M/S. Annai Infra Developers Limited vs. The Commissioner Of Customs And Central Tax
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The petitioner, M/s. Annai Infra Developers Limited, filed a writ petition challenging an Order in Appeal No. HYD-GST-RRC-APP1-COIVN/R-051-25-26 dated 30.09.2025, passed by the Commissioner of Customs and Central Tax (Appeals). This order refused to interfere with an order-in-original that imposed a penalty on the petitioner. During the hearing, the Court was informed that the Goods and Services Tax Appellate Tribunal (GSTAT) had commenced functioning and had issued an order on 24.09.2025 regarding the procedure for filing appeals under Section 112 of the CGST Act, 2017. The impugned order-in-appeal was dated 30.09.2025, placing the appeal window for the GSTAT between 01.02.2026 and 30.06.2026. The Finance Act, 2025, amended Section 112 of the CGST Act, introducing a proviso to sub-section (8) requiring a pre-deposit of 10% of the penalty amount for appeals where only penalty is demanded.
Held
The Court disposed of the writ petition without expressing any opinion on the merits of the case. The petitioner was granted liberty to prefer an appeal before the Goods and Services Tax Appellate Tribunal within the window period prescribed by the Tribunal's order dated 24.09.2025. The petitioner was directed to deposit 10% of the penalty amount within eight weeks from the date of the order. Upon making this pre-deposit within the stipulated time, no coercive action would be taken against the petitioner until the decision of the Appellate Tribunal. However, the Court did not accept the petitioner's contention that amounts paid towards tax liability during the investigation could be adjusted against the pre-deposit required for filing the appeal before the Appellate Tribunal. The ratio decidendi is that while the GSTAT is the appropriate forum for appeals, the specific conditions for pre-deposit, as amended by the Finance Act, 2025, must be strictly followed, and payments made towards tax liability cannot be repurposed for penalty pre-deposit.
Key Issues
1. Whether the petitioner can adjust amounts paid towards tax liability during investigation against the pre-deposit required for filing an appeal before the Goods and Services Tax Appellate Tribunal, as per the amended Section 112(8) of the CGST Act, 2017? Petitioner's contention: The petitioner argued that since the penalty was of a substantial amount, they should be permitted to deposit 10% of the penalty within eight weeks. They also contended that certain amounts already deposited as tax liability in Form GST DRC-03 during the investigation should be allowed to be deducted from the 10% penalty pre-deposit. Respondents' contention: The learned Senior Standing Counsel for the Central Board of Indirect Taxes and Customs objected to this, submitting that the amounts paid in Form GST DRC-03 were towards tax liability, whereas the order-in-original and the impugned order-in-appeal only imposed a penalty. Therefore, the petitioner could not claim the benefit of these payments towards the penalty pre-deposit.
Sections Cited
Section 112, Section 107, Rule 123
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
F THE HON'BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH AND THE HON'BLE SRI JUSTICE G.M,MOHIUDDIN WRIT PETITION No.32623 of 2025 ORDER: Learned counsel Sri S.Durairaj, representing learned counsel Sri Madanu Naresh, appears for the petitioner. Sri Dominic Fernandes, iearned Senior Standing Counsel for Central Board of Indirect Taxes and Customs. appears for the respondents
The order-in-appeal dated 30.O9.2025 is under challenge. The appellate authority has refused to interfere in the order-in-original imposing penalty upon the petitioner firm.
During the course of hearing, it has been brought to the notice of this Court that the Goods and Services Tax Appeliate Tribunal (hereinafter referred to os, 'the Appellate Tribunal") has started functioning.
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Section 112 of the Central Goods and Services 'lax Act,2017 (hcreinafter referred to as, "the Act"), provides for appeal to th'- Appellate Tribunal. The Appellnte Tribunal has issued zLn order dated 24.09.2025 under l?ule 123 of the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, classifying the category of cases specified in column (2) crf the table appended thereto ancl the period during which the appeal under Section 112 of the Act would be filed before the Appellate Tribunal corresponding to the perio C during rvhich the orders of the appellate authority rvere passed.
