. The proposed
personal liability of each Petitioner was, therefore, identified,
quantified and placed for adjudication before the Competent
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Authority.
8. The Petitioners submitted their written replies and were
represented at the personal hearing before the Adjudicating Authority.
Upon conclusion of the proceedings, the Impugned Order dated
16.12.2025 imposed upon each Petitioner the two penalties proposed
in the SCN, aggregating to ₹346,55,18,856/-, under Section 122(1A)
of the CGST Act, read with the corresponding State enactments and
Section 20 of the Integrated Goods and Services Tax Act, 2017. No
tax demand has been raised against the Petitioners in their individual
capacities.
9. Desirous of assailing the Impugned Order under Section 107 of
the CGST Act, the Petitioners addressed an E-mail dated 06.03.2026
to the Appellate Authority seeking waiver or relaxation of the pre-
deposit on the ground of financial hardship. By communication dated
09.03.2026, the Appellate Authority declined the request, stating that
it possessed neither any statutory mandate nor any inherent
discretionary power to relax, reduce or waive the prescribed pre-
deposit. The present Writ Petition was thereafter instituted on
20.03.2026.
STATUTORY SCHEME
10. Section 107 of the CGST Act provides the remedy of an Appeal
against a decision or order passed by an Adjudicating Authority. In
terms of sub-section (1), any person aggrieved by such decision or
order may prefer an Appeal before the prescribed Appellate Authority
within three months from the date on which the decision or order is
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communicated. In terms of Sub-section (4) of Section 107 of the Act,
the Appellate Authority may, upon sufficient cause being shown,
permit presentation of the Appeal within a further period of one
month.
11. Before 01.10.2025, sub-section (6) of Section 107 of the CGST
Act, insofar as relevant, provided as follows:
“(6) No appeal shall be filed under sub-section (1), unless the
appellant has paid —
(a) in full, such part of the amount of tax, interest, fine, fee
and penalty arising from the impugned order, as is admitted
by him; and
(b) a sum equal to ten per cent of the remaining amount of
tax in dispute arising from the said order, subject to a
maximum of twenty crore rupees, in relation to which the
appeal has been filed:
Provided that no appeal shall be filed against an order under sub-
section (3) of Section 129, unless a sum equal to twenty-five per
cent of the penalty has been paid by the appellant. ”
(Emphasis supplied)
12. Under the provision as it then stood, an Appellant was required
to pay the amount of tax, interest, fine, fee and penalty admitted by
him and ten per cent of the remaining tax in dispute. In the case of an
order under Section 129(3), twenty-five per cent of the penalty was
required to be deposited. The provision, however, did not prescribe
any percentage-based pre-deposit for an Appeal against a wholly
disputed penalty-only order under Section 122(1A) of the CGST Act.
13. By Section 129 of the Finance Act, 2025, the proviso to Section
107(6) of the CGST Act was substituted. The substituted proviso,
which was brought into force with effect from 01.10.2025, reads as
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follows:
“Provided that in case of any order demanding penalty without
involving demand of any tax, no appeal shall be filed against such
order unless a sum equal to ten per cent of the said penalty has been
paid by the appellant.”
14. The substitution has different consequences for different
categories of penalty orders. Insofar as an order under Section 129(3)
is concerned, the percentage of penalty required to be deposited stands
reduced from twenty-five per cent to ten per cent. For other penalty-
only orders, including an order imposing a wholly disputed penalty
under Section 122(1A), the substituted proviso introduces a
percentage-based pre-deposit for the first time.
15. Thus, although the amendment may be beneficial in its
application to an order under Section 129(3), it is more onerous for a
person seeking to challenge a penalty-only order of the nature
involved in the present case. In the Petitioners’ case, the statutory
position has changed from the absence of any percentage-based
deposit to a mandatory deposit of ten per cent of the penalty imposed
upon each of them.
16. The language employed by the legislature is also material.
Section 107(6) does not postpone compliance with the pre-deposit
requirement until the stage of hearing or final disposal of an Appeal, it
expressly declares that no Appeal shall be filed unless the prescribed
payment has been made. Upon compliance with sub-section (6),
recovery of the balance amount is deemed to remain stayed under sub-
section (7). The pre-deposit is, therefore, attached to the institution of
the Appeal itself and constitutes one of the statutory conditions upon
which the appellate remedy may be exercised.
