1. Introduction
The GST ecosystem is built on the pillars of “Digital India,” but occasionally, the rigid validations of the GST Portal clash with taxpayers’ substantive legal rights. A prominent example of this is the difficulty in filing appeals against orders reflecting “NIL” demand, despite the taxpayer intending to contest the underlying liability.
Following the recent GSTN Advisory dated 03 April 2026, this article explores the root cause of this issue, the legal position, and the practical way forward for taxpayers.
2. The Genesis of the Problem
The issue typically arises when a taxpayer opts for a “payment under protest” strategy during the adjudication process. The sequence of events usually looks like this:
| Step | Action | Intent |
| 01 | Issuance of SCN | The Proper Officer proposes a tax demand. |
| 02 | Voluntary Payment | The taxpayer pays the amount via DRC-03 to mitigate interest. |
| 03 | Under Protest | Payment is made without admitting liability. |
| 04 | Adjudication Order | The Officer passes an order with NIL demand, treating the payment as a final settlement. |
3. The Portal Constraint: Form GST APL-01
The GST portal’s architecture is designed to validate appeals based on the Electronic Liability Register.
- The Logic: If an order shows a demand of zero, the system assumes there is nothing to dispute.
- The Barrier: When a taxpayer attempts to file Form GST APL-01, the system prevents the entry of a “disputed amount” because the order itself does not reflect an outstanding demand.
- The Consequence: A taxpayer who has paid 100% of the tax under protest is paradoxically “locked out” of the appellate remedy because they were “too compliant” in paying early.
4. Legal Position vs. System Logic
The right to appeal is a statutory right under Section 107 of the CGST Act, 2017. Legal precedents have consistently held that:
1. Payment ≠ Admission: Deposits made during an investigation or SCN stage do not equate to an admission of guilt unless explicitly stated.
2. Speaking Orders: Adjudicating authorities are mandated to pass a “speaking order” that determines liability on merits, regardless of whether the tax has been pre-deposited.
3. Substance over Form: A procedural limitation on a portal cannot override a substantive right to appeal granted by the Legislature.
Illustrative Case Study
Scenario: ABC Pvt Ltd receives an SCN for ₹10,00,000. To save on mounting interest, they deposit the full amount using DRC-03, marking it “Paid under protest.”
The Adjudicating Authority, seeing the payment, issues an order showing:
- Demand:₹0
- Adjusted Amount:₹10,00,000
When ABC Pvt Ltd tries to file an appeal, the GST Portal rejects the application because the “Demand” column in the order is NIL. The taxpayer is now stuck in a “legal limbo.”
6. The Solution: The “Rectification” Route
Until the GSTN updates the portal’s logic to allow appeals in NIL demand cases, the GSTN Advisory suggests the following Way Forward:
1. File for Rectification: The taxpayer should approach the Adjudicating Authority to rectify the order under Section 161 of the CGST Act.
2. Correction of Order: Request the officer to issue a rectified order that correctly reflects the determined liability and the amount in dispute, rather than simply showing a NIL balance.
3. Fresh Appeal: Once the rectified order is uploaded and reflects the demand (even if offset by credits/payments), the system will allow the filing of Form GST APL-01.
7. Practical Tips for Professionals
To safeguard client interests, practitioners should adopt the following steps:
- Explicit Documentation: Ensure all DRC-03 communications clearly state that the payment is “Subject to the right of appeal” and “Without prejudice.”
- Review the Summary Order (DRC-07): Immediately check the DRC-07 issued on the portal. If it shows NIL demand despite a dispute, start the rectification process early.
- Monitor Timelines: Since rectification and subsequent appeals have strict limitation periods, do not wait for “system updates”—act on the manual/rectification route immediately.
8. Conclusion
The disconnect between the GST law and the GST portal remains a challenge for the tax fraternity. While the April 2026 Advisory provides a temporary bridge via the rectification process, a permanent fix—allowing “Disputed Amount” entries regardless of the “Demand” reflected—is necessary to ensure the principles of natural justice are upheld.
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Author’s Note: The views expressed in this article are personal and based on current GSTN functionalities and legal interpretations. Readers are encouraged to refer to the specific facts of their case and the latest circulars before proceeding. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. The author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document, nor for any actions taken in reliance thereon.
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