Guidance on Filing Appeals Against "NIL" Demand Orders on GST Portal

Understanding the Challenge

The GSTN has observed that some taxpayers are encountering difficulties when trying to file appeals on the GST portal. This issue arises specifically when adjudication orders indicate a "NIL" demand amount, even though there's an ongoing dispute about the tax liability.

This situation commonly occurs when taxpayers have made a payment (covering tax, interest, or penalties) during the Show Cause Notice (SCN) phase, without explicitly acknowledging the liability. Subsequently, the adjudicating authority issues a demand order that reflects a "NIL" amount, considering the prior payment as a complete settlement without formally determining or recording the actual liability.

How the GST Portal Handles "NIL" Demands

When a tax officer issues a demand order, the GST portal creates a corresponding entry in the Demand and Collection Register (DCR), which acts as a liability ledger. If this demand order specifies a "NIL" amount, a zero-value entry is recorded, implying no outstanding liability.

Consequently, when a taxpayer attempts to file an appeal application (APL-01) against such an order, the portal prevents the submission. An error message, such as "Disputed amount cannot be more than demand amount itself," might appear. Since the tax officer has not reported any liability on the portal, the system blocks the appeal process.

Clarification on the Issue

It is important to clarify that:

• Making a payment during the SCN stage without explicitly admitting liability does not equate to accepting the demand.
• In such scenarios, taxpayers retain their statutory right to dispute the liability and file an appeal as per Section 107 of the Central Goods and Services Tax Act, 2017.

However, if the adjudication order inaccurately shows a "NIL" demand, taxpayers are unable to exercise this legal right due to the system's reflection of no outstanding demand.

Proposed Solution

For cases where a dispute over liability exists but isn't reflected in the department's demand order, especially if payment was made before the demand order was issued, taxpayers are advised to seek a rectification order from the adjudicating authority.

Taxpayers can submit these rectification requests through the designated option available on the GST portal. Once a rectification order is received, accurately reflecting the disputed demand amount, the taxpayer can then proceed to file their appeal on the GST portal within the stipulated timeframes.

Original Source: https://services.gst.gov.in/services/advisoryandreleases/read/655