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SUBMISSIONS ON BEHALF OF THE PETITIONERS
17. Learned counsel for the Petitioners submits that the right of
appeal is a substantive right which vests upon commencement of the
lis and carries with it the conditions governing its exercise on that
date. It is contended that the lis in the present case commenced with
the issuance of the Show Cause Notice dated 25.06.2025, whereby the
Department asserted personal penal liability against the Petitioners
and called upon them to answer the allegations.
18. It is submitted that, on the date of issuance of the SCN, Section
107(6) did not require any percentage-based pre-deposit for an appeal
against a wholly disputed penalty-only order under Section 122(1A).
The subsequent substitution, which imposes a deposit of ten per cent
of the penalty, materially burdens the appellate remedy and cannot
govern proceedings already initiated before it came into force.
19. In support of the aforesaid submission, learned counsel places
reliance principally upon the decisions of the Supreme Court in
Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and
1 2
Ors. , and Garikapati Veeraya v. N. Subbiah Choudhry and Ors. .
Reliance is also placed upon Armour Security (India) Ltd. v.
3
Commissioner, CGST Delhi East and Anr. to contend that formal
adjudicatory proceedings under the CGST Act commence upon
issuance of the Show Cause Notice. The Petitioners accordingly
contend that the substituted proviso is inapplicable to the appeals

1
1953 SCC OnLine SC 33
2
(1957) 1 SCC 180
3
2025 SCC OnLine SC 1700
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arising from the Impugned Order.
20. In the alternative, learned counsel submits that the substituted
proviso is constitutionally vulnerable insofar as it prescribes an
uncapped and inflexible pre-deposit in penalty-only cases, although
the deposit in respect of disputed tax is subject to a statutory ceiling of
₹20 Crore. It is urged that, having regard to the magnitude of the
penalties imposed and the financial condition of the Petitioners,
insistence upon deposit of approximately ₹34.66 crore by each
Petitioner would render the appellate remedy inaccessible.
21. As a further alternative, learned counsel submits that this Court
may, in exercise of jurisdiction under Article 226 of the Constitution
of India, waive or suitably reduce the pre-deposit so as to preserve the
Petitioners’ statutory remedy of Appeal.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS
22. Ms. Samiksha Godiyal, learned Senior Standing Counsel
appearing for the Respondents opposes the Writ Petition and submits
that the Petitioners had no enforceable right of Appeal until the
Impugned Order was passed on 16.12.2025. Since the Appeal became
available only after the substituted proviso had already come into
force, it must comply with the law prevailing on the date of filing.
23. It is contended that the opening words of Section 107(6) -
“No appeal shall be filed” make the date of filing of the Appeal
determinative. According to the Respondents, the substituted proviso
regulates the institution of appeals filed after 01.10.2025 and its
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application to such appeals does not amount to giving the provision
retrospective operation merely because the Show Cause Notice or the
transactions under adjudication preceded the amendment.
24. Learned Senior Standing Counsel further submits that the
earlier proviso stood repealed and replaced upon substitution. In the
absence of any saving provision preserving the earlier regime for
proceedings in which only a Show Cause Notice had been issued, the
substituted proviso alone governs appeals filed after 01.10.2025.
25. Emphasis is also placed upon the fact that, except for the
issuance of the SCN, all subsequent steps in the adjudicatory process
occurred after the substituted proviso had come into force. The
Petitioners submitted their replies and participated in the personal
hearing in November 2025, while the Impugned Order was passed in
December 2025. It is submitted that no vested appellate right could
have arisen merely upon issuance of the SCN, particularly when no
appeal has yet been filed.
26. Learned Counsel for the Respondents further points out that the
Petitioners initially communicated with the Appellate Authority
seeking waiver or reduction of the pre-deposit on the ground of
financial hardship and did not contend before the Authority that the
substituted proviso was inapplicable to them.
27. It is also submitted that the pre-deposit under Section 107(6) is
accompanied by an automatic stay of recovery under Section 107(7)
and serves the object of discouraging frivolous appeals. According to
the Respondents, acceptance of the Petitioners’ contention would
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result in persons proceeded against under Section 122(1A) during the
period preceding 01.10.2025 not being required to make a pre-deposit
which other appellants under the CGST Act are required to make.
