The Delhi High Court has held that the pre-deposit requirement for a GST appeal involving a penalty-only demand must be governed by its earlier ruling in Gaurav Jain where the show cause notice was issued before the amendment to Section 107(6) of the Central Goods and Services Tax Act, 2017, took effect on October 1, 2025.

The Bench of Justice Anil Kshetarpal and Justice Bharat Parashar did not set aside the penalty demand or conclusively decide whether the proposed appeal would be within limitation. Its determination on pre-deposit was expressly confined to Section 107(6) of the CGST Act.

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The proceedings related to the financial year 2018–2019 and culminated in the imposition of a penalty. The taxpayer challenged a show cause notice dated June 30, 2025, an Order-in-Original dated December 17, 2025, and a subsequent order dated December 30, 2025, described as a rectification order.

Initially, the taxpayer questioned the jurisdiction of the officer who issued the show cause notice, alleging that the relevant functions under Section 122 of the CGST Act had not been validly assigned to the officer.

Relying on Circular No. 254/11/2025-GST dated October 27, 2025, he argued that a subsequent delegation could not validate an earlier show cause notice. However, this challenge was not pressed during arguments. The surviving issues concerned communication of the adjudication order and the statutory pre-deposit requirement.

The taxpayer submitted that although the adjudication order was passed on December 17, 2025, he became aware of it only on May 11, 2026, when the relevant particulars became available upon accessing the GST portal.

He stated that he had replied to the show cause notice on August 18, 2025, but had not received effective communication of the subsequent order. He attributed this partly to losing contact with the person who had been assisting him with the tax proceedings.

The taxpayer also referred to the department’s inspection findings that he was not operating from the registered business premises. In those circumstances, he argued, merely asserting that the order had been dispatched by Speed Post to that address did not conclusively establish effective service.

He relied on the Punjab and Haryana High Court’s decision in Luxmi Traders v. Union Territory of Chandigarh & Others concerning service through the GST portal and its implications for appeal limitation.

The department maintained that the adjudication order had been sent to the taxpayer’s registered email address and dispatched by Speed Post to the address recorded in the registration particulars.

It argued that the taxpayer’s subsequent access to the GST portal did not, by itself, establish that the order had not previously been communicated.

The department further explained that two pages of the adjudication order had initially been omitted from the portal upload and were uploaded subsequently on December 31, 2025. According to the department, this involved no substantive rectification or modification of the order and did not independently create a fresh limitation period.

The High Court observed that the competing claims required examination of the modes of service, supporting records and circumstances in which the taxpayer claimed to have acquired knowledge of the order.

These matters could appropriately be examined by the Appellate Authority under the statutory appeal mechanism.

The Bench expressly refrained from recording any conclusive finding on the validity or sufficiency of service, the date of communication, or the computation of limitation. It permitted the taxpayer to raise all legally available grounds before the appellate forum.

The Court also allowed reliance on Luxmi Traders, while observing that its applicability would have to be assessed against the actual facts, particularly the department’s assertion that service had been effected through email and Speed Post in addition to the portal.

On pre-deposit, the taxpayer relied on the Delhi High Court’s judgment dated July 31, 2026, in Gaurav Jain & Another v. Joint Commissioner (Appeals-II), CGST, Delhi Zone & Another.

The Bench accepted that the taxpayer was entitled to the benefit of that judgment because the liability consisted of penalty alone and the show cause notice preceded the amendment effective from October 1, 2025.

Accordingly, it directed that the pre-deposit requirement for maintaining the appeal would be governed by the principles laid down in Gaurav Jain.

The Court further directed that if the taxpayer applied under Section 14 of the Limitation Act, 1963, seeking exclusion of the period during which the writ petition remained pending, the Appellate Authority must consider that application in accordance with law.

However, filing such an application would not automatically exclude that period. The authority would have to decide the issue on the applicable legal principles and facts.

The Bench left the merits of the penalty demand, the officer’s competence under Section 122, service, limitation and the ultimate maintainability of the proposed appeal open for consideration, subject to its finding on pre-deposit.

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