GST Advisory on Nil Demand – Appeal Block Issue
GST Advisory on Nil Demand – Appeal Block issue has been issued on 04-04-2026.It has been observed that in certain cases, taxpayers face difficulty in filing appeals on the GST portal where the demand order reflects a “NIL” demand, despite the existence of a dispute regarding tax liability.This situation typically arises when the taxpayer, during the stage of issuance of the Show Cause Notice (SCN), makes payment of tax, interest or penalty—either fully or partially—without admitting the liability, often to mitigate interest exposure or avoid coercive recovery. Subsequently, while passing the adjudication order under Section 73 or 74 of the CGST Act, the proper officer treats such payment as full discharge of the demand and fails to explicitly determine and record the tax liability in the order. As a result, the demand gets reflected as “NIL” on the GST portal.
However, this creates a procedural anomaly because, in substance, the taxpayer continues to dispute the liability, and the order effectively operates against the taxpayer’s interest. Since the GST portal enables filing of appeal based on the demand amount reflected in the order, a “NIL” demand restricts the system from allowing proper filing of appeal under Section 107, thereby impairing the statutory right of appeal. Legally, payment made at the SCN stage without admission cannot be construed as acceptance of liability, and the adjudicating authority is obligated to pass a reasoned order determining the liability irrespective of such payment. The failure to do so results in a defective order, leading to a mismatch between the legal position and system functionality, and consequently causing hardship to taxpayers who are unable to pursue appellate remedies despite having a valid dispute.
When a tax officer issues a demand order, the GST portal automatically records it in the liability ledger (DCR) by generating a Demand ID. However, in cases where the officer shows the demand as NIL, the system records it as zero liability, meaning it assumes nothing is payable.Now, when the taxpayer tries to file an appeal (APL-01), the portal checks the demand amount recorded in the system. Since the demand is shown as zero, the system does not allow any disputed amount to be entered and throws an error like “Disputed amount cannot be more than demand amount itself.”
In simple terms, even though the taxpayer may have a genuine dispute, the system treats the case as if no tax is demanded at all, and therefore blocks the appeal filing. This creates a practical issue where the taxpayer is unable to challenge the order on the portal.It is clarified that if a taxpayer makes payment during the SCN stage without clearly accepting the liability, such payment should not be treated as agreement with the demand. The taxpayer still has full legal right to dispute the issue and file an appeal under Section 107 of the CGST Act, 2017.However, the problem arises when the adjudication order wrongly shows the demand as “NIL.” In such cases, although the taxpayer wants to challenge the liability, the GST portal treats the case as if no demand exists. Because of this, the system does not allow filing of appeal, effectively blocking the taxpayer from exercising their legal right, even though the dispute is still alive.
If a taxpayer has a genuine dispute about tax liability, but the demand order wrongly shows NIL demand (because payment was already made earlier), the system cannot recognize the dispute. In such cases, the taxpayer should first go back to the adjudicating authority and request a rectification of the order.This can be done through the rectification option available on the GST portal. The purpose of this request is to get the order corrected so that the actual demand is properly recorded, instead of showing NIL. Once the authority issues a rectified order with the correct demand amount, the GST portal will reflect the liability properly. After that, the taxpayer can file an appeal (APL-01) in the normal course within the prescribed time limit.
https://www.gst.gov.in/newsandupdates/read/655
GST Advisory on Nil Demand Issue