28. In support of the aforesaid submissions, learned Senior
Standing Counsel places reliance upon the decisions in Hardeodas
4
Jagannath v. State of Assam and Ors. , Surinder Singh Deswal and
5
Ors. v. Virender Gandhi , Chandra Sekhar Jha v. Union of India
6
and Anr. and Barjinder Singh Kohli v. Assistant Commissioner of
7
Revenue and Ors. on the temporal application of amended conditions
governing an Appeal. Reliance is also placed upon Tecnimont Private
8
Limited v. State of Punjab and Ors. and the decision of a Coordinate
Bench of this Court in M/s. Impressive Data Services Private Limited
9
v. Commissioner (Appeals-I), Central Tax, GST Delhi on the
validity of statutory pre-deposit conditions and the absence of any
inherent power in the Appellate Authority to waive such conditions.
ISSUE FOR DETERMINATION
29. Upon consideration of the rival submissions, the principal issue
which arises for determination is whether the proviso to Section
107(6) of the CGST Act, as substituted with effect from 01.10.2025,
applies to an Appeal arising from adjudicatory proceedings initiated
by a Show Cause Notice issued prior to the substitution, although the
Order-in-Original was passed thereafter.

4
[1969] 2 SCR 261
5
(2019) 11 SCC 341
6
(2022) 14 SCC 152
7
W.P.A 19676 of 2025, Cal HC
8
(2021) 12 SCC 477
9
2025:DHC:2651-DB
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30. The questions concerning waiver and constitutional validity
arise only if the substituted proviso is first held applicable to the
Petitioners. The Court must, therefore, determine the point at which
the appellate right, together with the conditions governing its exercise,
vested and whether the amendment manifests an intention to apply the
new condition to proceedings already initiated.
ANALYSIS AND FINDINGS
A. NATURE AND VESTING OF THE APPELLATE RIGHT
31. The right of Appeal is a creature of statute, and the legislature
which creates the right may define its scope, prescribe the forum and
impose conditions upon its exercise. Equally, however, it is firmly
established that the right of Appeal is substantive and not merely
procedural. 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.
Although an Appeal can ordinarily be filed only after an adverse
decision is rendered, the right to pursue the proceedings through the
appellate hierarchy attaches to the lis at its commencement, the
adverse order merely makes that right capable of exercise.
32. The principle was authoritatively applied in Hoosein Kasam
Dada (supra) . In that case, the assessment proceedings had
commenced under a provision which required an Appellant to deposit
only such amount as was admitted to be due. During the pendency of
those proceedings, the provision was amended to require payment of
the entire assessed tax as a condition for admission of the Appeal. The
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assessment order and the Appeal were both subsequent to the
amendment.
33. The Supreme Court held that the amended condition placed a
substantial restriction upon the right of Appeal and could not govern
an Appeal arising from proceedings which had commenced before the
amendment. A condition requiring deposit of the disputed amount was
not merely procedural, since it could prevent the exercise of the
Appeal altogether and thereby fetter, impair or imperil the substantive
right. The Court accordingly recognised that the appellate right vests
when the original proceedings are initiated and cannot thereafter be
burdened by a more onerous condition except by express enactment or
necessary intendment.
34. Of particular relevance is the rejection of the contention that the
prohibitory words of the amended provision under which the authority
could not admit an Appeal without proof of deposit necessarily made
the amendment applicable to every appeal filed thereafter. The
Supreme Court held that the pre-existing Appellate right carried with
it an implied preservation of the earlier law for the limited purpose of
supporting and enforcing that right. The newly introduced proviso was
consequently held to be wholly inapplicable to the pre-existing
appellate right.
35. On the question as to when the lis arose, the Supreme Court
explained that a lis comes into existence when a proposition asserted
by one party is met with opposition from the other. In the context of
tax adjudication, the Court held that the critical date is the date of
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initiation of the proceedings and not the date of the eventual decision.
It accordingly directed the Appeal to be entertained under the pre-
amendment provision, without requiring deposit of the disputed tax.
36. The principles in Hoosein Kasam Dada (supra) were
subsequently crystallised by the Constitution Bench in Garikapati
Veeraya (supra). The Court held that the legal pursuit of a remedy
through suit, appeal and further appeal constitutes one connected
proceeding, that the right of appeal vests when the lis commences and
also that such right can be taken away only by express enactment or
necessary intendment.
