GST Appeal Pre-Deposit: What You Really Owe, and How to Get It Back
An adjudication order has confirmed a GST demand, and the three-month appeal clock is running. Before the appeal can even be filed, the portal wants money, and the question is how much.
Pay too little and the appeal is defective. Pay too much and working capital sits with the department for years. On 26 October 2026, CBIC issued Circular No. 259/05/2026-GST to settle exactly these points.
Quick answer: Pay in full whatever part of the order you accept, plus 10% of the tax you dispute (not interest or penalty). At GSTAT, pay another 10% of the tax the first appellate order confirmed and you still dispute. If you win, claim the refund in RFD-01 under 'on account of order'; a departmental appeal alone does not block it.
Contents
What must you pay before filing a GST appeal?
Section 107(6) of the CGST Act sets two conditions for filing an appeal to the Appellate Authority in FORM GST APL-01:
Admitted amount: the part of tax, interest, fine, fee and penalty arising from the order that you admit, paid in full.
Pre-deposit: 10% of the remaining amount of tax in dispute, subject to a maximum of ₹20 crore. The cap applies separately under the CGST and SGST Acts.
Once these are paid, section 107(7) deems recovery of the balance stayed. There is no stay application to make and no discretion to refuse it.
For a second appeal to the GST Appellate Tribunal in FORM GST APL-05, section 112(8) requires the admitted amount in full plus a further 10% of the remaining tax in dispute, in addition to the first-stage deposit, again capped at ₹20 crore. Section 112(9) then deems recovery stayed until the appeal is disposed of.
The appeal itself must be filed within three months of communication of the order (section 107(1)), extendable by one month for sufficient cause (section 107(4)). For the full route from notice to Tribunal, see GST dispute resolution: section 107 appeals and GSTAT.
Worked example: ₹56 lakh demand, two appeal stages
A trading company (illustrative) receives an order under section 73 confirming a demand of ₹56 lakh (CGST and SGST combined) on two issues.
Issue A, credit on a blocked item under section 17(5): tax ₹6 lakh, interest ₹1.8 lakh, penalty ₹0.6 lakh. The company accepts this.
Issue B, credit denied because suppliers did not file returns: tax ₹34 lakh, interest ₹10.2 lakh, penalty ₹3.4 lakh. The company contests this.
At the first appeal. Admitted amount: ₹6 lakh + ₹1.8 lakh + ₹0.6 lakh = ₹8.4 lakh, paid in full. Pre-deposit: 10% of ₹34 lakh = ₹3.4 lakh. Total paid to file: ₹11.8 lakh. Recovery of the remaining ₹44.2 lakh is deemed stayed.
After the first appeal. The Appellate Authority accepts part of the supplier evidence and cuts the Issue B tax to ₹20 lakh, deleting ₹14 lakh.
At GSTAT. The company appeals against the ₹20 lakh. The extra pre-deposit is 10% of ₹20 lakh = ₹2 lakh, on top of the ₹3.4 lakh already paid. Computing it on the original ₹34 lakh would mean ₹3.4 lakh, an overpayment of ₹1.4 lakh.
Practice guide for professionals
GST Notices, Demands & Appeals: a working guide to show cause notices, adjudication, section 107 appeals and GSTAT filings, with checklists. ₹299, or all four practice guides for ₹699.
Admitted amount vs tax in dispute: who decides?
The circular is clear that this is the taxpayer's call, made when the appeal is filed. The 'admitted amount' is the part of the order you accept and do not intend to challenge. Everything you contest is 'tax in dispute'.
The split is recorded in Table 14 of APL-01 and Table 20 of APL-05. Practical points:
Admit issue by issue. If you accept one issue, the interest and penalty linked to it are usually admitted too.
Do not admit an amount 'to be safe'. An admitted amount is, by definition, not under appeal.
If you contest only interest or only penalty on an issue, the tax on it is admitted, and the contested interest or penalty attracts no 10% deposit.
List any amount already paid through DRC-03 against this demand and show it in the appeal, so the same tax is not demanded twice.
If the order came after a weak reply to the notice, it is worth reading how to reply to a GST show cause notice before drafting grounds.
How is the GSTAT pre-deposit worked out?
This was the most contested point in practice. Some taxpayers were told to deposit 10% of the tax in the original order even after the first appeal reduced it.
Circular 259 answers it directly: for a GSTAT appeal, the 10% is computed on the liability confirmed by the Appellate Authority that the appellant disputes. In the example, that is ₹20 lakh, not ₹34 lakh.
Two further points follow from section 112(8):
The GSTAT deposit is in addition to the first-stage pre-deposit. The ₹3.4 lakh stays paid.
The ₹20 crore cap applies to the GSTAT deposit separately, per Act.
For filing mechanics, see GSTAT hearings and the APL-05 e-filing protocol.
Penalty-only orders: the 10% penalty rule
Finance Act, 2025 substituted the proviso to section 107(6) and inserted a proviso in section 112(8). From 1 October 2025, where an order demands only a penalty with no tax, the appeal needs 10% of that penalty, at each stage.
