10% GST Penalty Pre-Deposit Not Required When Tax Also Demanded: Madras HC

Kappa Chakka Kandhari Foods Private Limited Vs Commissioner of GST and Central Excise (Madras High Court)

Summary: Madras High Court set aside the appellate order dated 17.07.2026 which had rejected the petitioner’s GST appeal solely for failure to pre-deposit 10% of the penalty. The petitioner contended that the underlying detailed order dated 18.12.2025 imposed liability towards tax, interest and penalty and also recorded payment of tax and interest. Therefore, according to the petitioner, the proviso to Section 107(6) of the CGST Act, 2017 was not attracted.

The detailed adjudication order dropped demand of Rs.51,88,983/- out of the total demand of Rs.2,17,22,663/- for 2018-19. It confirmed and appropriated tax of Rs.1,65,33,680/- under Section 74(9) of the CGST/TNGST Act, 2017, comprising Rs.28,74,872/- for 2018-19, Rs.49,57,592/- for 2019-20 and Rs.87,01,216/- for 2020-21. It also confirmed and appropriated interest of Rs.25,19,134/- under Section 50(1) and imposed penalty of Rs.1,65,33,680/- under Section 74(9) read with Section 122(2)(b).

The High Court observed that the detailed order confirmed liability towards tax, interest and penalty and recorded that the tax and interest had been paid. Since only the penalty remained unpaid, Form DRC-07 was issued only in respect of the penalty. The Court described the detailed order as akin to a judgment of a civil Court and Form DRC-07 as akin to a decree. It then examined the proviso to Section 107(6), which applies where an order demands penalty without involving any demand of tax and requires payment of 10% of such penalty before an appeal can be filed.