The Finance Bill 2025 has proposed the GST Amendment in Section 107 of the GST Act.Â
In section 107 of the Central Goods and Services Act, in sub-section (6), for the proviso, the following proviso shall be substituted, namely:
“Provided that in case of any order demanding a 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 has been paid by the appellant.”
Section 107(6) is being amended to provide for 10% mandatory pre- deposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any demand for tax.
Previously, businesses facing penalty-only cases had to deposit higher amounts to file appeals. With this amendment, the financial burden is reduced, making legal recourse more accessible.
Since no tax demand is involved, reducing the pre-deposit requirement to 10% of the penalty ensures that businesses do not face excessive liquidity constraints while appealing.
By capping the pre-deposit, the amendment prevents excessive financial deterrents from discouraging genuine appeals against wrongful penalties.
Many businesses delay appeals due to high financial costs. A lower pre-deposit could speed up dispute resolution and reduce the backlog in appellate authorities.
By streamlining the appeals process, the amendment promotes a business-friendly environment, reassuring taxpayers of a fair and efficient redressal mechanism.