37. The principle was further considered and elaborated by the
Supreme Court in Videocon International Ltd. v. Securities and
10
Exchange Board of India . The Supreme Court explained that an
appellate remedy is conferred as a particular “package”. The package
comprises not merely the existence of an appeal, but also the forum,
scope and limitations subject to which it may be pursued. The package
available at the commencement of the lis constitutes the vested
substantive right of the litigant.
38. The Supreme Court drew a distinction between an amendment
which enlarges an appellate package and one which diminishes it.
Where the later enactment reduces the scope of the appellate remedy
or makes it less advantageous, it adversely affects the vested right. In
the absence of an express or necessarily implied provision to the
contrary, the appellate package available at the commencement of the

10
(2015) 4 SCC 33
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proceedings continues until their culmination.
39. Significantly, Videocon International (supra) holds that neither
the date on which the adverse order is passed nor the date on which
the Appeal is filed determines the appellate regime. The relevant date
is the date on which the dispute or lis was initiated. The subsequent
stages are treated as parts of one legal proceeding connected by an
intrinsic unity.
40. The Court also rejected the contention that the absence of a
specific saving clause necessarily subjects pending proceedings to the
amended provision. It held that a non-retrospective amendment does
not disturb rights crystallised in pending proceedings unless the statute
expressly or by necessary intendment provides otherwise. Such
proceedings continue, for that limited purpose, as though the
unamended provision remained in force.
B. COMMENCEMENT OF THE LIS IN THE PRESENT CASE
41. The Respondents contend that no appellate right could have
vested before the Impugned Order was passed because, until then,
there was neither an appealable order nor a person aggrieved by such
order within the meaning of Section 107(1). This submission conflates
the stage at which the appellate right may be exercised with the point
at which the appellate regime becomes attached to the proceedings.
42. The Petitioners could not have filed appeals before the
Impugned Order came to be passed. The exercise of the right
necessarily awaited an adverse adjudication. The decisions noticed
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above, however, expressly recognise that the right to carry the
proceedings in appeal exists as a component of the legal proceeding
before the original authority renders its decision. Were it otherwise,
the law prevailing on the date of the appellate order or the filing of the
appeal would invariably govern, a proposition expressly rejected in
Hoosein Kasam Dada (supra) and Videocon International (supra) .
43. The relevant event is not the date of the alleged transactions,
nor does every investigation by itself give rise to a vested appellate
right. The material event here is the SCN dated 25.06.2025.
44. The SCN invoked Section 122(1A), identified the Petitioners as
key persons and main beneficiaries, and proposed two quantified
penalties aggregating to ₹346,55,18,856/- against each of them. The
Department had thereby formulated and asserted a definite proposition
of personal penal liability and placed it for statutory adjudication.
45. The fact that the Petitioners submitted their replies and
participated in the personal hearing after 01.10.2025 does not
postpone the commencement of the proceedings. The relevant inquiry
is when the Department asserted the liability and required the
Petitioners to answer it, not when they formally articulated their
defence. The replies and hearing were subsequent steps in an
adjudicatory process already initiated. The Impugned Order thereafter
imposed the very penalties proposed in the SCN. There is thus an
unbroken continuity between the SCN, the adjudication and the
appellate remedy arising from the resulting order. The lis commenced
no later than 25.06.2025.
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46. On that date, the appellate package did not include any
percentage-based pre-deposit for challenging a wholly disputed
penalty-only order under Section 122(1A). The substituted proviso
introduced a mandatory deposit of ten per cent and prohibited filing of
the Appeal unless it was first fulfilled. In relation to the Petitioners,
this was a substantial financial impediment at the threshold of the
appellate forum, where no corresponding percentage-based condition
had previously existed.
47. The substituted proviso therefore diminishes the appellate
package which attached to the proceedings on 25.06.2025. The
remaining question is whether the Finance Act, 2025 nevertheless
manifests an intention to apply the new condition to pending
adjudicatory proceedings.
