The Telangana High Court has held that the amount paid towards the tax liability during investigation cannot be adjusted as against pre-deposit to be made for the purposes of preferring the appeal before the Appellate Tribunal.
The bench of Chief Justice Aparesh Kumar Singh and Justice G.M. Mohiuddin has directed the petitioner firm to deposit 10% of the penalty amount within a period of eight weeks from today. If the petitioner firm makes such pre-deposit within the aforesaid period, no coercive action be taken against the petitioner firm till the decision of the Appellate Tribunal in the appeal to be filed.
The petitioner, Annai Infra Developers had approached the High Court challenging the order passed by the Commissioner of Customs and Central Tax (Appeals), which upheld a penalty imposed on the company by the adjudicating authority. The penalty, however, did not involve any tax demand.
During the hearing, counsel for the petitioner argued that the company should be permitted to adjust amounts earlier paid through Form GST DRC-03 (during investigation) towards the mandatory pre-deposit for filing appeal before the Tribunal.
The Court took note of the fact that the Goods & Services Tax Appellate Tribunal (GSTAT) has now commenced functioning and has issued a schedule on September 24, 2025, specifying the timelines for filing appeals depending on the date of orders passed by appellate authorities.
Since the impugned order-in-appeal was issued on 26.08.2025, the company can file its appeal between February 1, 2026 and June 30, 2026.
The Court referred to the amendment introduced via the Finance Act, 2025, which inserted a proviso to Section 112(8)of the CGST Act, mandating that in cases where the dispute relates to penalty alone and not tax, the appellant must deposit 10% of the penalty amount before filing an appeal before the Appellate Tribunal.
The Court rejected the petitioner’s request to allow adjustment of amounts earlier paid as tax (during investigation) against this 10% penalty pre-deposit requirement.
However, the Court granted relief to the petitioner by directing that if the company deposits 10% of the penalty within eight (8) weeks, no coercive steps shall be taken against it until the GST Appellate Tribunal decides the appeal.
Case Details
Case Title: Annai Infra Developers Limited Versus Commissioner of Customs and Central Tax
Case No.: Writ Petition No: 32612 Of 2025
Date: 29/10/2025
Counsel For Petitioner: Durairaj Representing
Counsel For Respondent: Dominic Fernandes
Read More: Challenge GST Penalty Order Before GSTAT: Telangana High Court