In the present case, since the impugnt:d order-in- appeal is dated 3O.O9.2O25, the window for liling such appeal 1S prescribed at serial No.S i.e., commcncing on 01.02.2026 or any date succeeding such date being not later than 30.06.2026. It is further brought to tl're notice of this Court that the Finance Act, 2025, notilied on 29.03.2025, has amended Section 112 of the Act and added the proviso to sub-section (8) thereto, ri-hich reads as under: \
J "13O. In section 112 ofthe Central Goods and Servrces Tax Act, in sub-section (8), the following proviso shall be inscrted, namel-v: "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, in addition to the amount payable under the proviso to sub-section (6) of sectiorl lO7 has been paid by the appellant.""
This Court has, ir-r similar circumstances, relegated the aggrieved petitioner to prefer an appeal before the Appellate Tribunal within a timeframe. It has a,lso been ordered that subject to deposit of 1O(/o of the tax liability within the aforesaid time, no coercive action be taken against the petitioner therein till the decision of the Appellate Tribunal in the said appeal. 7 . In the instant case, there is no imposition of tax liability. But, the liability of penalty has been imposed. Under the amended proviso to Section 112 of the Act, the aggrieved person has to deposit a sum equal to 1O7o of the penalty in addition to the amount payable under the proviso to sub-section (6) of Section 1O7 of the Act paid by the appellalt. \
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Learned counsel for the petitioncr submits that since the penalty is of substantial amount, thc petitioner firm may be permitted to make 1o7o deposit of the pen:rlt1' amount u,ithin a period of eight u,eeks. He :rlso submits that certain amount deposited as tax liabilitl, in Form GST DRC-03 during the investigation may be perrrritted to be deducted from the 10% of the penalty am()unt to be deposited as a condition of pre-deposit for pr,:ferring the a ppeal.
To the aloresaid submission, the leal red Senior Standing Counsel for Centra-l Board of Indirect Taxes and Customs appearing for the respondents has taken objection. He submits that the amount paid by the petitioner firm as per Form GST DRC-03 is tou,;,rrds the tax liability. The order-in-original as affirmed by thr: impugned order-in-appeal only imposes penalty. Therefore, the petitioner firm cannot take the benefit of rrLaking any deposit or l)ayments towards tax liability <luring the ) investigation proceedings.
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Upon consideration of the rival submissions of the parties, in the facts and circumstances noted above, the writ petition is disposed of "vithout expressing an-rr opinion on the merits of the case and by giving liberty to the petitioner firm to prefer an appeal before the Appellate Tribunal within the windou. period prescribed under the order dated 24.09.2025 issued by the Appeilate Tribunal. The petitioner firm shall deposit 10% of the penalty amount within a period of eight u,eeks from today. If the petitioner hrm makes such pre-deposit within the aloresaid period, no coercive action be taken against the petitioner firm till the decision of the Appeilate Tribunal in the appeal to be filed. We, however, do not accept the contention of the petitioner Iirm that the amount paid towards the tax liability during investigation can be adjusted as against pre-deposit to be made for the purposes of preferring the appeal before the Appellate Tribunal. However, there shall be no order as to costs. ! \
6 To, Miscellaneous applications pending, ii any, shall stand closecl I- Ii BHAVANI SWAMY AS ANT RE //// ECTION OFFICER
The Commissic,ner of Customs and Central Tax, Office ot the Commissioner of Customs ancl Central Tax, Appeals I Commissionerate 7th Floor, GST Bhavan, L.B Sr:adium Road, Basheerbagh, Hyderabad - 5i00 004. 2. The Additional ,lommissioner of Central Tax, Rangareddy GST Commissionerate, GST Bhavan, H. No.- 1-98/7/43, VIP H lls, Jaihind Enclave, Itrladhapur, Hyderabad-S0O 01 6. 3. The Additional lfirector of DGGI, Vishakapattnam Zonal LJnit, D. No. 28- 141 17, Suryabagh, Besides Melody Theatre, Vishakapatnam - 530 020. 4. The Additional llirector of DGGI, Hyderabad Zonal Unit, 1.. No.1-11-22214, Lane Opp HDFC Bank, Hyderabad - 500 016. 5. One CC to SRI MADANU NARESH, Advocate IOPUC]
One CC to SRI DOMINIC FERNANDES (SR. SC for CBIC) tOPUCj
Two CD Copies BN t
HIGH COURT DATED:29110t2025 ORDER WP.No.32623 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COIJTS J 01 il0\J 2025 I4: S H -t' rr c T o <),
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.