C. WHETHER THE AMENDMENT DISCLOSES A
CONTRARY LEGISLATIVE INTENTION
48. Neither Section 129 of the Finance Act, 2025 nor the
substituted proviso states that the new condition shall apply to
adjudicatory proceedings pending on 01.10.2025. Nor is there a
transitional provision identifying pending proceedings which would
be governed by the earlier or the substituted regime.
49. Learned Senior Standing Counsel has placed emphasis upon the
words “no appeal shall be filed” and submits that every Appeal filed
after 01.10.2025 must necessarily satisfy the substituted proviso. The
same submission, in substance, was considered and rejected in
Hoosein Kasam Dada (supra) . The amended provision there also
prohibited the admission of an appeal unless the newly prescribed
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deposit accompanied it. The Supreme Court held that such prohibitory
language did not, by itself, disclose an intention to extinguish or
impair an appellate right which had already vested.
50. The words “no appeal shall be filed” determine the stage at
which compliance is required where the substituted proviso applies.
They do not answer the anterior question as to which appellate regime
governs proceedings initiated before the substitution. To treat the
words as conclusive of temporal application would make the date of
filing determinative in every case and would render the principles in
Hoosein Kasam Dada (supra) and Videocon (supra) otiose.
51. The Respondents are correct that substitution ordinarily
displaces the earlier provision and replaces it with the new one. That,
however, does not by itself divest rights which had already accrued
under the earlier law. The earlier provision is not kept alive for
general application, but it continues to govern, for the limited purpose
of preserving the vested appellate right, proceedings which
commenced while it was in force.
52. The absence of an express saving clause also does not advance
the Respondents’ case. As explained in Videocon (supra) , where an
amendment is not retrospective, rights and obligations crystallised
upon commencement of the lis remain unaffected unless the amending
enactment expressly or by necessary intendment provides otherwise.
For that limited purpose, the pending proceeding continues as though
the unamended appellate provision remained operative.
53. The structure of the substitution does not yield any necessary
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implication to the contrary. The earlier proviso required deposit of
twenty-five per cent of the penalty in appeals against orders under
Section 129(3). The substituted proviso reduces that requirement to
ten per cent, but simultaneously extends the deposit condition to every
penalty-only order. The amendment is therefore beneficial for one
category of appellants and more onerous for another. Nothing in its
language indicates that the latter burden was intended to attach to
adjudicatory proceedings already initiated.
54. A legislative intention to impair a vested appellate right cannot
be inferred merely from the fact that the amendment is expressed in
general terms. Necessary intendment requires something in the
language, scheme or unavoidable operation of the enactment which is
inconsistent with the continuance of the earlier right. No such
inconsistency is discernible here. The substituted proviso can operate
fully and effectively in respect of adjudicatory proceedings initiated
on or after 01.10.2025 without being applied to proceedings in which
the appellate package had already vested.
55. The reliance placed upon the automatic stay contemplated
under Section 107(7) does not alter this conclusion. Sub-section (7)
prescribes the consequence which follows upon compliance with the
deposit requirement applicable to a particular Appeal. It cannot be
employed in reverse to determine which version of sub-section (6)
governs the appellate right.
56. Likewise, the object of discouraging frivolous appeals or
securing a part of the disputed liability cannot supply retrospective
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operation which the statutory language does not contain. A
prospective amendment necessarily creates a temporal distinction
between proceedings governed by the earlier law and those governed
by the amended law. That consequence cannot justify imposing a
subsequently introduced burden upon a vested appellate right.
57. This Court accordingly finds that the Finance Act, 2025 neither
expressly nor by necessary implication subjects adjudicatory
proceedings initiated before 01.10.2025 to the newly introduced ten
per cent deposit in penalty-only cases. The substituted proviso does
not, therefore, govern the appeals arising from the SCN dated
25.06.2025.

D. AUTHORITIES RELIED UPON BY THE RESPONDENTS
58. The Respondents have placed considerable reliance upon the
Constitution Bench decision in Hardeodas Jagannath (supra) . There,
Section 30 of the Assam Sales Tax Act, 1947 was amended with
effect from 01.04.1958 so as to require payment of the assessed tax or
penalty before entertainment of the appeal. The assessee contended
that the amended condition could not apply to assessment periods
which preceded the amendment. The Supreme Court rejected the
contention upon noticing that the assessments were completed and the
appeals were filed after the amendment.
