| ADVISORY CIRCULAR Link DRC-03 Payment with DRC-03A for Recognition in Appeal Pre-Deposit Calculation — GSTN Advisory Based on GSTN Portal Advisory | March 2026 |
| Circular Ref. | MC / GST / CIR / 2026-03 |
| Subject | Pre-deposit via Form GST DRC-03 — Filing Form GST DRC-03A is Mandatory Before Appeal |
| Issued by | Mohan & Chandrasekhar, Chartered Accountants |
| Date | March 2026 |
| Applicability | All GST-registered taxpayers who have paid amounts via Form GST DRC-03 against demand orders and intend to file appeals before the First Appellate Authority |
1. Background — The Problem Taxpayers are Facing
A recurring practical difficulty has been flagged by the GSTN (Goods and Services Tax Network) which affects taxpayers who have made payments through Form GST DRC-03 during the course of investigation, scrutiny, or audit proceedings — and who subsequently wish to file an appeal against the demand order passed after such proceedings.
The typical situation is as follows:
- During investigation, search, or audit, the taxpayer makes a payment through Form GST DRC-03 — either voluntarily or under pressure, to demonstrate bonafides.
- A formal demand order is thereafter issued in Form GST DRC-07 by the adjudicating authority.
- The taxpayer decides to challenge the demand order and files an appeal before the First Appellate Authority (Appellate Deputy Commissioner / Additional Commissioner of CGST Appeals).
- To file the appeal, the GST portal mandates payment of a pre-deposit (as required under Section 107(6) of the CGST Act, 2017), computed as the admitted tax amount plus 10% of the remaining disputed amount (subject to caps under the respective provisions).
- Even though the taxpayer has already paid more than the required pre-deposit amount through Form GST DRC-03, the portal does not recognise that earlier payment and demands fresh payment of the pre-deposit.
This has led to double payments, liquidity stress, and unnecessary disputes. The GSTN Advisory clarifies the root cause and provides a definitive solution.
2. Root Cause — How the Electronic Liability Register Works
To understand why this problem occurs, it is necessary to appreciate how payments are tracked in the GST portal’s Electronic Liability Register.
2.1 Payment through ‘Payment Towards Demand’ Functionality
When a demand order in Form GST DRC-07 is issued, a unique Demand ID is generated and posted in Part II of the Electronic Liability Register on the GST portal. If the taxpayer subsequently makes a payment using the portal’s dedicated ‘Payment Towards Demand’ functionality, such payment is automatically mapped to the Demand ID and reflects as a credit against the specific demand in the liability register. Accordingly, at the time of filing the appeal in Form GST APL-01, the system automatically recognises this payment and adjusts it against the required pre-deposit, thereby allowing the appeal to be filed without any further payment.
2.2 Payment through Form GST DRC-03
However, payments made through Form GST DRC-03 are treated differently by the system. Such payments are not automatically linked to any specific Demand ID. They are recorded in the portal as standalone payments under DRC-03, without any mapping to the Electronic Liability Register entry corresponding to the demand. Consequently, when the portal calculates the pre-deposit requirement at the time of filing the appeal, it finds no payment recorded against the Demand ID and computes the full pre-deposit as outstanding — even if the taxpayer has already paid far more than the requisite amount.
| ⚠ IMPORTANT ALERT Form GST DRC-03 payments are NOT automatically linked to a Demand ID. Unless a specific linking step is completed, the GST portal will not recognise such payments as pre-deposit, and will insist on fresh payment at the time of filing the appeal. |
3. The Solution — Form GST DRC-03A
The GSTN Advisory prescribes a clear and straightforward solution to this problem: the taxpayer must file Form GST DRC-03A on the GST portal to link the DRC-03 payment to the corresponding Demand ID.
Once Form GST DRC-03A is filed:
- The payment made through DRC-03 gets mapped to the specific Demand ID created upon issuance of the demand order in Form GST DRC-07.
- An entry for the linked payment becomes available and visible in the Electronic Liability Register (Part II) against the relevant Demand ID.
- At the time of filing the appeal in Form GST APL-01, the system recognises this linked payment and treats it as satisfaction of the pre-deposit requirement.
- The taxpayer is not required to make any additional payment for the pre-deposit, provided the DRC-03 payment (after linking via DRC-03A) is equal to or greater than the required pre-deposit amount.
This is a simple but critically important procedural step that taxpayers and their consultants must complete before approaching the First Appellate Authority.
