Pre Deposit and Refund in GST Appeal Case Liberalised

[GST Circular No. 259/05/2026-GST dated 26.10.2026]

The provided document details Circular No. 259/05/2026-GST issued by the Ministry of Finance on October 26, 2026, which clears up ambiguities regarding pre-deposits paid during the GST appeal process.

1. "Admitted Amount" vs. "Tax in Dispute"

· Admitted Amount: The portion of tax, interest, fees, or penalties from the original tax order that the taxpayer agrees they owe and does not want to challenge. This must be paid in full before filing any appeal.

· Tax in Dispute: The remaining liability that the taxpayer wants to contest. The mandatory 10% pre-deposit is calculated strictly using this disputed tax component.

· The taxpayer indicates their choice of what is admitted vs. disputed in Table-14 of FORM GST APL-01 (for Appellate Authority) or Table-20 of FORM GST APL-05 (for Appellate Tribunal).

2. Pre-Deposit Amount for Modified Liabilities

· If the Appellate Authority changes/reduces the original tax liability, and the taxpayer wants to appeal further to the Appellate Tribunal, the next 10% pre-deposit is computed based on the modified liability confirmed by the Appellate Authority, not the original order.

3. Rules for Refunding Pre-Deposits

· No Explicit Mention Needed: Appellate orders do not need to explicitly state that a pre-deposit must be refunded; a favourable order automatically entitles the taxpayer to a refund.

· Filing Form: Taxpayers must apply for the pre-deposit refund under Serial No. 7 of FORM GST RFD-01 using the category ‘on account of order’.

· Departmental Appeals: A refund cannot be blocked simply because the Tax Department intends to or has filed a counter-appeal against the favourable decision, unless they secure a formal stay order from a Court or the Tribunal.

· Interest Computation: If interest is due on the refund under Section 115, the date of payment for calculation is tracked separately for each level of appeal based on the actual dates the respective payments were made.

4. Refund Procedure in Remand Cases

· Full Remand: If the Tribunal sends the case back to the original officer for a fresh look, the taxpayer is eligible for a full refund of the pre-deposit within the standard prescribed timelines.

· Partial Remand: If only a portion of the tax demand is sent back and some liability is upheld in favour of the tax department, the pre-deposit will first be adjusted against the confirmed tax demand and applicable interest before the remaining balance is refunded.