GSTN issues Advisory on Difficulties Faced in Filing Appeals Where Adjudication Order Reflects “NIL” Demand, Despite Ongoing Tax Dispute
- Parul Aggarwal
- Apr 13
- 2 min read
Updated: Apr 15
GSTN issued Advisory No. 655, dated April 03, 2026, to address practical and technical issues faced by taxpayers while filing Appeals on the GST Portal in matters where the Adjudication Order shows "NIL Demand", despite an ongoing dispute, due to voluntary prior payment of the tax amount.
Background
Many taxpayers make voluntary payments, i.e. tax, interest and penalty at the stage of Show cause Notice (SCN) Stage itself in order to optimise their exposure of interest and penalties in the face of protracted litigation. However, such payment is made "in Dispute", i.e. "WITHOUT" admitting the GST liability. At the time of passing the Adjudication Order, the Adjudicating authority treats such payment as full discharge of tax and passes an order showing "NIL Demand" instead of determining the actual liability.
The Issue
Subsequently, the GST Portal records zero demand in DCR (Demand & Collection Register) and the GST portal blocks the taxpayer from filing an appeal (APL-01), often throwing the error “Disputed amount cannot be more than demand amount itself.” Since the demand is NIL, the Appeal filing gets blocked. Consequently, the taxpayer's statutory right to appeal under section 107 gets practically denied due to presence of a system limitation.
Solution Offered by GSTN Advisory
GSTN Advisory 655 acknowledged that voluntary payment is not acceptance of tax liability and the taxpayer still has full right to Appeal. Accordingly, the Adjudication order must determine actual liability, not simply show NIL on the adjudicating order. Further, section 107 of the CGST Act, 2017 gives every taxpayer the right to appeal against any decision or order passed by an adjudicating authority. Payment during the SCN stage without explicit admission of liability does not amount to acceptance of the demand and the right to appeal survives.
Accordingly, GSTN prescribes that the taxpayer must approach the adjudicating authority and request issuance of a rectification order that correctly reflects the actual demand amount. Once the DCR is updated with the correct demand figure, the taxpayer can file APL-01 on the GST portal within the prescribed time limits.
Disclaimer: This tax update is for general overview and guidance only and does not constitute a binding legal interpretation. Always verify the current statutory position before acting on this information. Indian tax laws are subject to frequent amendments and works in tandem with evolving judicial interpretations. Independent professional advice should be separately obtained for any specific client matter. Prime Accountants accepts no liability for decisions taken in reliance on this article without independent verification.
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