Rule 110(5) and GSTAT Appeal Fee: Alternatives or Aggregate Amount?

A Simple Fee Provision Raises an Important Question

With the functioning of the Goods and Services Tax Appellate Tribunal (GSTAT), the provisions governing the filing of appeals have assumed practical importance. One such provision is Rule 110(5) of the CGST Rules, 2017, which prescribes the fee for filing or restoring an appeal before the Tribunal.

At first sight, the Rule appears simple. It prescribes a fee of Rs 1,000 for every Rs 1 lakh, subject to a minimum of Rs 5,000 and a maximum of Rs 25,000. The difficulty arises where an order contains different monetary components, such as tax or ITC, along with interest and penalty. The question then is: on which amount should the appeal fee be calculated?

The answer lies in the language of Rule 110(5). The Rule repeatedly uses the word "or", refers to tax and ITC "involved" in the appeal, and does not use expressions such as "aggregate", "total" or "sum of". Significantly, "interest" is absent from the main formula but is expressly mentioned in the proviso. The central issue, therefore, is whether these amounts are alternative bases for computing the appeal fee, depending on the dispute involved, or whether all of them are required to be added together.

What Does Rule 110(5) Say?

Rule 110(5) prescribes a fee of Rs 1,000 for every Rs 1 lakh of "tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined in the order appealed against", subject to a minimum of Rs 5,000 and a maximum of Rs 25,000. The proviso fixes a fee of Rs 5,000 where the order does not involve any demand of tax, interest, fine, fee or penalty.

The language of the Rule is important. The different monetary components are repeatedly separated by the word "or". The Rule does not use "and" or expressions such as "aggregate amount", "total amount" or "sum total" that would require all the components to be added together. This indicates that the Rule contemplates different bases for computing the fee, depending on the nature of the dispute in the appeal.

At the same time, the appellant cannot simply choose whichever component yields the lowest fee. The relevant component must be identified from the impugned order, the dispute raised in the appeal and the relief sought. The use of "or" is therefore important because it separates the statutory alternatives rather than automatically combining them into one aggregate amount.

"Or" Ordinarily Creates Alternatives

The settled rule of interpretation is that "or" is ordinarily disjunctive. Where two conditions are separated by "or", they are normally treated as alternatives, not as cumulative requirements.

In Babu Manmohan Das Shah & Ors. v. Bishun Das, AIR 1967 SC 643 : (1967) 1 SCR 836 : 1966 INSC 215, decided on 12.10.1966, the Supreme Court considered a provision in which two situations were separated by the word "or". The question was whether both conditions had to be satisfied or whether either one was sufficient. Rejecting an interpretation that would effectively convert "or" into "and", the Court stated:

"There is no reason why the word ‘or' should be construed otherwise than in its ordinary meaning."

The Court explained that statutory words should ordinarily be given their natural meaning unless there are compelling reasons to depart from it, such as avoiding an absurd result or giving effect to the clear legislative intention. Accordingly, the two conditions separated by "or" were treated as alternatives.

The principle is directly relevant to Rule 110(5). Since the Rule repeatedly uses "or" between different monetary components, those components should ordinarily be treated as alternatives rather than automatically added together.

"Or" Is Disjunctive and "And" Conjunctive - But There Is a Limited Exception

The principle was further explained in Municipal Corporation of Delhi v. Tek Chand Bhatia, (1980) 1 SCC 158: AIR 1980 SC 360: (1980) 1 SCR 910.

The controversy arose under Section 2(i)(f) of the Prevention of Food Adulteration Act, 1954. Broadly stated, food could be regarded as adulterated if it contained filthy, putrid, rotten, decomposed, or diseased substances, or was insect-infested, "or is otherwise unfit for human consumption". The question was whether unfitness for human consumption had to be proved in addition, even where the food already fell within the preceding specified categories.

The Supreme Court rejected such a cumulative construction. It treated "or is otherwise unfit for human consumption" as a separate category and stated the governing principle:

"The word ‘or' is normally disjunctive and ‘and' is normally conjunctive, but at times they are read as vice versa."

The latter part of the statement is equally important. "Or" and "and" are not incapable of being interchanged. Courts may, exceptionally, do so where the context and manifest legislative intention make such a construction necessary. But that is an exception, not the ordinary rule. The Supreme Court cautioned against the interchange of the expressions without sufficient reason.

For Rule 110(5), therefore, the question is not whether "or" can ever be read cumulatively. It can, in an appropriate case. The real question is whether anything in the language, structure or object of Rule 110(5) provides sufficient reason for doing so.

Fiscal Provisions Are No Exception to the Ordinary Meaning of "Or"

The principle is even more relevant because the Supreme Court has applied it in indirect taxation.

In Commissioner, Customs, Central Excise & Service Tax, Patna v. Shapoorji Pallonji & Co. Pvt. Ltd., (2024) 3 SCC 358 : 2023 SCC OnLine SC 1330, the Supreme Court considered the definition of "governmental authority" in a Service Tax exemption notification. Different parts of the definition were separated by "or", raising the question whether they were alternative or cumulative requirements.