59. The decision has to be understood in the context of the
argument which was advanced and the chronology before the Court.
In respect of the earlier return periods, the reassessment proceedings
were initiated by notices dated 04.04.1959, after the amended Section
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30 had already come into force. The assessee relied upon the anterior
assessment periods, not upon the commencement of adjudicatory
proceedings under the earlier appellate regime.
60. Hardeodas Jagannath (supra) thus establishes that the mere
fact that the taxable period or underlying transaction preceded the
amendment does not preserve the earlier appellate regime where the
proceedings giving rise to the Appeal themselves commenced
thereafter. It does not decide the present situation, where a formal
Show Cause Notice initiating adjudication and proposing personal
penalties was issued before the more onerous condition came into
force.
61. The decision neither considers nor displaces the principle that
an appellate right vests upon initiation of the lis . It can therefore be
harmoniously read with Hoosein Kasam Dada (supra) : an anterior
transaction or assessment period is not decisive, but initiation of the
proceedings which culminate in the Appeal is.
Surinder Singh Deswal and Ors. vs. Virender Gandhi
62. In Surinder Singh Deswal (supra) , the Supreme Court held that
Section 148 of the Negotiable Instruments Act, 1881 could be applied
to appeals arising from the Criminal complaints instituted before the
provision was introduced. The Court distinguished Garikapati
Veeraya (supra ) and Videocon (supra) upon holding that Section 148
did not take away or affect the vested substantive right of appeal.
63. Section 148 of the N.I. Act is materially different in its
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operation. It empowers the Appellate Court, after an Appeal against
conviction has been instituted, to direct the Appellant to deposit a
minimum of twenty per cent of the fine or compensation during the
pendency of the Appeal. The amount becomes payable pursuant to
judicial direction, and the provision does not prohibit the institution of
the Appeal itself. The subsequent decisions in Jamboo Bhandari v.
11
Madhya Pradesh State Industrial Development Corporation Ltd .
12
and Muskan Enterprises v. State of Punjab clarify that the use of
the word “may” preserves a discretion to dispense with such deposit in
an exceptional case.
64. The substituted proviso to Section 107(6) of the CGST Act, on
the other hand, operates before the Appellate Authority can be
approached. It prohibits the filing of the Appeal unless the payment of
ten per cent of the penalty has already been made and does not confer
any discretion upon the Appellate Authority to relax the condition. It
therefore forms part of the terms of access to the appellate forum. The
premise upon which Garikapati Veeraya (supra) and Videocon
International (supra) were distinguished in Surinder Singh Deswal
(supra) is absent in the present case.
Chandra Sekhar Jha v. Union of India and Anr.
65. Reliance is also placed by the Respondents upon Chandra
Sekhar Jha (supra) , where the Supreme Court considered substituted
Section 129E of the Customs Act, 1962. Under the earlier provision,
an appellant was required to deposit the entire duty, interest or

11
2023 INSC 822
12
2024 INSC 1046
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penalty, subject to a discretionary power of waiver on the ground of
undue hardship. The substituted provision reduced the deposit to 7.5
per cent or 10 per cent, imposed a ceiling of ₹10 crore and withdrew
the discretion to waive.
66. The substituted Section 129E of the Customs Act, 1962
contained an express transitional proviso declaring that the new
provision would not apply to appeals and stay applications already
pending before an Appellate Authority on the date of commencement.
The Supreme Court treated that clause as reflecting the statutory
dividing line between the two regimes.
67. The appellant therein relied upon the fact that the incident had
occurred before the substitution, although the adjudication order under
the Customs Act was passed and the appeal was filed thereafter. He
sought the benefit of the substantially lower fixed deposit under the
new provision while also claiming the discretionary waiver available
under the earlier provision. The Supreme Court declined to permit
such a combination of the two regimes.
68. The present case differs materially. Section 107(6) contains no
comparable transitional clause. The Petitioners rely upon
commencement of adjudicatory proceedings and not on the date of the
alleged transactions, and the amendment creates a pre-deposit
condition where none existed for this category, and the Petitioners
seek application of the entire appellate regime prevailing when the lis
commenced, rather than favourable features of two regimes.

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Barjinder Singh Kohli v. Assistant Commissioner of Revenue and
Ors.
