Introduction

Many taxpayers have recently encountered a technical and procedural issue while trying to file appeals on the GST portal. The problem arises when an adjudication order reflects a “NIL” demand, even though the taxpayer disputes the tax liability.

This issue has been officially acknowledged by the Goods and Services Tax Network (GSTN), and it primarily affects cases where payments were made during the Show Cause Notice (SCN) stage without accepting liability.

Why Does This Issue Occur?

In several cases, taxpayers make voluntary payments (tax, interest, or penalty) during the SCN stage to avoid further complications. However:

• These payments are often made without admitting liability
• The adjudicating officer may treat this payment as full settlement
• As a result, the final order is issued with a “NIL” demand

This creates a mismatch between the taxpayer’s intent (to contest) and the system’s interpretation (case closed).

How the GST Portal Handles This

When a demand order is issued, the GST portal generates a Demand ID in the Demand and Collection Register (DCR).

• If the order shows NIL demand, the system records zero liability
• While filing an appeal (Form APL-01), the system checks the disputed amount
• Since the demand is zero, the portal throws an error like:

“Disputed amount cannot be more than demand amount itself.”

This effectively blocks the taxpayer from filing an appeal.

Legal Position – What Taxpayers Should Know

Under Section 107 of the CGST Act:

• Making payment during the SCN stage does NOT mean acceptance of liability
• Taxpayers retain the right to appeal
• Even if payment is made, the dispute can still be legally contested

However, due to incorrect NIL reflection in the system, this right becomes difficult to exercise.

Recommended Solution by GSTN

To resolve this issue, GSTN has suggested an alternative approach:

Step 1: Apply for Rectification

• Taxpayers should approach the adjudicating authority
• File a rectification request through the GST portal

Step 2: Get Correct Demand Reflected

• The authority will issue a rectification order
• This order will properly record the actual demand amount

Step 3: File Appeal

• Once the corrected demand appears in the system
• The taxpayer can proceed to file an appeal using APL-01

Important Points to Keep in Mind

• Always maintain documentation showing that payment was made without admission of liability
• Act within the prescribed timelines for both rectification and appeal
• Regularly track updates on the GST portal to avoid missing deadlines

Conclusion

While the GST system aims to streamline compliance, situations like NIL demand orders can create practical challenges for taxpayers. The key takeaway is that your right to appeal still exists, even if the system temporarily restricts it.

By following the rectification process, taxpayers can ensure that their disputes are properly recorded and legally pursued.