Earlier, a percentage deposit on penalty applied only to detention orders under section 129(3), at 25%. The Delhi High Court in Gaurav Jain v. Joint Commissioner (Appeals-II), CGST Delhi held that the new 10% does not apply where the show cause notice was issued before 1 October 2025. Check the SCN date before paying.
How do you get the pre-deposit back?
No special wording needed. The appellate order does not have to say that the pre-deposit is refundable.
File RFD-01. Use S. No. 7, 'on account of order', with the appellate order attached.
Departmental appeal is not a ground to deny. The refund is still payable unless the order is stayed by the Tribunal or a court.
Interest under section 115. Interest at the section 56 rate runs from the date of payment to the date of refund. Where you paid at both stages, each payment carries interest from its own date.
Remand. If GSTAT remands the matter to the adjudicating authority, the pre-deposit is refundable. On a partial remand, the upheld demand and its interest are recovered or adjusted first, and only the balance is refunded.
In the example, if GSTAT deletes the full ₹20 lakh, both deposits, ₹3.4 lakh and ₹2 lakh, are refundable, with interest from their separate payment dates.
Decision checklist before you pay
Is the order a tax demand, or penalty only? If penalty only, when was the SCN issued?
Which issues do you accept? List them, with tax, interest and penalty for each.
Is the disputed tax figure taken from the latest order (the appellate order, for GSTAT)?
Is the cap relevant? ₹20 crore per Act, at each stage.
Will you pay from the cash ledger or the credit ledger? Only output tax can come from the credit ledger.
Have earlier DRC-03 payments been linked to the demand and disclosed in the appeal?
Is the appeal within three months of communication, or within the one-month condonable period?
Common mistakes
Paying 10% of the whole demand, including interest and penalty.
Computing the GSTAT deposit on the original order instead of the appellate order.
Marking an amount as admitted and then arguing it in the grounds of appeal.
Paying a 10% penalty deposit on a pre-October 2025 SCN without considering Gaurav Jain.
Waiting for the department's appeal to be decided before claiming the refund.
Filing the refund under the wrong RFD-01 category, which delays processing.
A hearing often decides how much of the demand survives. See GST personal hearing under section 75.
Summary table
Point | First appeal (s.107) | GSTAT (s.112) |
|---|---|---|
Form | APL-01, Table 14 | APL-05, Table 20 |
Admitted amount | Pay in full | Pay in full |
Pre-deposit on tax | 10% of disputed tax | Further 10% of disputed tax confirmed by the Appellate Authority |
Cap | ₹20 crore per Act | ₹20 crore per Act |
Penalty-only order | 10% of penalty (SCN from 1 Oct 2025) | Further 10% of penalty |
Recovery of balance | Deemed stayed, s.107(7) | Deemed stayed till disposal, s.112(9) |
Refund route | RFD-01, 'on account of order' | RFD-01, 'on account of order' |
Frequently asked questions
What is the pre-deposit for a GST appeal?
Before filing an appeal under section 107, you must pay in full the part of the demand you admit, plus 10% of the remaining tax in dispute, capped at ₹20 crore each for CGST and SGST. For a GSTAT appeal under section 112(8), a further 10% of the tax still in dispute is payable, with the same cap.
Is the 10% pre-deposit calculated on interest and penalty?
No. The 10% is calculated on the disputed tax only. Interest, fine, fee and penalty count only to the extent you admit them, which you pay in full. The exception is an order demanding only a penalty, where 10% of the penalty is payable.
How much pre-deposit is needed at GSTAT if the first appeal reduced the demand?
Circular 259/05/2026-GST says the 10% for the Tribunal is computed on the liability confirmed by the Appellate Authority that you still dispute, not on the original order. It is payable in addition to the pre-deposit already paid at the first stage.
Can the pre-deposit be paid from the electronic credit ledger?
Yes, to the extent the pre-deposit is output tax. CBIC Circular 172/04/2022-GST clarified that the electronic credit ledger can be used for it. Interest, penalty, fees and reverse charge tax must be paid in cash.
Will I get the pre-deposit back if the department appeals against my win?
Yes. Circular 259/05/2026-GST says the refund is payable even if the department intends to appeal or has appealed, unless the favourable order is stayed by the Appellate Tribunal or a court.
How do I claim a refund of the GST pre-deposit?
File FORM GST RFD-01 under the category 'on account of order' (S. No. 7) after you receive the favourable order. The order does not need to say expressly that the pre-deposit must be refunded.
Is interest paid on a refunded pre-deposit?
Yes. Section 115 of the CGST Act allows interest at the rate specified under section 56 from the date of payment until the date of refund. Where you paid at both appeal stages, interest runs from each actual date of payment separately.
Related reading
Sources
CGST Act, 2017: sections 54, 56, 73, 107, 112, 115, 129 and 168; Finance Act, 2025, sections 129 and 130 (with effect from 1 October 2025); Finance (No. 2) Act, 2024 (₹20 crore cap); CBIC Circular No. 259/05/2026-GST dated 26 October 2026; CBIC Circular No. 172/04/2022-GST dated 6 July 2022; Gaurav Jain v. Joint Commissioner (Appeals-II), CGST Delhi (Delhi High Court, 2026). Figures in the example are illustrative. Educational content only, reflecting the law as of 31 October 2026; check the current law for your facts.
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