The Supreme Court gave "or" its ordinary disjunctive meaning. It held that the use of "or" manifested an intention to prescribe alternatives and declined to convert the separate limbs into cumulative requirements.

This ruling is important for interpreting Rule 110(5). A fiscal setting does not, by itself, justify treating "or" as though the provision used "and". If cumulative operation was intended, the drafting of the provision would ordinarily be expected to convey that intention.

"Or" Creates Alternatives, Not Necessarily a Right of Choice

A recent Supreme Court judgment provides an important qualification and prevents the principle from being carried too far.

In Bikram Chand Rana v. Himachal Pradesh Road Transport Corporation, 2026 INSC 326, Civil Appeal No. 14669 of 2025, decided on 07.04.2026, the Supreme Court examined Rule 69(1)(c) of the Central Civil Services (Pension) Rules, 1972. The Rule prevented payment of gratuity until the conclusion of "departmental or judicial proceedings" and the issue of final orders.

The Supreme Court treated "or" in its ordinary disjunctive sense and relied upon Babu Manmohan Das Shah. However, because either departmental or judicial proceedings could independently attract the statutory bar, gratuity continued to be withheld if either category remained pending. The employee could not choose the alternative that produced the more favourable consequence.

This qualification is particularly useful in applying Rule 110(5). Disjunctive alternatives do not necessarily confer a right of election. The appellant cannot simply choose "tax", "ITC" or "penalty" according to whichever produces the lowest fee. The relevant alternative has to emerge from the nature of the appellate dispute.

The balanced principle is therefore this: "or" ordinarily keeps statutory alternatives separate; it does not necessarily make those alternatives optional at the choice of the person affected.

What Do the Four Supreme Court Decisions Collectively Establish?

Read together, the decisions establish three propositions. First, "or" ordinarily carries its natural disjunctive meaning and separates alternatives. Secondly, "or" may exceptionally be read as "and", but only where the statutory context, scheme, or clear legislative intention provides sufficient justification. Thirdly, treating statutory limbs as alternatives does not necessarily confer an unrestricted choice upon the person affected.

This framework fits Rule 110(5) particularly well. "Tax", "input tax credit involved", "difference in tax or input tax credit involved", and "fine, fee or penalty" cannot simply be treated as if the rule-making authority had joined them by "and". Equally, the appellant cannot arbitrarily select the smallest figure.

The correct approach is to examine the impugned order, identify what is actually being challenged, determine which statutory limb appropriately corresponds to that controversy, and then calculate the fee under Rule 110(5).

The Rule Itself Uses Both "Or" and "And" - The Difference Cannot Be Ignored

Rule 110(5) contains an important internal indication. While the monetary bases are repeatedly separated by "or" , the same sentence thereafter provides that the fee is "subject to a maximum of twenty-five thousand rupees and a minimum of five thousand rupees".

Thus, both conjunctions have been consciously used in the same provision.

The distinction is meaningful. "Or" separates the different bases of computation, whereas "and" connects the two statutory parameters - the minimum and maximum - which govern the amount ultimately payable. Reading "or" as "and" in the earlier portion would dilute a linguistic distinction which the rule-making authority has itself maintained.

Interest Presents a Separate and Stronger Textual Question

The treatment of interest warrants separate attention. Interest does not appear in the main computational formula. The main part refers to tax, ITC, the difference in tax or ITC, fine, fee and penalty.

Yet the proviso expressly refers to an order not involving any demand of "tax, interest, fine, fee or penalty".

This difference is significant. The rule-making authority clearly knew how to refer to interest and expressly did so in the proviso. Its omission from the main computational formula therefore strongly indicates that interest was not intended to form part of the Rs 1,000-per-Rs 1 lakh base.

The two parts of the Rule can operate harmoniously. The existence of an interest demand may mean that the appeal cannot be regarded as one involving no monetary demand for purposes of the proviso. But that does not automatically establish that interest must be added to the amount on which the proportional fee under the main provision is calculated.

The Word "Involved" May Be as Important as the Word "Or"

Much of the interpretative debate naturally focuses on "or", but Rule 110(5) repeatedly uses another important expression - "involved".

The Rule refers to "tax or input tax credit involved " and "the difference in tax or input tax credit involved ". It does not simply refer to every amount appearing in the adjudication order. The word suggests a nexus between the amount forming the fee base and the actual subject matter carried in appeal.

This becomes particularly relevant where an adjudication order determines a larger amount, but the appellant accepts a part of the demand and challenges only the balance. In such a case, the amount accepted and not carried in appeal stands on a different footing from the amount actually disputed before the Tribunal. The expression "involved" therefore supports a close connection between the computational base and the monetary controversy forming the subject matter of the appeal.

There is, however, an important textual distinction. For fine, fee or penalty, the Rule uses the expression "determined in the order appealed against" . Therefore, "involved" cannot be detached from the remainder of the provision. In a mixed order, the computational base has to be determined by reading Rule 110(5) as a whole. Neither automatic aggregation by the Registry nor arbitrary selection by the appellant provides a substitute for that exercise.

