Stay on Recovery of Demand till Appellate Tribunal Comes into
Operation
Introduction
Under the Goods and
Services Tax (GST) framework, taxpayers have a clear right to appeal against
any demand or penalty imposed by tax authorities. First, they can file an
appeal before the First Appellate Authority under Section 107 of the
CGST Act. If they remain dissatisfied, they can further appeal to the GST
Appellate Tribunal under Section 112.
However, since the GST
Appellate Tribunal is yet to be operational, taxpayers cannot file a second
appeal. This gap created uncertainty about whether tax officers could proceed
with recovery after three months from the first appellate order.
To address this, the CBIC
issued Circular No. 132/2/2020-GST and Circular No. 224/18/2024-GST,
offering clear relief to taxpayers and now, with Form GST DRC-03A
available on the GST portal, the process has become more structured.
Background
- Circular No. 132/2/2020
clarified that the time limit to file an appeal before the Tribunal will
start from the date the Tribunal’s President or State President assumes
office.
- Circular No. 224/18/2024
introduced a mechanism for taxpayers to pay the pre-deposit under
Section 112(8) and get a stay on recovery under Section 112(9)
until the Tribunal is functional.
- Now, with Form GST DRC-03A
available, taxpayers who have already paid through DRC-03 can
formally adjust those payments against demand orders to count as
pre-deposits.
How to
Avail Stay on Recovery
If the First Appellate
Authority confirms the demand (fully or partially), here’s the relief process:
1. Pay the Pre-Deposit
- Section 112(8) requires:
- 10% of the disputed tax (in addition
to the 10% paid at the first appeal stage under Section 107(6)) as
pre-deposit for Tribunal appeal.
- Payment can be made:
- Via GST portal → Services →
Ledgers → Payment towards Demand
- Or, if already paid through DRC-03,
adjust it via Form GST DRC-03A.
2. File an Undertaking
- Submit a written declaration to the
jurisdictional officer stating:
- You will file an appeal before the
Tribunal once operational.
- The appeal will be filed within the
timelines under Section 112 read with the Ninth Removal of
Difficulties Order, 2019.
3. Recovery Stay
- Once the pre-deposit is paid and
undertaking is given:
- Recovery of the remaining demand
will be stayed till the Tribunal decides the case.
Using Form
GST DRC-03A (Now Available)
Form GST DRC-03A helps
taxpayers allocate payments made in DRC-03 (under ‘Voluntary’ or
‘Others’) towards specific demand orders such as DRC-07, MOV-9, APL-04, etc. This
ensures the payment is recognized as a pre-deposit, enabling a stay on
recovery.
Step-by-Step
Process to File DRC-03A
1. Log
in to GST Portal → Services → User Services → My
Applications → FORM GST DRC-03A.
2. Enter
DRC-03 Details → Input DRC-03 number → Search.
3. Select
Demand Order → Choose the relevant demand from the
drop-down list.
4. Adjust
the Demand → Allocate cash and/or credit balances from DRC-03
against the demand.
5. Verify
& Validate → Check all details, then validate.
6. Upload
Supporting Documents (if any).
7. Sign
Undertaking & Verification → Confirm correctness.
8. Preview
& Submit → File via DSC or EVC.
9. Acknowledgment
→ The adjustment reflects in the Electronic Liability Ledger.
Note:
One DRC-03 payment can be adjusted against multiple demands, or multiple DRC-03
payments can be applied to one demand.
What If
Taxpayer Does Not Comply?
- No pre-deposit or undertaking
→ Recovery can proceed after 3 months from appellate order.
- Tribunal becomes operational & no
appeal filed in time → Recovery resumes.
Practical
Tips
1. Act
quickly after receiving the first appellate order to avoid
coercive recovery.
2. If
payment already made through DRC-03, immediately file DRC-03A to adjust it as
pre-deposit.
3. Keep
records of the undertaking submitted to the officer.
Conclusion
The CBIC’s clarification
and the availability of Form GST DRC-03A ensure taxpayers are not
penalized for procedural gaps caused by the non-constitution of the GST
Appellate Tribunal. By paying the pre-deposit and filing the undertaking, along
with adjusting past payments via DRC-03A, taxpayers can secure a legal stay on
recovery until their appeal is heard — promoting fairness and procedural
justice under GST.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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