Answer

GST

Pre-deposit for a GST tax demand appeal

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  1. Facts

    No, you do not pay the full demand. You pay in full the part you admit, plus 10 percent of the disputed tax. The 10 percent is capped at Rs 20 crore each under CGST and SGST. Interest and penalty linked to tax are not part of the 10 percent.

  2. Provisions and law

    • Sec 107(6), CGST Act 2017Appeal is admitted only on payment of admitted dues in full and 10 percent of disputed tax, subject to a cap
    • Sec 107(7), CGST Act 2017On payment of the pre-deposit, recovery of the balance is deemed stayed

  3. Analysis

    Example: demand order for Rs 10 lakh tax, Rs 4 lakh interest and Rs 1 lakh penalty. You admit nothing. Pre-deposit is 10 percent of Rs 10 lakh, that is Rs 1 lakh, split by tax head as in the order. Once paid, recovery of the rest is stayed during the appeal. The cap was reduced from Rs 25 crore to Rs 20 crore by the Finance (No. 2) Act 2024.

  4. Conclusion

    1. Separate admitted and disputed amounts in the order
    2. Compute 10 percent of disputed tax by head
    3. Pay admitted amounts in full and the pre-deposit
    4. Enter these figures in APL-01

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