The Hyderabad GSTAT on 28 July mentioned that the 10% pre-deposit requirement rolled out for penalty-only appeals under the proviso to Section 112(8) of the Central Goods and Services Tax (CGST) Act cannot be applied retrospectively.
A Bench including Judicial Member Justice Sushil Kumar Sharma and Technical Member Duvvuri Krishna Srinivas permitted the appeal submitted by Reddy Veeranna Constructions Pvt. Ltd. and said that the revised provision shall not apply where the Show Cause Notice (SCN), Order-in-Original and Order-in-Appeal were issued before 1 October 2025. It said that:
“The proviso to Section 112(8) was effective from 01.10.2025 vide Finance Act, 2025 (Act No. 7 of 2025) dated 29.03.2025, wherein pre-deposit was prescribed in cases where the issue involved is only the penalty. In the present case, it was observed that a show-cause notice was issued on 29.09.2022, the Order in Original was issued on 28.08.2023, and the impugned order (OIA) was issued on 12.01.2024. From this, it can be seen that the impugned order was issued very much before the amendment became effective, i.e. 01.10.2025.”
The issue arose after the appellant was provided an SCN alleging issuance of bogus invoices without actual supply of goods and services. The authorities levied penalties under section 122 of the CGST Act, which furnishes penalties for the mentioned offences along with issuing invoices without supply, and Section 125 of the CGST Act, which delivers a general penalty for the breaches where no separate penalty is mentioned.
On 29 September 2022, an SCN was issued after the Order-in-Original on 28 August 2023 and the Order-in-Appeal on 12 January 2024, which kept the penalties. Afterwards, the appellant had approached the GST Appellate Tribunal against the order.
During the filing of the appeal, the registry objected that the appellant had not made the regulatory pre-deposit required under the proviso to Section 112(8) of the CGST Act. The provision specified that a 10% pre-deposit of the penalty amount is needed where the appeal relates merely to the penalty.
The appellant claimed that the proviso to Section 112(8), rolled out via the Finance Act, 2025, came into force from 1 October 2025 and could not apply to the proceedings initiated before that date.
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It placed reliance on the judgment of the Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and the Calcutta High Court judgment in Barjinder Singh Kohli v. Assistant Commissioner, which consider the right of appeal as a vested substantive right and hold that conditions restricting such right cannot be applied retrospectively unless furnished by the legislature.
The Tribunal considered the submissions of the appellant and held that the Finance Act, 2025 did not provide for the retrospective functioning of the proviso to Section 112(8), either expressly or by necessary implication. It stated that the revised pre-deposit requirement could not be applied to appeals arising from earlier proceedings.
Therefore, the GSTAT said that the appeal could not be cancelled for non-filing of the 10% pre-deposit and mentioned that its order was restricted to the problem of admission of the appeal. It said that the merits of the dispute shall be regarded separately at the phase of final hearing, if needed.
| Case Title | Reddy Veeranna Constructions Pvt. Ltd. Vs Appeal-I Commissioner & Ors |
| Case No. | APL/623/HYD/2026 |
| For the Petitioner | Mr Muktinutalapati Ramachandra Murthy |
| Hyderabad GSTAT | Read Order |