4. Step-by-Step Process — From Demand to Appeal
| 1 | Demand Order (Form GST DRC-07) is issued — a Demand ID is created in Part II of the Electronic Liability Register on the GST Portal. |
| 2 | Taxpayer has paid amounts through Form GST DRC-03 during investigation / voluntarily before adjudication. |
| 3 | File Form GST DRC-03A on the GST Portal to link the DRC-03 payment to the specific Demand ID. |
| 4 | The linked payment now reflects in the Electronic Liability Register against the Demand ID. |
| 5 | File Appeal in Form GST APL-01 — the system recognises the pre-deposit and does not ask for further payment. |
5. Legal Framework — Pre-Deposit Requirements Under the GST Law
For completeness, the relevant statutory provisions on pre-deposit are briefly summarised below:
Section 107(6) of the CGST Act, 2017
No appeal shall be filed before the First Appellate Authority unless the appellant has paid:
- In full, the admitted amount of tax, interest, fine, fee, and penalty arising from the impugned order; and
- A sum equal to ten percent (10%) of the remaining amount of tax in dispute arising from the said order (subject to a maximum of Rs. 25 crores for CGST and an equal amount for SGST/UTGST).
Practical Note: Many taxpayers pay amounts through DRC-03 during the course of proceedings, which in many cases exceeds the admitted tax and the 10% pre-deposit. In such situations, provided Form GST DRC-03A is filed to link these payments to the Demand ID, no further outflow is required at the time of filing the appeal.
6. Checklist for Taxpayers — Before Filing Appeal in Form GST APL-01
| # | Checklist Item | Status |
| 1 | Obtain copy of demand order (Form GST DRC-07) and note the Demand ID from Part II of the Electronic Liability Register. | [ ] |
| 2 | Identify all payments made through Form GST DRC-03 against the subject demand proceedings. | [ ] |
| 3 | File Form GST DRC-03A on the GST portal to link each DRC-03 payment to the relevant Demand ID. | [ ] |
| 4 | Verify that the linked payment is now reflected in the Electronic Liability Register against the Demand ID. | [ ] |
| 5 | Compute the required pre-deposit (admitted amount + 10% of disputed amount, subject to caps). | [ ] |
| 6 | Confirm that the linked DRC-03A payment covers the total required pre-deposit amount. | [ ] |
| 7 | If the DRC-03A linked amount is insufficient, make the balance payment using ‘Payment Towards Demand’ functionality or Electronic Cash Ledger. | [ ] |
| 8 | Proceed to file appeal in Form GST APL-01 within the limitation period (3 months from date of communication of demand order). | [ ] |
7. Frequently Asked Questions
Q1. I paid through DRC-03 before the demand order was issued. Can DRC-03A still be filed?
Yes. Form GST DRC-03A can be filed to link DRC-03 payments irrespective of the timing of the payment — whether made before or after the demand order. The key requirement is that a Demand ID must exist in the Electronic Liability Register at the time of filing DRC-03A.
Q2. What if I have already made a fresh pre-deposit payment at the time of filing the appeal without filing DRC-03A?
In such cases, the taxpayer would have made a double payment. The excess amount may be available in the Electronic Cash Ledger and can be used for future tax payments. However, seeking a refund of excess pre-deposit is a complex process. It is therefore strongly advised to file DRC-03A before filing the appeal to avoid such situations.
Q3. Where can I find the procedure / manual for filing Form GST DRC-03A?
The detailed user manual for filing Form GST DRC-03A is available on the official GST portal at www.gst.gov.in under the ‘Help / User Manuals’ section. Taxpayers are advised to refer to the same or consult their GST consultant for step-by-step guidance.
Q4. Does this apply to appeals before the GST Appellate Tribunal or High Court as well?
The GSTN Advisory specifically addresses pre-deposit requirements under Section 107(6) for filing appeals before the First Appellate Authority. Appeals before the Appellate Tribunal (under Section 112) and High Courts involve different pre-deposit provisions and procedures.
| ✔ ACTION REQUIRED Taxpayers and their consultants must file Form GST DRC-03A on the GST portal to link any pre-existing DRC-03 payment to the relevant Demand ID before filing an appeal in Form GST APL-01 before the First Appellate Authority. Failure to do so will result in the portal mandating a fresh pre-deposit payment, even if sufficient amounts have already been paid through DRC-03. |
8. Disclaimer
This circular is prepared by Mohan & Chandrasekhar, Chartered Accountants, based on the advisory issued by GSTN. It is intended for general informational purposes for our clients and associates. It does not constitute legal advice and is not a substitute for professional consultation on specific facts and circumstances. Readers are advised to seek professional guidance before acting on the information contained herein. Laws and procedures are subject to change; this circular reflects the position as of the date of issue.
| For Mohan & Chandrasekhar Chartered Accountants CA Chandrasekhar Kutty Partner — GST & Indirect Taxation | Offices at: Hosur, Tamil Nadu Bengaluru, Karnataka | Chennai, Tamil Nadu |