Appealing a goods and services tax demand takes 10 per cent of the central tax in dispute at each of two appeals, capped at INR 20 crore at each

A goods and services tax (GST) demand under the Central Goods and Services Tax Act, 2017 (CGST Act) is appealed first to the Appellate Authority under section 107 within three months, which one further month can extend, on payment of the admitted amount and 10 per cent of the remaining tax in dispute, capped at INR 20 crore of central tax. The second appeal lies to the Goods and Services Tax Appellate Tribunal (GSTAT) under section 112 within three months, which three further months can extend, on a further 10 per cent with a further cap of INR 20 crore of central tax. The State tax in an intra-State demand is appealed under the corresponding provisions of the State Goods and Services Tax Act, which carry their own deposit. Each payment stays recovery of the balance, and since 1 October 2025 an order that demands only a penalty carries the same 10 per cent deposit on the penalty.

Who may appeal, and to which forum?

Section 107(1) of the CGST Act lets any person aggrieved by an order of an adjudicating authority appeal to the Appellate Authority. The sub-section also covers decisions and orders passed under the State and Union territory Acts. Section 112(1) gives a second appeal to the Tribunal against an order passed under section 107 or under section 108, the revisional power. The Tribunal, constituted under section 109, has a Principal Bench at New Delhi and State Benches, and its own list shows one State Bench for Karnataka, at Bengaluru. A case in which any one issue relates to the place of supply is heard only by the Principal Bench, under the proviso to section 109(5).

How long is the first appeal open, and what must be paid?

The appeal must be presented within three months from the date the order is communicated. Section 107(4) lets the Appellate Authority allow it within a further one month if sufficient cause prevented filing in time, and no more. Circular No. 258/04/2026-GST of 26 October 2026 adds that limitation is examined first, and that an appeal beyond the condonable period is not decided on its merits.

Section 107(6) bars the appeal unless the appellant has paid, in full, the part of the tax, interest, fine, fee and penalty that the appellant admits, and a sum equal to 10 per cent of the remaining tax in dispute, subject to a maximum of INR 20 crore of central tax. Circular No. 259/05/2026-GST of 26 October 2026 explains that the admitted amount is the portion the appellant does not intend to challenge, that the rest is the tax in dispute, and that the appellant makes the choice in Table 14 of FORM GST APL-01.

Two amendments fix these figures. Sections 141 and 143 of the Finance (No. 2) Act, 2024 substituted the ceiling in section 107(6) and the percentage and ceiling in section 112(8); Notification No. 17/2024-Central Tax of 27 September 2024 brought them into force from 1 November 2024. Sections 129 and 130 of the Finance Act, 2025 (7 of 2025) inserted a proviso into each sub-section; Notification No. 16/2025-Central Tax of 17 September 2025 brought them into force from 1 October 2025. The proviso says that where an order demands penalty without any demand of tax, no appeal lies unless 10 per cent of the penalty has been paid. Before that date the deposit was measured on tax in dispute alone, so on the words of the sub-sections a penalty-only order drew none.

What does the second appeal add?

Section 112(1) allows three months from communication of the order, or the date the Government notifies for appeals to the Tribunal, whichever is later. Section 112(6) lets the Tribunal admit an appeal within three months after that period if satisfied of sufficient cause. The Tribunal's website carries a notice of 30 June 2026 that the last date for filing under section 112 was extended to 31 July 2026.

The appeal is filed online. Rule 18 of the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, notified on 24 April 2025, requires filing on the GSTAT portal, one appeal against each order-in-appeal, or one for each order-in-original that it decides, and a separate appeal by each aggrieved person. Section 112(2) lets the Tribunal refuse to admit an appeal where the amount involved does not exceed INR 50,000, and section 109(8) allows such an appeal, if it involves up to INR 50 lakh and no question of law, to be heard by a single Member with the President's approval.

The deposit under section 112(8) has the same shape: the admitted amount in full, and 10 per cent of the remaining tax in dispute, capped at INR 20 crore of central tax, in addition to the amount paid under section 107(6). Circular No. 259/05/2026-GST computes the 10 per cent on the liability the Appellate Authority confirmed and the appellant still disputes. A penalty-only order draws a further 10 per cent of the penalty.

When is recovery stayed?

Section 107(7) provides that, once the amount under section 107(6) is paid, recovery proceedings for the balance are deemed to be stayed. Section 112(9) says the same of the Tribunal deposit and adds "till the disposal of the appeal". The stay arises on payment, without an application. Section 115 pays interest at the section 56 rate on a deposit that has to be refunded, from the date of payment. Circular No. 259/05/2026-GST says the order need not state the refund, the claim goes in FORM GST RFD-01 on account of an order, the department's intention to appeal does not by itself defeat it unless the order is stayed, and interest on the two deposits runs from their separate payment dates.

