On 14 March 2026, GSTN issued an important advisory regarding the payment of pre-deposit while filing an appeal before the First Appellate Authority under GST. The advisory addresses a common issue faced by taxpayers who had already made payments during investigation but were still asked by the GST portal to deposit the pre-deposit again while filing the appeal.

This clarification is particularly relevant for taxpayers who made voluntary payments through Form GST DRC-03 during investigation proceedings.

In this article, we will understand:

What the advisory says
Why taxpayers were asked to pay pre-deposit again
The role of DRC-03 and DRC-03A
How to correctly adjust payments while filing an appeal

Background: Pre-Deposit Requirement in GST Appeals

Under the GST law, when a taxpayer files an appeal before the First Appellate Authority against a demand order, certain payments must be made before the appeal is admitted.

The taxpayer must pay:

100% of the admitted tax liability, and
10% of the disputed tax amount as mandatory pre-deposit (subject to maximum limit).

Without paying this pre-deposit, the appeal cannot be filed or admitted by the appellate authority.

Problem Faced by Taxpayers

In many cases, taxpayers make voluntary payments during investigation or audit using Form GST DRC-03.

Later when the department issues a demand order (for example through Form GST DRC-07), the taxpayer files an appeal.

However, taxpayers noticed a problem:

Even though they had already paid sufficient amount through DRC-03, the GST portal still asked them to pay the pre-deposit again while filing the appeal.

This created confusion and unnecessary financial burden.

Why GST Portal Asked for Pre-Deposit Again

The advisory explains the technical reason behind this issue.

When a demand order is issued:

A Demand ID is generated in the Electronic Liability Register on the GST portal.

If a taxpayer pays using “Payment towards Demand” option, the payment is automatically linked to that Demand ID.

However:

Payments made through Form GST DRC-03 are not automatically linked to any Demand ID.

Because of this:

The GST system does not recognise such payment while calculating the pre-deposit requirement during appeal filing.

As a result, the portal still shows the pre-deposit as unpaid.

Solution Provided by GSTN – Use Form GST DRC-03A

To resolve this issue, GSTN has advised taxpayers to use Form GST DRC-03A.

Form DRC-03A is used to link the payment made through DRC-03 with a specific Demand ID.

Once the payment is linked:

The amount gets reflected in the Electronic Liability Register, and
The GST system recognises that the required amount has already been paid.

After linking through DRC-03A, taxpayers will not be required to pay the pre-deposit again while filing the appeal.

When Will the GST Portal Ask for Payment?

While filing the appeal, the GST system automatically calculates the required amount:

Required amount =
Admitted Tax + Mandatory Pre-Deposit

The portal then checks the Electronic Liability Register.

Two situations may arise:

1️⃣ If Payment Already Covers Required Amount

If the payment linked to the Demand ID is equal to or more than the required amount, the portal will allow the appeal to be filed without any additional payment.

2️⃣ If Payment Is Less Than Required Amount

If the payment recorded against the Demand ID is less than the required amount, the portal will ask the taxpayer to pay the balance pre-deposit amount before filing the appeal.

How to Link DRC-03 Payment with Demand Order

Taxpayers who already paid through Form GST DRC-03 must follow this process:

Log in to the GST portal
Open Form GST DRC-03A
Enter the reference number of the DRC-03 payment
Provide the Demand Order ID
Verify and submit the form using DSC or EVC

Once submitted successfully:

The payment gets mapped to the demand order, and
The system recognises it for pre-deposit calculation.

Practical Example

Suppose:

Demand order issued: ₹10,00,000

Taxpayer already paid during investigation via DRC-03: ₹2,00,000

Required pre-deposit for appeal:

10% of disputed tax = ₹1,00,000

But if the ₹2,00,000 payment through DRC-03 is not linked with the demand order, the GST portal will still ask for ₹1,00,000.

However, if the taxpayer files DRC-03A, the system will recognise that sufficient payment has already been made and no additional payment will be required.

Important Points for Taxpayers

Taxpayers should keep the following points in mind:

✔ Payments made through DRC-03 are not automatically linked to demand orders.
✔ Such payments must be linked through DRC-03A.
✔ Without linking, the GST portal may ask for additional pre-deposit payment.
✔ Linking ensures correct adjustment of earlier payments during appeal filing.

Impact of the Advisory

This advisory is important because:

It resolves confusion faced by taxpayers during appeal filing.
It prevents duplicate payment of pre-deposit.
It clarifies the correct procedure for adjusting voluntary payments made during investigation.

Tax professionals and businesses involved in GST litigation should ensure that all earlier payments made through DRC-03 are properly linked before filing appeals.

Conclusion

The GST advisory issued on 14 March 2026 clarifies that payments made through Form GST DRC-03 must be linked to the relevant demand order using Form GST DRC-03A before filing an appeal.

Failure to do so may result in the GST portal asking for the pre-deposit again, even if the taxpayer has already paid the required amount earlier.

Therefore, taxpayers planning to file an appeal should carefully review their payment records and ensure that all payments are properly linked to the demand order in the GST system.

✔ This advisory will help reduce confusion and ensure smoother filing of appeals before the First Appellate Authority under GST.

Disclaimer

The contents of this article are for general informational purposes only and are intended to provide quick access to tax rate information. Readers are advised to verify the provisions with the Income-tax Act, relevant rules, notifications, and official government sources before making financial decisions.

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