TaxTMI 
TaxTMI 
After a long wait of exactly nine years since introduction of GST in India on 01/07/2017, on the day when GST law enters the 10th year on 01/07/2026, the GSTAT benches all over India are expected to have appeals for disposal running in lakhs. These include direct appeals by taxpayer against orders passed under sections 107 and 108 as well as cases remanded by the jurisdictional high courts to adjudication or first appellate authorities, but still no relief is granted etc. It is also possible that at one point of time, the jurisdictional high courts may transfer cases or order preferring appeal before GSTAT and a rough estimate is that around 4,00,000 appeals are due for filing before GSTAT in the next two weeks.
Section 107 of the CGST Act, 2017 stipulates a pre deposit of 100% of admitted taxes with applicable interest as well as penalty and a sum of 10% disputed tax amount. It is pertinent to note that interest as well as penalty which is under dispute is directly proportional to the GST amount that is confirmed at final stage and accordingly, while making a pre deposit, when there is a disputed portion of GST, 10% of disputed GST subject to a maximum of twenty crores is sufficient to prefer the first appeal. Prior to 01/11/2024, the cap for maximum pre deposit was kept as twenty five crores which was amended as twenty crores with effect from 01/11/2024 as per sub section 6 of section 107. Sub section 7 grants relief to taxpayer on recovery of balance amount once the required pre deposit is made and the first appeal is duly filed.
The month of June 2026 is dedicated for second appeal in GSTAT and it is crucial to note that the required pre deposit amount is correctly paid before filing the second appeal. So far as section 107 is concerned, taxpayers with GST demand amount of more than 250 crores and who paid pre deposit under 107(6) prior to 01/11/2024 may adjust the excess pre deposit against the liability, if any or seek refund of the pre deposit. Some of the first appellate authorities have even rejected the appeal on the sole ground that pre deposit was made through electronic credit ledger. This is impermissible on two grounds. Pre deposit could be made through electronic credit ledger as only RCM payments, interest, late fee as well as penalty require payment from electronic cash ledger. In the second place, the appeal should not have been rejected and a deficiency memo could have been issued for and deficiency (in case it is there).
The doubt came on pre deposit on second appeal due to the amendment made in sub section 8 of section 112 with effect from 01/11/2024 which reduced the second pre deposit amount from twenty % to ten %. As the GSTAT was not functional as on 01/11/2024, all taxpayers who make necessary pre deposit for second appeal on or after 01/11/2024 may take 10 +10= 20 whereas for the pre deposits made prior to 01/11/2024, it was 20+10=30. However, in all cases the pre deposit at first as well as second level is refundable, when the appeal is decided in favor of the taxpayer.
A doubt rose as to whether 10+10=20 is correct with effect from 01/11/2024 as officers who pass first appeal orders (OIA) still continue to mention the required pre deposit as 20+10 only despite the amendment effective from 01/11/2024. Above all, the GSTAT portal also stipulates the pre deposit as 20 +10= 30 only, which is reproduced as it is.
Question: Are there any pre- deposit requirements for filing an appeal?
Answer: Yes. For appeals filed by taxpayers, a pre-deposit equal to 20% of the amount of tax in dispute (in addition to pre-deposit made at the first appeal stage) is required to be paid online in GSTN portal.
As this is contrary to the legal provisions, I made a call to the help center which is functional at GSTAT, Chennai Bench on 9092621818 and it was clarified over phone that the required pre-deposit is only 10+10 =20 and not 20+10=30.
The above information may be relevant for the concerned persons and it is appealed to all first appellate authorities to make 10% of disputed tax as the requirement for second appeal as against 20, which was correct only up to 31/10/2024. It is also appealed to GSTAT team to intervene immediately and make necessary corrections in the frequently asked questions portion in the GSTAT portal to correctly enlighten the viewers on the exact requirements on second pre deposit.