69. Barjinder Singh Kohli (supra) before the Calcutta High Court
concerned an Appeal which had itself been filed before the substituted
proviso came into force. It therefore did not consider a right which
vested before the amendment but became exercisable thereafter. The
decision does not determine the present controversy, though it
recognises that a pre-deposit requirement is a substantive condition
affecting the right of appeal.
E. WAIVER OF PRE-DEPOSIT
70. The Respondents have relied upon Tecnimont (supra) , and the
decision of a Coordinate Bench of this Court in M/s. Impressive Data
Services (supra) . These decisions establish that where a statutory pre-
deposit condition applies, the Appellate Authority cannot invoke
inherent or implied powers to waive or reduce it on the ground of
financial hardship.
71. This Court agrees with the said proposition. The Appellate
Authority is a creature of statute and cannot dispense with an express
condition which governs the Appeal. The communication dated
09.03.2026 is therefore correct insofar as it stated that the Appellate
Authority possessed no statutory or inherent power to waive an
applicable pre-deposit requirement.
72. The Petitioners are nevertheless entitled to relief on a different
basis as the substituted proviso does not govern the appellate right of
the Petitioners which attached to the proceedings commenced on
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25.06.2025. The question of waiver, therefore, does not arise.
73. The fact that the Petitioners initially sought waiver or reduction
of the pre-deposit does not determine the statutory regime applicable
to their Appeals. An erroneous assumption made by a litigant
regarding the applicable law cannot render applicable a statutory
provision which otherwise does not govern the proceedings. Nor can
there be an estoppel against the correct interpretation of a statute. In
any event, the contention concerning temporal applicability was
expressly raised at the preliminary hearing, whereupon notice was
issued, and the Respondents were afforded an opportunity to address
the question.
F. CONSTITUTIONAL VALIDITY CHALLENGE
74. Since this Court has held that the substituted proviso does not
govern the Petitioners’ Appeals, it is unnecessary to examine either its
constitutional validity or the alternative prayer seeking waiver or
reduction of the pre-deposit in exercise of writ jurisdiction. The
constitutional validity challenge is left open for an appropriate case.
CONCLUSION
75. For the aforesaid reasons, the proviso to Section 107(6), as
substituted with effect from 01.10.2025, does not govern the
Petitioners’ Appeals arising from the adjudicatory proceedings
initiated by the SCN dated 25.06.2025. Their appellate remedy is
governed by Section 107(6) as it stood on that date.

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76. Consequently, the Petitioners are not required to deposit ten per
cent of the penalties imposed under the Impugned Order as a
condition for filing their appeals. This shall, however, remain subject
to compliance with Section 107(6)(a) in respect of any amount
admitted by either of the Petitioners. The Appellate Authority shall
register and entertain the appeals without treating the non-payment of
ten per cent of the disputed penalties as a deficiency.
77. The present Writ Petition was instituted on 20.03.2026 while
the question concerning the applicable pre-deposit regime remained
under consideration. Accordingly, for the purpose of computing
limitation under Section 107 of the CGST Act, the period from
20.03.2026 until the date of this judgment shall stand excluded. The
Petitioners shall file their respective Appeals within four weeks from
today. If any delay remains after such exclusion, the Petitioners may
seek condonation under Section 107(4), which shall be considered by
the Appellate Authority in accordance with law.
78. No coercive steps for recovery of the penalties imposed upon
the Petitioners shall be taken for a period of four weeks from today. If
the Appeals are filed within the aforesaid period, the statutory
consequence contemplated under Section 107(7) shall only follow
subject to compliance with the applicable requirements of Section
107(6).
79. The communication dated 09.03.2026 does not warrant any
interference insofar as the Appellate Authority correctly stated that it
possessed no power to waive an applicable statutory pre-deposit. The
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communication shall, however, not preclude the Petitioners from
filing their Appeals in accordance with the statutory regime held
applicable by this Court.
80. This Court has not examined the merits of the Impugned Order
or the penalties imposed on the Petitioners. All contentions in that
regard are left open for consideration by the Appellate Authority.
81. The present Writ Petition is, accordingly, allowed in the
aforesaid terms. The pending applications also stand closed.

ANIL KSHETARPAL, J.

SHAIL JAIN, J.

JULY 31, 2026
sp/ad
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