Courts retain inherent jurisdiction to waive the mandatory ten

Courts retain inherent jurisdiction to waive the mandatory ten percent pre-deposit for filing GST appeals.

Issue

Whether the court holds the inherent jurisdiction under Article 226 to waive the statutory mandate of a 10% pre-deposit for entertaining a first appeal under Section 107 of the GST Act in appropriate cases.

Facts

The tax department issued a Show Cause Notice (SCN) to the petitioner, which led to a subsequent final adjudication order.
After the date of the adjudication order, a stricter statutory regime mandating a 10% pre-deposit for filing a first appeal officially came into force.
The petitioner intended to file an appeal against the adverse order but was constrained by the new pre-deposit requirement.
The petitioner filed a writ petition arguing that the right of appeal vests on the date the SCN is issued and cannot be curtailed by subsequent retrospective pre-deposit conditions.
The Revenue argued that the 10% pre-deposit was strictly mandatory under the prevailing law at the time of filing the appeal and could not be bypassed.
The petitioner sought a complete waiver of the pre-deposit and a direction to the appellate authority to hear the case without the payment.

Decision

The writ petition is allowed in favor of the assessee as an interim measure.
Relying on the established judicial precedent in Ganesh Yadav v. Union of India [2015], the court held that the jurisdiction to waive a statutory pre-deposit continues to subsist in appropriate cases.
If the petitioner files the first appeal within a mandatory period of two weeks from the date of the order, the appellate authority must entertain it without insisting on the 10% pre-deposit.

Key Takeaways

Pre-Deposit is Not Absolute: While tax statutes create mandatory monetary thresholds like the 10% pre-deposit rule to filter out frivolous litigation, the High Court’s equitable powers under Article 226 remain intact to grant waivers in exceptional scenarios.
Vested Right of Appeal: A taxpayer’s right of appeal begins when the initial litigation starts (the date of the SCN). Substantive hurdles or new financial restrictions introduced after that date cannot automatically destroy or severely restrict that pre-existing right.

HIGH COURT OF ALLAHABAD

Anukul Bindal

Union of India

Saumitra Dayal Singh and Swarupama Chaturvedi, JJ.

WRIT TAX No. 2096 of 2026

MAY 6, 2026

Praveen Kumar, Counsel for the Petitioner. Dhananjay Awasthi, Gopal Verma and Krishna Agarawal, Counsels for the Respondent.

ORDER

1. Heard Shri Praveen Kumar, learned counsel for the petitioner; Shri Krishna Agarwal, learned counsel for the revenue and, Shri Gopal Verma, learned counsel for GSTN.

2. Submission is, the right of the appeal vested on the petitioner from the date of issuance of the show cause notice 31.03.2023. Though an adjudication order was passed on 01.10.2025 and the provision of Section 107 of the CGST Act 2017, requiring a pre-deposit of 10% of the penalty amount to maintain an appeal, was enforced with effect from 01.10.2025, the right of appeal that vested in the petitioner from before cannot be altered by virtue of the amendment made. Thus, the revenue and the appeal authorities cannot compel the petitioner to deposit 10% of the disputed amount of penalty to maintain the appeal. Also, it cannot be doubted, the unamended proviso to sub-section (6) of Section 107 of the said Act, may never be applied as that was confined to penalties under Section 129 of the said Act.

3. Reliance has been placed on the decision of the Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh (1953) 1 SCC 299.

4. On the other hand, learned counsel for the revenue submits, in view of the subsequent decision of the Supreme Court in Chandra Sekhar Jha v. Union of India [Civil Appeal No. 1566 of 2022, dated 28-2-2022] and another decision of a coordinate bench of this Court in Ganesh Yadav v. Union of India (Allahabad)/(2015) 6 ADJ 250, the petitioner is required to make deposit.

5. Matter requires consideration.

6. To the extent submissions being advanced learned counsel for the petitioner may be clearly covered by parent law in Hoosein Kasam Dada (supra) and further to the extent the Chandra Sekhar Jha (supra) may apply for the purpose of grant stay by the appellate authority, at present, the writ petition is being entertained.

7. Learned counsel for the revenue prays for and is granted four weeks time to file counter affidavit. Petitioner shall have two weeks thereafter to file rejoinder affidavit.

8. List thereafter.

9. In view of the further reasoning in Ganesh Yadav (supra), the Court retains its jurisdiction to grant waiver in appropriate cases. By way of an interim measure, it is provided, if the petitioner’s appeal is filed within a period of two weeks from today, the same may be entertained without requirement of 10% pre-deposit.