NIL Demand Orders, Portal Glitches and the Vanishing 90 Days: A Silent Threat to GST Appeals

By -

 


The GST Network has recently acknowledged a serious technical issue that directly affects a taxpayer’s right to appeal under section 107 of the CGST Act. Many taxpayers are finding themselves unable to file appeals on the portal where the adjudication order shows a “NIL” demand, even though a genuine dispute on tax liability still exists.

This situation typically arises when a taxpayer makes payment of tax, interest or penalty at the Show Cause Notice (SCN) stage. Such payments are often made to avoid further litigation, interest or coercive recovery, and do not necessarily amount to admission of liability. Yet, when the final order is passed, adjudicating authorities sometimes mechanically treat this pre‑deposit as full satisfaction of demand and record the liability as completely discharged. The result: the order reflects a “NIL” demand.

Once the order shows NIL, the GST portal auto‑populates the Demand and Collection Register with “zero” liability. When the taxpayer then attempts to file an appeal in Form APL‑01, the system throws up an error that the disputed amount cannot exceed the demand amount. Since the demand captured is zero, the system blocks the appeal altogether. The taxpayer is thus trapped in a classic catch‑22: there is a dispute, there is an order, there is a legal right of appeal – but the electronic gateway to exercise that right is shut.

Importantly, GSTN itself has clarified that payment at the SCN stage, without an express admission of liability, does not amount to acceptance of the demand. The taxpayer’s right to challenge the order remains intact in law. The problem lies not in the statute, but in the way the portal currently reads the data and freezes the workflow.

To unlock this, GSTN has suggested a workaround. Taxpayers are advised to approach the adjudicating authority and seek a rectification order so that the actual demand figure is correctly reflected instead of NIL. This rectification request can be made online using the functionality available on the portal. Once the rectified order is uploaded and the correct demand appears in the system, the appeal in Form APL‑01 can technically be filed within the prescribed time.

The hidden challenge: how rectification delays eat into the 90‑day appeal window

While this solution works on paper, it introduces a serious practical challenge: time. The CGST Act allows a fixed period (generally 3 months) from the date of communication of the order to file an appeal. That clock starts ticking from the original adjudication order – not from the subsequent rectification order issued just to correct the “NIL” demand entry.

In the real world:

  • Time is lost in identifying that the problem is not legal, but technical (portal rejecting the appeal due to zero demand).

  • More time is consumed in drafting, filing and pursuing the rectification request with the adjudicating authority.

  • Additional time may be taken by the authority to process the rectification, upload the revised order, and ensure the demand is correctly reflected in the system.

By the time the demand gets corrected, a substantial portion of the 90‑day appeal window may already have elapsed. In some cases, the rectification may be issued so late that the original limitation period has effectively expired, forcing the taxpayer to rely on condonation of delay – something that is never automatic and always uncertain.

Thus, what started as a “technical” impediment ends up having substantive consequences: the taxpayer’s statutory right of appeal is undermined by a combination of portal design and administrative delay. The system that was meant to facilitate ease of doing business ends up creating a new layer of litigation around limitation and condonation.

Key risks and pain‑points for taxpayers

  • Erosion of limitation period: Every day spent waiting for rectification silently chips away at the 90‑day appeal timeline, even though the taxpayer is not at fault.

  • Uncertainty around condonation: If the appeal is ultimately filed beyond the original limitation due to rectification delay, the taxpayer is exposed to objections and potential dismissal on grounds of limitation.

  • Inconsistent administration: Different officers may have different views on whether and how quickly rectification should be done, leading to uneven treatment across jurisdictions.

  • Increased compliance costs: Taxpayers must now handle an additional procedural leg – rectification – before even reaching the appellate stage, increasing professional time, cost, and effort.

What taxpayers should proactively do

  • Act immediately on receipt of order: As soon as an order with “NIL” demand is received despite an underlying dispute, taxpayers should not wait until the last weeks to test the portal. They should initiate rectification at the earliest.

