Indirect Tax Update No. 34

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Pre-deposit for appeals under Section 107(6) and Section 112(8) of the CGST Act

Background:

In line with the recommendations of the 57th GST Council meeting held on 8 October 2026, the Central Board of Indirect Tax and Customs (‘CBIC’) has issued Circular No. 259/05/2026-GST dated 26 October 2026 to clarify various issues relating to pre-deposit for filing appeals under Section 107(6) (Appeal to Appellate Authority) and Section 112(8) (Appeal to Appellate Tribunal) of the CGST Act, 2017.

The taxpayers are required to make a payment of the admitted amount along with the prescribed pre-deposit of the disputed amount for filing appeals before the Appellate Authority and Appellate Tribunal respectively.

The Circular has been issued clarifying various procedural and substantive aspects relating to pre-deposit requirements and refunds thereof discussed below. Also, the Circular is trying to clarify the issues faced by the taxpayer while filing appeals to GSTAT.

Key clarifications introduced:

“Admitted amount” and “tax in dispute": The “admitted amount” refers to the portion of tax, interest, fine, fee or penalty arising from the impugned order which is accepted by the taxpayer and is not proposed to be challenged in appeal. Whereas the balance liability contested by the taxpayer shall constitute the “tax in dispute”, on which the statutory pre-deposit is to be computed.
The decision whether to treat an amount as admitted or in dispute is to be made by the taxpayer at the time of filing an appeal and to be captured in Table-14 (Amount of demand created, admitted and disputed) of APL-01 (Appeal to Appellate Authority) and Table 20 (Details of demand created, disputed and admitted) of APL-05 (Appeal to the GSTAT).
Pre-deposit for appeal before Appellate Tribunal: If the tax liability is modified by the Appellate Authority, the 10% of remaining tax in dispute is to be computed with reference to the liability confirmed by the Appellate Authority which is disputed by the appellant, in addition to the amount already paid at the Appellate Authority stage.
Refund of pre-deposit is not automatic, separate application needs to be filed: An appellate order granting relief to the taxpayer is sufficient for claiming refund of the pre-deposit, even if the order does not expressly direct such refund. Refund application for pre-deposit needs to be filed under the head “on account of order” in Form GST RFD-01. No automatic refunds of the pre-deposits, post the favourable appellate orders. The same needs to be filed separately by the concerned taxpayers.
Refund is not to be withheld merely because Department intends to appeal: Where the appellant obtains a favourable order, refund of pre-deposit is admissible even if the Department contemplates or has filed a further appeal, unless the order is stayed by the Appellate Tribunal or Court.
Relevant date for interest computation on refund of pre deposit: Interest shall be computed separately from the respective date of payment of pre-deposit at each level of appeal.
Refund in case of remand by the Appellate Tribunal: Where matter is remanded to the original adjudicating authority, the appellant is entitled to refund of the pre-deposit within the prescribed time-line. In case of partial remand, the balance refund is released only after adjustment or recovery of the demand confirmed in favour of the Revenue, along with applicable interest.

LKS Comments:

The circular provides clarity to the taxpayer to treat an amount as admitted or in dispute at the time of filing an appeal. The amount recorded in the order or populated over the portal cannot be treated as tax in dispute for the computation of pre-deposit. The taxpayer has an option to challenge the amount shown as admitted liability even if the same has been recorded in the order.
The dispute relating to forcing the taxpayer to mandatorily calculate the pre-deposit based on amount shown in the order as “Admitted Amount” and the “tax in dispute” has been resolved. In the event of dispute by the appellate authority/ Appellate Tribunal on quantum of pre-deposit, the taxpayer should be able to explain that pre-deposit has been computed on the “tax in dispute” and not on the “admitted amount”.
While making an appeal before the Appellate Tribunal, where the demand is modified/reduced by the Appellate Authority, the pre-deposit of the taxpayer will be computed only on the modified/ reduced demand in dispute. This position is in line with the decision of Hon'ble High Court of Jharkhand in the case of Ashirwad Food Industries v. Union of India and others [2026 (2) TMI 596]. GSTAT registry had been taking objections on the pre-deposit amount.
Issue in relation to automatic payment of interest on refund of pre-deposit or whether separate refund application is required, has not been addressed in the Circular. Taxpayers may review pending appeals and refund claims in light of the clarifications issued in relation to any excess pre-deposits being paid for GSTAT appeals.