Mohan & Chandrasekhar, Chartered Accountants
Hosur | Bengaluru | Chennai
GSTN Advisory
Ref: GSTN | April 3, 2026
Difficulty in Filing Appeals Where Demand Order Reflects “NIL” Amount
1. Background
GSTN has, vide its advisory dated April 3, 2026, brought to the notice of taxpayers a technical difficulty being faced on the GST portal while filing appeals (Form GST APL-01) in cases where the adjudication order reflects the demand amount as “NIL.”
This situation commonly arises when a taxpayer makes payment of tax, interest, or penalty at the Show Cause Notice (SCN) stage — without admitting the underlying liability — and the adjudicating authority thereafter issues a demand order treating such payment as full discharge of the demand, without explicitly determining and recording the tax liability.
2. How the Issue Manifests on the Portal
When a demand order is issued, the GST portal creates a Demand ID in the Demand and Collection Register (DCR). In cases where the order records a NIL demand, the DCR entry reflects zero outstanding liability.
Consequently, when the taxpayer attempts to file an appeal against such an order, the portal throws the following error:
| “Disputed amount cannot be more than demand amount itself.” |
Since the system reads the demand as NIL, the portal blocks the taxpayer from filing the appeal entirely.
3. GSTN’s Clarification on the Legal Position
GSTN has clarified the following in its advisory:
- Payment made at the SCN stage, without explicit admission of liability, does not amount to acceptance of the demand.
- The taxpayer retains the right to contest the liability and file an appeal under Section 107 of the CGST Act, 2017, notwithstanding such payment.
- Where the adjudication order incorrectly reflects a NIL demand, the taxpayer is unable to exercise this statutory right due to the system restriction.
4. Interim Solution Advised by GSTN
Pending a permanent portal fix, GSTN has advised taxpayers to adopt the following workaround:
- Approach the adjudicating authority and file a rectification request through the option available on the GST portal, seeking issuance of a rectification order that correctly reflects the demand amount.
- Upon receipt of the rectification order with the correct demand amount updated in the portal, proceed to file the appeal (APL-01) within the prescribed time limits.
5. Immediate Action Points for Taxpayers
Taxpayers who are in this situation should take the following steps without delay:
- Identify all cases where payment was made at the SCN stage without admission of liability and where the demand order reflects NIL.
- File a rectification request before the adjudicating authority at the earliest, specifically citing this GSTN advisory and requesting urgent disposal given the running limitation period for appeal.
- Preserve a screenshot of the portal error message as contemporaneous documentary evidence that the appeal was blocked due to a system restriction.
- Ensure that all future payments made at the SCN stage are accompanied by a clear written reservation of rights stating that payment is made “without prejudice to the right to contest the liability.”
M & C Perspective
While the GSTN advisory is a welcome acknowledgment of the problem, we wish to place on record a broader concern that this situation exemplifies.
The right of appeal under Section 107 of the CGST Act is a statutory right — one that Parliament has conferred upon every aggrieved taxpayer. No administrative instruction, departmental circular, or portal algorithm has the competence to abridge or deny this right. Yet, in the present case, a software-driven restriction has effectively blocked taxpayers from exercising a right that the law expressly guarantees.
This is, in our view, a classic instance of “portal law” substituting for statute law. The GST portal has, on more than one occasion across its years of operation, imposed procedural constraints that go beyond — and sometimes contradict — the statutory framework. Taxpayers and practitioners find themselves compelled to conduct their affairs not in accordance with the law, but in accordance with what the portal will accept.
The interim solution — seeking a rectification order from the very authority whose order is being challenged — is not without its own difficulties. It depends on the willingness and speed of the adjudicating authority, and creates a real risk of the limitation period for appeal expiring in the interim. The taxpayer is, in effect, made to run behind the system to remedy the system’s own deficiency.
We urge CBIC to issue a formal Circular clarifying that the limitation period for filing an appeal shall be reckoned from the date the portal restriction is removed (i.e., the date of the rectification order), and not from the date of the original adjudication order. Without such protection, a portal deficiency could permanently extinguish a taxpayer’s statutory right of appeal.
The law must govern the portal. The portal cannot be permitted to govern the law.
Mohan & Chandrasekhar, Chartered Accountants
Hosur | Bengaluru | Chennai
This communication is for general information and awareness of our clients. It does not constitute legal advice. For guidance specific to your matter, please reach out to our office.