As mentioned earlier, the right to appeal is a statutory right which operates within the limitations placed on it by the law. One such limitation flows from the principle that an appellant must first deposit the adjudged dues before his further appeal can be heard. However, often an appellant may succeed in his appeal, and hence it would (in retrospect) be unfair to saddle him with this financial burden. To balance these factors, tax laws mandate some “pre-deposit” so as to discourage frivolous appeals and also safeguard the bona fide interests of both the taxpayers and the revenue.
According to section 107(6) No appeal shall be filed under sub-section (1), unless the appellant has paid—
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and
(b) a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.
Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.
The pre-deposit provisions for appeals before the Tribunal are similar to the above and are contained in section 112 of the CGST Act.
Section 115 provides for interest on refund of pre-deposit. If the pre-deposit made by the appellant under section 107(AA) or under section 112 (Tribunal) is required to be refunded consequent to any order of the AA or of the Tribunal, as the case may be, interest at the specified rate shall be payable from the date of payment of the amount till the date of refund of such amount