The necessary provisions regarding filing an appeal to Appellate Authority has been provided under CHAPTER XVIII- APPEALS AND REVISION [SECTION 107 TO 121] of the Central Goods and Services Tax Act, 2017 (‘CGST Act, 2017’) supplemented with CHAPTER XIII- APPEALS AND REVISION [RULE 108 TO 116].

Pursuant to the provisions of Section 107(1) of the CGST, Act, 2017 “Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the union Territory Goods and Service Tax by an Adjudicating Authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.”

It means any taxpayer or an unregistered person aggrieved by any decision or order passed against him by an Adjudicating Authority, may appeal to the Appellate Authority, within three months from the date on which the said decision or order is communicated to such person. The pre-condition to file an appeal to the Appellate Authority, is that order must be passed by the Adjudicating Authority for the taxpayer or an unregistered person.

Every appeal under Section 107(1) shall be in such form and shall be verified in such manner as may be prescribed. To file an appeal before Appellate Authority, the necessary form has been prescribed under Rule 108. Pursuant to Rule 108(1), an appeal to the Appellate Authority under sub-section (1) of Section 107 shall be filed in FORM GST APL-01, along with relevant documents, either electronically or otherwise as may be notified by the Commissioner, and a provisional acknowledgement shall be issued to the appellant immediately.

Mandatory pre-deposit for filing appeal

No appeal can be filed before Appellate Authority unless a specified amount of pre- deposit is made by the appellant. As per section 107(6) of the CGST Act, 2017, no appeal shall be filed before Appellate Authority, unless the appellant has paid:-

• in full, such part of the amount of tax, interest, fine, fee and penalty arising from impugned order, as is admitted by him; and
• a sum equal to ten percent of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty-five crore rupees (Rs. 50 crores in case of IGST), in relation to which the appeal has been

It is submitted that pre-deposit ensures staying of the recovering proceedings for the balance amount of demand in dispute. Minimum of 10% of the disputed amount of tax needs to be paid as pre-deposit before filing an appeal. There is no deed to pre-deposit any percentage of disputed interest, fine, fee and penalty arising from impugned order.

For instance: XYZ Ltd. received a show cause notice demanding of tax of Rs. 20 lakh, penalty of Rs. 20 lakh and interest of Rs. 4 lakh. The Adjudicating Authority passed the order confirming the entire demand. While XYZ Ltd. admits the tax liability of Rs. 10 lakh and interest of Rs. 1 lakh, it wishes to file an appeal to litigate the balance demand amount. The amount of pre-deposit to be made by XYZ Ltd. for filing an appeal to the Adjudicating Authority is computed as under-

• Full amount of tax, interest and penalty as admitted by the company e. Rs. 11 lakh;
• 10% of the tax in dispute, e. Rs. 1 lakh (10% of Rs. 10 lakh)

Therefore, total pre-deposit to be made by the company is Rs. 12 lakh. On payment of such pre-deposit, the recovery proceedings for the balance amount of Rs. 32 lakh will get stayed.

Payment of Pre-deposit

 Cash Ledger Balance and Credit Ledger Balance can be utilised for making the payment of pre-deposit amount. ITC available in the Credit Ledger Balance can be used for making the payment/adjusted against tax liability only. As per Rule 86(2), “the electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the provisions of Section 49 or Section 49A or Section 49B.” 

Further, Section 49(4) of the CGST Act, 2017 prescribes that “the amount available in electronic credit ledger may be used for making the payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed.”

It means amount available in electronic credit ledger can be used only for making the payment towards output tax only and not for interest, penalty or fine etc.

Disclaimer: This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts.

Adv. Sushil Antal

Sushil Kumar Antal is a Law Graduate and an Associate Member of the Institute of Company Secretaries of India since 2004. His Master Degree in Business Administration (Finance) along with others filed of knowledge, makes him expert in Business Strategies. He has immense knowledge and over 16 years of experience in Corporate Sector including Strategic Planning, Business set-up, Legal, Secretarial, Tax Planning and Corporate Restructuring. Now, is fully equipped in Advocacy Profession.