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The Delhi High Court has held that requirement of 10% pre-deposit for filing appeal to the Appellate Authority in cases involving only penalty is not applicable for the cases where the SCNs have been issued before 1 October 2025, the date of coming into force of the amendment to Section 107(6) requiring 10% pre-deposit.
The Court in Gaurav Jain & Anr. v. Joint Commissioner noted the following:
- Right to carry the proceedings in appeal exists as a component of the legal proceeding before the original authority renders its decision.
- Material event is the date of SCN (25 June 2025) invoking penalty provisions under Section 122(1A).
- Submission of replies and participation in the personal hearing after 1 October 2025 does not postpone the commencement of the proceedings.
- Substituted proviso diminishes the appellate package attached to the proceedings on 25 June 2025.
- Neither Section 129 of the Finance Act, 2025 nor the substituted proviso states that the new condition shall apply to adjudicatory proceedings pending on 1 October 2025.
- Absence of any transitional provisions.
- Substitution does not by itself divest rights which had already accrued under the earlier law.
- Department’s reliance of the words ‘no appeal shall be filed’, was also rejected by relying on Supreme Court’s decision in the case of Hoosein Kasam Dada.
- Absence of an express saving clause would not aid the Department, since SC in Videocon holds that non-retrospective amendments do not affect rights and obligations crystallised at commencement of the lis, unless expressly or necessarily intended otherwise.
- Legislative intention to impair a vested appellate right cannot be inferred merely from the fact that the amendment is expressed in general terms.
- Fact that the petitioners initially sought waiver or reduction of the pre deposit does not determine the statutory regime applicable to their appeals.
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