What time limits bind the officers?

Under section 73(10) an order for a period up to 2023-24, other than fraud, issues within three years of the due date of the annual return, and under section 74(10) a fraud order within five years. Section 74A, which governs 2024-25 onward, requires the notice within forty-two months of that due date (section 74A(2)) and the order within twelve months of the notice, extendable by up to six months for reasons recorded before the period ends (section 74A(7)). An order made on a direction of an appellate forum or court issues within two years of the communication of the direction, under section 75(3).

The appellate forums have a softer clock: one year from filing, "where it is possible to do so" for the Appellate Authority (section 107(13)) and "as far as possible" for the Tribunal (section 113(4)). The Appellate Authority "shall not refer the case back" (section 107(11)); the Tribunal may refer it back for fresh adjudication (section 113(1)).

What does the arithmetic look like?

An illustration. The order, amounts and dates below are hypothetical and show the central tax only. An intra-State demand carries a State tax demand alongside it, and the appeal against that part needs its own deposit under the State Goods and Services Tax Act, which is not shown here.

Order under section 74A for 2024-25, communicated 10 January 2027
  Central tax INR 5.00 crore; interest INR 1.20 crore;
  penalty under section 74A(5)(ii), equal to tax, INR 5.00 crore;
  total demand INR 11.20 crore

First appeal, section 107(6)
  Admitted: tax INR 1.00 crore and interest INR 0.20 crore   INR 1.20 crore
  Tax in dispute INR 4.00 crore, 10 per cent                 INR 0.40 crore
  Paid before filing                                         INR 1.60 crore
  Balance whose recovery is stayed                           INR 9.60 crore
  Last day                          10 April 2027
  With one month's condonation      10 May 2027

Appellate Authority annuls INR 1.00 crore of the disputed tax;
order communicated 15 March 2028

Second appeal, section 112(8)
  Tax still disputed INR 3.00 crore, 10 per cent             INR 0.30 crore
  Cumulative deposit                                         INR 1.90 crore
  Last day                          15 June 2028
  With three months' condonation    15 September 2028

Central tax in dispute of INR 300 crore at the first stage,
INR 250 crore at the second
  First stage: 10 per cent is INR 30 crore, ceiling          INR 20 crore
  Second stage: 10 per cent is INR 25 crore, ceiling         INR 20 crore
  Cumulative deposit                                         INR 40 crore

A penalty-only order of INR 50 lakh under the central Act
  Deposit: INR 5 lakh at the first appeal,
  a further INR 5 lakh at the second

The 10 per cent is measured on tax alone, so the INR 5.00 crore penalty and the interest on the disputed tax add nothing to the deposit while tax is in dispute. And each ceiling is written into its own sub-section, so on the words the second-stage deposit is capped separately from the first.

When is a writ to the High Court still used, and what follows the Tribunal?

In Radha Krishan Industries v. State of Himachal Pradesh (2021) the Supreme Court held that an alternative remedy does not bar a writ petition under Article 226 of the Constitution, though the High Court ordinarily declines to interfere unless a fundamental right is breached, natural justice is violated, the order is wholly without jurisdiction, or the vires of a provision is challenged. An order of that kind, such as a demand made without notice, belongs to the writ jurisdiction, and a dispute on the merits to the appeal.

After the Tribunal, section 117 allows an appeal to the High Court against an order of a State Bench, on a substantial question of law, within one hundred and eighty days of receipt, with delay condonable for sufficient cause. An order of the Principal Bench goes to the Supreme Court under section 118(1)(a). Section 119 makes sums due under a Tribunal order, or a High Court order under section 117, payable notwithstanding a further appeal.

What remains unsettled?

Four points.

Whether the stay in section 107(7) lasts until disposal. Unlike section 112(9), the sub-section does not say so, and Circular No. 224/18/2024-GST of 11 July 2024 addresses the interval after a first appeal only for the period before the Tribunal was operational.

Whether the INR 20 crore central tax ceiling at the second stage limits the sum payable at that stage or the cumulative deposit. The words of section 112(8) place it on the 10 per cent sum, in addition to the first deposit, which the arithmetic above follows, but the 2026 circular does not address the ceiling.

What a remand does to the stay. The 2026 circular says the deposit is refunded on a remand by the Tribunal, subject to recovery of any confirmed part, but not whether recovery stays in abeyance while the fresh order is awaited. Nor do sections 107(13) and 113(4) state a consequence for an appeal that runs past one year.

The reach of the extended filing date. The Tribunal's notice records an extension to 31 July 2026 without stating which orders it covers, and section 112(1) leaves the later-of date to a notification.