Abstract
The Goods and Services Tax regime gives an aggrieved taxpayer a statutory right of appeal against orders passed by adjudicating authorities. In practice, the GST portal for some time did not allow an appeal in Form GST APL-01 where the order showed a NIL or zero demand, even though a dispute about liability remained. In September 2026 the Goods and Services Tax Network (GSTN) announced that the restricting validation had been removed.
This article examines the statutory basis of the right of appeal, explains how NIL demand orders arise, and argues that the right depends on the existence of an adverse order and not on the amount shown as outstanding. It also identifies the questions that the advisory leaves open, in particular the time limit, the pre-deposit and the treatment of the earlier payment.
Introduction
A right of appeal is of little value if the machinery meant to exercise it refuses to accept the appeal. The experience of many taxpayers under the Central Goods and Services Tax Act, 2017 (the CGST Act) shows how a technical validation on the common portal can produce exactly this result.
The problem was narrow. A taxpayer pays the disputed tax before the adjudication order is passed. The officer then passes an order that determines the liability against the taxpayer, but because the payment has already been made, the demand shown as outstanding is NIL. The taxpayer, who still disputes the finding, tries to file an appeal and finds that the portal does not accept it. This article looks at why that outcome was inconsistent with the scheme of the Act, and at what the GSTN advisory dated 7 September 2026 changes and does not change.
The Statutory Right of Appeal under Section 107
Section 107 of the CGST Act provides the first appeal in the GST regime. Under sub-section (1), a person aggrieved by a decision or order passed by an adjudicating authority under the Act, or under the corresponding State or Union Territory law, may appeal to the Appellate Authority within three months from the date on which the decision or order is communicated to him.² The opening words of the provision describe the right in terms of the person who is aggrieved:
‘Any person aggrieved by any decision or order passed under this Act …’
The text does not make the right depend on the amount demanded. It depends on two things: an order passed by an adjudicating authority, and a person who is aggrieved by it.
Sub-section (4) allows the Appellate Authority to condone a delay of up to one further month where sufficient cause is shown.³ Sub-section (6) requires the appellant to pay the admitted amount in full, together with a percentage of the remaining tax in dispute, subject to a ceiling set in the provision, before the appeal is filed.⁴ Sub-section (7) stays recovery of the balance once that condition is met.⁵
The manner of filing is prescribed by Rule 108 of the Central Goods and Services Tax Rules, 2017 (the CGST Rules). It requires the appeal to be filed in Form GST APL-01 with the relevant documents, and it provides for a provisional acknowledgement.⁶ As far as the text of the rule goes, it does not add a condition that the order must carry an outstanding demand. An appeal is a creature of statute and is available only where the statute gives it. That principle also works the other way: where the statute gives the right, administrative practice should not take it away.
How a NIL Demand Order Arises
Demand proceedings under sections 73 and 74 of the CGST Act, and under section 74A for later periods, are built to encourage early payment. The Act allows a person to pay the tax with interest, and in some cases a reduced penalty, before a notice is served or within a stated time after it, and in the specified cases the proceedings may then be concluded.⁷ Payment is intimated to the officer in Form GST DRC-03.⁸
Not every payment ends the dispute. A taxpayer may pay to stop interest from running, or to avoid coercive recovery, and still contest the department’s view on the merits. The adjudicating officer may then pass an order that holds the liability against the taxpayer. The summary of the order is uploaded in Form GST DRC-07.⁹ Because the earlier payment is adjusted, the demand that remains outstanding is NIL. The order is nonetheless adverse. It contains a finding of liability, and it may carry consequences beyond the amount of tax, such as a finding on penalty or on the eligibility of input tax credit. This description reflects how such orders are generally understood in practice, since the Act and the Rules do not use the expression ‘NIL demand order’.
The Portal Barrier
Form GST APL-01 asks the appellant to state the amounts in dispute under each head. According to practitioner commentary, the portal compared the disputed amount with the demand amount recorded for the order and rejected the form if the disputed amount was higher.¹⁰ Where the recorded demand is zero, any disputed amount is higher than the demand, and the portal therefore refused the appeal.
Practitioners also reported a workaround: taxpayers sought rectification of the order so that a demand amount appeared. That route has its own cost. It depends on the officer’s cooperation, it takes time, and the period of limitation under section 107 continues to run while the taxpayer waits. A right that depends on a rectification, which the officer may or may not grant, is weaker than the right the section describes.
The GSTN Advisory of 7 September 2026
On 7 September 2026, the GSTN issued an advisory titled Enabling Filing of Appeals in Cases Involving NIL or Zero Demand Amount.¹¹ The advisory addresses cases where a dispute about liability exists, the order shows the demand as NIL or zero, and the taxpayer made the payment before the order was issued.
