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GST

Appeal pre-deposit when the order is penalty only

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From 1 October 2025, the Finance Act 2025 requires a 10 percent pre-deposit of the penalty for penalty-only appeals at the first appeal stage. Earlier, most penalty-only appeals needed no pre-deposit. Courts are divided on whether this applies to older cases.

Provisions

Sec 107(6), CGST Act 2017; Finance Act 2025, amendment to Sec 107(6)

Analysis

Example: a Sec 122 penalty of Rs 5 lakh with no tax demand needs Rs 50,000 pre-deposit for an appeal filed now. The Delhi High Court has held that the new condition does not apply where the show cause notice was before 1 October 2025, and the Supreme Court was to hear the issue. The 57th GST Council in October 2026 recommended a Rs 40 crore total cap for such cases; check whether it has been notified.

Close

  1. Check whether your order has tax or only penalty
  2. Note the date of the show cause notice
  3. Compute 10 percent of the penalty as pre-deposit
  4. If your notice is before 1 October 2025, take advice on whether to pay

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