A Fee Provision Should Not Be Enlarged Beyond the Words Used

Rule 110(5) imposes a monetary obligation related to filing or restoring an appeal. Its measure should therefore be found in the language the rule-making authority actually employed.

If interest were intended to be included in the proportional computational base, it could have been expressly included, as it has been in the proviso. Likewise, if all the monetary components were intended to be added together, Rule 110(5) could have used expressions such as "aggregate amount", "total amount" or "sum of" tax, ITC, fine, fee and penalty.

It does not do so. In the absence of such language, distinct expressions repeatedly separated by "or" should not ordinarily be transformed into one composite figure by effectively inserting "and", "aggregate" or "total" into the Rule.

Practical Application - Nine Illustrations

The following practicalillustrations make Rule 110(5) easier to understand.

Illustration 1 - Appeal involving only tax: An order determines tax of Rs 7 lakh, together with consequential interest, and the entire tax demand is challenged. Under this interpretation, the computational base is Rs 7 lakh, and the appeal fee is Rs 7,000. Consequential interest is not separately added because interest does not appear in the main computational formula.

Illustration 2 - ITC dispute: An order denies ITC of Rs 15 lakh, together with interest and penalty, while the appeal challenges the denial of the entire ITC. The relevant base is the Rs 15 lakh ITC involved, resulting in a fee of Rs 15,000. ITC, interest and penalty should not automatically be added merely because they appear in the order. If the penalty is also independently challenged, however, its treatment under the separate penalty limb must be considered in the context of the precise appellate dispute.

Illustration 3 - Difference in tax involved: A taxpayer declares tax of Rs 20 lakh, whereas the adjudicating authority determines Rs 26 lakh. The appeal concerns only the additional Rs 6 lakh. The expression "difference in tax … involved" becomes directly relevant. The computational base would be Rs 6 lakh, and the appeal fee Rs 6,000. This illustrates the significance of the legislature separately referring to the "difference in tax".

Illustration 4 - Minimum fee: If the relevant amount involved in the appeal is Rs 2 lakh, the rate-based calculation produces Rs 2,000. Since Rule 110(5) prescribes a minimum fee of Rs 5,000, the amount payable would be Rs 5,000.

Illustration 5 - Maximum fee: If the relevant amount involved is Rs 40 lakh, the rate-based calculation produces Rs 40,000. The statutory ceiling applies, and the appeal fee would therefore be Rs 25,000.

Illustration 6 - Penalty-only order: An order imposes a penalty of Rs 13 lakh without determining tax or ITC and the entire penalty is challenged. The relevant limb is the "amount of … penalty determined in the order appealed against". The appeal fee would be Rs 13,000.

Illustration 7 - No monetary demand: Where the order does not involve any demand of tax, interest, fine, fee or penalty, the proportional formula does not apply in the ordinary manner. The proviso expressly fixes the appeal fee at Rs 5,000.

Illustration 8 - Only part of the tax demand is disputed: An order determines tax of Rs 30 lakh. The taxpayer accepts Rs 20 lakh and challenges only the balance Rs 10 lakh. Since Rs 10 lakh is the tax or difference in tax actually involved in the appeal, the accepted Rs 20 lakh should not be added merely because it formed part of the original order. The appeal fee would therefore be calculated on Rs 10 lakh and would be Rs 10,000.

Illustration 9 - ITC denial accompanied by penalty and interest: An order denies ITC of Rs 10 lakh and imposes penalty of Rs 1 lakh together with consequential interest. Both the ITC denial and penalty are challenged. Rule 110(5) separately refers to "input tax credit involved" and "the amount of … penalty determined in the order appealed against", connecting them by "or" rather than "and"; interest is absent from the main formula altogether. On the interpretation of Rule 110(5) discussed above, the Rs 10 lakh ITC would constitute the relevant computational base and the appeal fee would be Rs 10,000. The Rs 1 lakh penalty and consequential interest should not be mechanically added merely because they also appear in the impugned order.

These examples also demonstrate why Rule 110(5) cannot safely be applied through a single mechanical formula based upon the total financial consequence of the adjudication order. The nature of the dispute carried before the Tribunal remains central.

Rule 110(5) - The Subject Matter of the Appeal Determines the Fee

Rule 110(5) should be applied by first identifying the nature and amount of the dispute involved in the appeal and then determining the relevant basis for computing the fee. The use of "or", read with the word "involved", does not support automatic addition of different monetary components merely because they appear in the same order. At the same time, the appellant cannot simply choose the component that results in the lowest fee.

This interpretation is also supported by the language of the Rule itself. Rule 110(5) uses both "or" and "and", does not use expressions such as "aggregate", "total" or "sum of", and expressly mentions interest in the proviso but not in the main formula. These differences in wording should be given their proper meaning.

Accordingly, the appeal fee should be calculated on the relevant amount involved in the appeal, at Rs 1,000 for every Rs 1 lakh, subject to the minimum of Rs 5,000 and maximum of Rs 25,000. The computational base should therefore be determined from the actual subject matter of the appeal, without either mechanical aggregation by the Registry or arbitrary selection by the appellant.