It states that the earlier validation which restricted the filing of an appeal against such orders has been removed, so that an appeal can now be filed in Form GST APL-01. It also advises taxpayers who face difficulty to raise a ticket with the GST Helpdesk.
Three features of the advisory should be noted:
- It is limited to payment made before the order.
- It deals only with the portal validation.
- It does not purport to amend the Act or the Rules.
Analysis
1. Appealability Turns on the Order, Not on the Outstanding Demand
Read with the text of section 107(1), the advisory corrects an error in implementation and does not create a new right. The right arises when an adjudicating authority passes an order and the taxpayer is aggrieved by it.
An order that finds liability and shows a NIL balance only because the taxpayer has already paid is still an order that aggrieves. The loss is real: the money has left the taxpayer’s account, and the finding stands on the record, with consequences for later proceedings, for the taxpayer’s input tax credit position and for any claim that depends on the outcome of the dispute.
2. A Technical Validation Cannot Narrow a Statutory Right
Tax may be levied and collected only under the authority of law.¹² The same discipline should apply to the procedure for challenging it.
A portal is an instrument for giving effect to the statute. When a validation built into the portal prevents the exercise of a right that the statute gives, it is the validation that has to give way. The GSTN’s decision to remove it is consistent with that position.
3. Questions the Advisory Leaves Open
3.1. Limitation
The first question is limitation. The advisory is silent on the time limit. Section 107(1) allows three months from communication of the order, with a further month available on sufficient cause.¹³
A taxpayer who could not file earlier because of the portal block cannot assume that the lost time will be excused. Whether the Appellate Authority will treat the portal block as sufficient cause is left to its discretion, and the extension that the statute permits is limited to one month.
3.2. Pre-Deposit
The second question is the pre-deposit. Section 107(6) conditions the appeal on payment of the admitted amount and a percentage of the remaining tax in dispute.
The taxpayer in the NIL demand case has already paid the disputed tax while disputing the liability. Neither section 107 nor the advisory says expressly how that earlier payment is to be counted towards the pre-deposit.
A reasonable reading is that an amount already paid on the same liability should not have to be paid again. That reading is not stated in the advisory, and a taxpayer should not assume that it will be accepted without confirmation.
3.3. Effect of the Earlier Payment on the Merits
The third question is the effect of the earlier payment on the merits. The advisory does not say whether a voluntary payment made through Form GST DRC-03 may be read against the taxpayer as an admission.
In the author’s view, payment alone should not be read as an admission where the taxpayer’s reply disputes the liability. The point is fact-sensitive, however, and the contents of the reply and of the payment intimation will matter.
Practical Implications
Steps for Taxpayers
For taxpayers, the first step is to note the date on which the order was communicated and to calculate the limitation period at once.
The notice, the reply, the DRC-03 acknowledgement and the order should be preserved together. The grounds of appeal should be specific, and should point to the part of the order that is disputed and the reason.
If the portal still rejects the form, a Helpdesk ticket should be raised and screenshots of the error kept.
Lessons for the Department and the GSTN
For the department and the GSTN, the episode is a reminder that validations must be tested against the statute before they go live.
A rule written into software acts as a rule of law for the user. Where it departs from the Act, the user has no immediate remedy except to ask for a fix, and the limitation period does not wait for that fix.
Conclusion
The right of appeal under section 107 depends on an adverse order and a person aggrieved by it. The amount shown as outstanding is not part of that test.
The removal of the portal validation brings practice in line with the statute. The open questions on limitation, pre-deposit and the effect of the earlier payment should be settled by a clarification from the Central Board of Indirect Taxes and Customs or by the Appellate Authorities in individual cases.
Until then, taxpayers should file within the ordinary limitation period and build the record with care.
Endnotes
- Goods and Services Tax Network, Advisory titled ‘Enabling Filing of Appeals in Cases Involving NIL or Zero Demand Amount – reg.’ (7 September 2026), published on the GST Portal.
- Central Goods and Services Tax Act 2017, s 107(1).
- Central Goods and Services Tax Act 2017, s 107(4).
- Central Goods and Services Tax Act 2017, s 107(6).
- Central Goods and Services Tax Act 2017, s 107(7).
- Central Goods and Services Tax Rules 2017, r 108.
- Central Goods and Services Tax Act 2017, ss 73, 74 and 74A.
- Central Goods and Services Tax Rules 2017, r 142.
- Central Goods and Services Tax Rules 2017, r 142 (summary of order in Form GST DRC-07).
- Practitioner commentary on the advisory, published on tax news portals in September 2026.
- GSTN Advisory dated 7 September 2026 (n 1).
- Constitution of India, art 265.
- Central Goods and Services Tax Act 2017, s 107(1) and (4).