  • Record a clear non‑admission: Where payments are made at SCN stage, taxpayers should clearly document that the payment is without prejudice and does not amount to acceptance of the proposed demand.

  • Maintain a limitation tracker: Internally track the 90‑day period from the date of the original order and flag any rectification‑related delays that could later support a condonation plea.

  • Preserve evidence of follow‑up: Keep screenshots, emails and letters showing that you promptly sought rectification and that the delay in issuing the corrected order lies with the department or the system, not with you.

Why this advisory matters

The advisory is a welcome acknowledgement of a genuine pain‑point that many taxpayers have been grappling with, often in silence. It clarifies that pre‑SCN payments do not extinguish the right to appeal and offers a procedural route to cure the portal defect. At the same time, it exposes a larger systemic issue: when technology drives procedure, even a small design flaw can have disproportionate impact on substantive rights such as the right to appeal.

Until the portal architecture is refined to allow appeals even where the demand is wrongly shown as NIL, taxpayers will have to navigate this two‑step process of rectification followed by appeal. The cost of delay – both in terms of time and risk to limitation – makes it imperative that businesses and advisors remain alert, act quickly, and build a robust documentation trail to safeguard their right to appeal.

- LDR


Comments

Post a Comment

Popular posts from this blog

Inter‑State GST Transit Under Scrutiny: AP High Court Draws a Clear Line on State Officers’ Powers

By -
Image
Andhra Pradesh High Court’s ruling in Golden Traders offers a strong precedent against overreach by State GST officers in cases of pure transit/inter‑State movement of goods, and it will be frequently cited in future detention/confiscation disputes. Context and factual background In Golden Traders & Others v. Deputy Assistant Commissioner of State Tax (WP No. 541/2026, AP High Court, order dated 01‑04‑2026), multiple consignments were intercepted while moving between two States outside Andhra Pradesh but physically passing through AP as a transit State. The vehicles carried valid tax invoices and e‑way bills, yet State officers invoked Sections 129 and 130 of the CGST/APGST Acts alleging undervaluation and possible tax evasion, and proceeded to issue MOV‑06/MOV‑10/MOV‑11 orders proposing confiscation and penalty. Petitioners argued that the movement was an inter‑State supply governed by the IGST Act 2017 and that AP officers, appointed under the APGST Act, had no jurisdiction over...
Read more

Retrospective Amendment of Section 17(5)(d) Does Not Overturn Apex Court Judgment: Key Insights

By -
Image
 The lifeline of the GST framework lies in the context of Input Tax Credit (ITC), moreover, on the principle of eligibility — a principle that becomes even more nuanced when businesses undertake expansion projects. The landmark case of Safari Retreats has served as a turning point, bringing clarity to the treatment of ITC in scenarios involving blocked credits. It has illuminated the judicial interpretation around the eligibility of ITC, especially with respect to immovable property. A significant development is that the Apex Court has broadened the definition of “plant” to include land, buildings, machinery, apparatus, and fixtures — all seen as instrumental to the operation of a trade or business undertaking. The Court further explained that a plant encompasses the totality of facilities available for production or service, including the physical infrastructure of an institution. This interpretation underlines that where such components are essential to a business’s functioning, ...
Read more

Tracing the impact of Circular No. 170/02/2022 to GSTR-9 for FY 2022-23

By -
Image
 The purpose this circular No.170/02/2022 was to clarify mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B and statement in FORM GSTR-1. The category of changes suggested are broadly in lines of : Changes relating to supplies through E-commerce operators Changes relating to reporting of inter-state supplies Changes relating to ITC Over this blog, we attempt to trace the changes relating to ITC on to respective rows of GSTR 9 for FY 2022-23. Clarification as such on these lines not available elsewhere, so its to be understood as our  personal view only for any wider consumption for application as such. Vide this  circular No.170/02/2022  para 4, the following key points were instructed: Presently, Table 4A of GSTR-3B contains the details of various ITC being claimed. Table 4B contains details of various reversals. Table 4C, i.e. the difference...
Read more