GST Demand Order Appeal: A Complete Guide for Taxpayers

In today’s business world, staying compliant with tax regulations is crucial for smooth operations. However, navigating the Goods and Services Tax (GST) system can sometimes be challenging, especially when facing a demand order from tax authorities. These orders often stem from discrepancies in filings or perceived tax liabilities, which can be unsettling for businesses. Understanding how to address these issues and appeal against such orders is vital for a fair resolution. This blog aims to walk you through the entire process of appealing a demand order under GST, providing clarity and actionable steps.

What Is A Demand Order?

A demand order under GST is an official notice issued by tax authorities to inform a taxpayer about an outstanding tax liability. It specifies the amount due, including any interest, penalty, or late fee, and mentions the tax period and the relevant section of GST law under which it is raised. The notice also explains the reasons behind the demand.

Once a demand order is received, the taxpayer must pay the due amount within the specified time to avoid further penalties or legal actions. If the taxpayer disagrees with the demand, they have the option to file an appeal. This must be done within three months of receiving the notice.

The demand order applies to all taxpayers, whether registered under GST or not. However, if you believe the demand is incorrect, you can appeal to the relevant appellate authority within the given time frame.

How To File Appeal Under GST?

Before you go ahead and file the appeal, you need to be mindful of certain conditions. 

1. You can file an appeal with the Appellate Authority only if the adjudicating authority has issued an order. Without this order, the appeal process cannot begin.
2. Before filing an appeal, you must pay at least 10% of the disputed tax as a pre-deposit. However, this percentage may be reduced if the authorities allow it.
3. To appeal against a Demand Order, you can use a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). If you're filing as a company or LLP, using DSC is mandatory.
4. Also, ensure a PDF reader is installed on your device. Orders are usually shared in PDF format, and reviewing them carefully is essential before proceeding with the appeal.

Now, to file the first appeal against the demand order, you can follow the below-mentioned procedure-

Step 1: Log in to the GST portal and go to Services > User Services > My Applications.

Step 2: On the 'My Applications' page, select the application type as 'Appeal to Appellate Authority' and click 'New Application'. This will open the GST APL-01-Appeal to Appellate Authority page.

Step 3: Set the order type to 'Demand Order' and enter the order number. Then click Search to view the orders page.

Step 4: From the drop-down list, choose the categories of the case under dispute and click Add. If necessary, you can edit the date of communication and the dispute period.

Step 5: To upload the annexure to GST APL-01, click the 'Click Here' link on the orders page. Download the GST APL-01 template, update the details in the annexure, save it as AplAnnexureTemplate.pdf, and upload it.

Step 6: Click the 'Disputed Amount/Payment Details' button on the orders page to update the disputed amount and payment details. Enter the amount under dispute, classified under tax head, late fee, or interest. The system will auto-display the demand created and admitted.

(Note: Demand admitted = Demand created – Amount disputed)

Step 7: Enter the percentage for the pre-deposit (minimum 10% of the amount disputed). A lower percentage needs approval from the authority. The 'Details of Payment Required' table is auto-filled.

Step 8: Add details of the place of supply for the admitted demand and choose the payment method—cash or ITC from the electronic ledger.

Step 9: If necessary, upload supporting documents. Add a description for each file and upload it.

Step 10: Preview the application by clicking Preview. Download the PDF to verify all details.

Step 11: Once verified, select the declaration checkbox, choose the authorized signatory, and enter the place to proceed with filing.

Step 12: Click Submit and file using DSC or EVC. Upon successful submission, a confirmation message will appear.

How do you file a reply during an appeal proceeding?

The Appellate Authority can start proceedings and hold hearings to resolve an appeal or may call the appellant when reviewing the tax department’s appeal. To reply during an appeal, taxpayers need to follow these steps:

• Step 1: Log in to the GST portal.
• Step 2: Go to Services > User Services > View Additional Notices/Orders.
• Step 3: On the case details page, find your Case ID and click on the "Notice" tab.
• Step 4: Click the "Reply" option to open the page titled ‘Submit a reply to the notice.’
• Step 5: Upload your reply file and any supporting documents.
• Step 6: Check the confirmation box and click on the File Reply button.
• Step 7: A warning message will pop up. Click Proceed.
• Step 8: Submit your reply using DSC or EVC.

Once your reply is successfully uploaded, an acknowledgment will appear on the screen. 

How do you file a rectification request for an appeal?

Another possible scenario while filing an appeal against the demand draft in GST is where the issuance is right, but one or many details are incorrect. A rectification request allows taxpayers to correct any mistakes made in the order passed by the Appellate Authority. If there’s an error in calculation, misinterpretation of facts, or an oversight, a rectification request can be filed. To file one, you can follow these steps:

Step 1: Log in to the GST portal.

Step 2: Go to Services > User Services > View Additional Notices/Orders. Click 'View' on the 'Additional Notices/Orders' page to open the Case Details page.

Step 3: Next, click on the 'Orders' tab and select 'Initiate rectification'.

Step 4: The 'Initiate rectification' page will open. Select the reason for rectification and upload any necessary supporting documents. Then, click 'Initiate' to proceed.

Step 5: Finally, submit the request using DSC or EVC. After successful submission, a confirmation message with the rectification request number will appear.

How To Withdraw An Appeal Application?

Suppose, for some reason, you decided not to go ahead with the application. In that case, you can follow the mentioned steps to withdraw your application-

Step 1: To withdraw an appeal application, go to Services > User Services > My Applications. Select Appeal to Appellate Authority from the drop-down menu. Then, choose the period you want to view applications by clicking the calendar icon in the From Date and To Date fields.

Step 2: Click the Search button. The search results will appear. Click the ARN hyperlink for the appeal you want to withdraw.

Step 3: On the Case Details page, go to the Withdrawal Application tab. Click Apply for Withdrawal and select Application for Withdrawal.

Step 4: Choose the reason for withdrawal and click the Add button. You can select multiple reasons from the drop-down menu. Upload the required documents and enter/select the Declaration details. Click Submit.

Note: You can select the reason for withdrawal from the provided list.

Step 5: Click Preview to view and download the PDF of the Application for Withdrawal of Appeal before submitting it.

Step 6: Sign the application using DSC or EVC. Once submitted, a success message will appear.

Note: If the appeal is withdrawn before admission, it is auto-approved. However, if it is withdrawn after admission, it will be sent to the Appellate Authority for approval.

• Case I: If no SCN has been issued after admission, the Appellate Authority can approve or reject the withdrawal.
• Case II: If an SCN is issued after admission, the Appellate Authority cannot approve the withdrawal and will reject it.

If the withdrawal is approved, the pre-deposited amount will be adjusted against the taxpayer’s liability, and the taxpayer must pay any remaining demand separately.

Conclusion

If you're facing a demand order under GST, knowing how to appeal is crucial. This allows you to challenge any unfair or incorrect tax demands made by the authorities. Understanding the reasons for the appeal, the process to follow, and the documents you'll need is key. It’s also a good idea to get help from a tax professional or legal expert. They can guide you through the complex process and ensure your appeal is handled correctly.

FAQs

Ans. After submitting the required documents and verification to the appellate authority, you’ll receive the final acknowledgment within 7 days. Once you get this acknowledgment with the appeal number, the appeal is officially filed.

Ans. The Appellate Authority may allow a one-month extension if the taxpayer can show a valid reason for the delay.

Ans. To check your GST appeal status, log in to the GST portal. Go to Services > User Services > My Applications, then view the details on your case page.