How-to · Tax · GST
How to Handle a GST Demand Order (2026)
A GST demand order can look alarming, with tax, interest and penalty all rolled into one figure. But it is not the last word. It is an adjudication order that you can pay, or challenge through a defined appeal route with its own deadline and pre-deposit. The mistakes that cost businesses most are missing the appeal window and misreading what the order actually demands. This guide, for businesses, finance teams and their advisers, sets out how to read a demand order, the deadline, whether to pay or appeal, and how to file the Section 107 appeal correctly. It is general information, not legal advice. Last verified October 2026.
- What it is: an adjudication order confirming tax, interest and penalty, usually under Section 73 (no fraud) or Section 74 (fraud alleged).
- First appeal: to the Appellate Authority under Section 107, generally within 3 months of the order, condonable by 1 further month.
- Pre-deposit: the admitted amount in full plus 10% of the disputed tax under Section 107(6), subject to a cap you should confirm.
- Section 74 defence: contest the fraud or suppression allegation, which if removed cuts the higher penalty; check if Section 74A applies to your period.
- Onward: if the first appeal fails, the GST Appellate Tribunal under Section 112, then the High Court and Supreme Court.
01The short answer
A GST demand order is an adjudication order confirming tax, interest and penalty, usually under Section 73 where there is no fraud, or Section 74 where fraud or suppression is alleged. If you disagree, your remedy is an appeal to the Appellate Authority under Section 107, which must generally be filed within 3 months of the order, extendable by up to 1 more month for sufficient cause.
To file, you must make a pre-deposit: the admitted amount in full, plus 10% of the disputed tax under Section 107(6). If the first appeal fails, the next step is the GST Appellate Tribunal under Section 112. The two things that matter most are the deadline and the pre-deposit, because missing either can shut out even a strong case.
02First, read the order properly
Before deciding anything, understand exactly what the order says. Check:
- The amount, split into tax, interest and penalty, and the periods it covers.
- The section it is passed under, 73 or 74, because that changes the penalty and the stakes.
- The grounds, what the department says you did wrong, such as a disallowed credit or a short payment.
- The date of communication, because your appeal clock runs from it.
A careful reading often shows that part of the demand is wrong or overstated, and tells you how strong an appeal would be. Do not treat the headline figure as final.
03Section 73 or Section 74
The section the order is passed under changes everything:
| Section 73 | Section 74 | |
|---|---|---|
| When used | No fraud or suppression | Fraud, wilful misstatement or suppression alleged |
| Penalty | Lower | Much higher |
| What to watch | Correct computation and limitation | The fraud allegation itself, which you can contest |
If an order invokes Section 74, a central part of your defence may be that there was no fraud or suppression, which if accepted removes the higher penalty. For periods from financial year 2024-25, a newer Section 74A provides a common framework, so confirm which provision applies to your period.
04Pay or appeal
You have a choice. If the demand is correct, paying promptly limits interest and, in some cases, reduces penalty. If it is wrong or overstated, you appeal. Many businesses do both: pay or admit the part that is clearly due, and appeal the part that is disputed.
Base the decision on the merits you found when reading the order, the amounts involved, and the cost and time of an appeal. What you should not do is ignore the order, because the deadline passes and recovery can follow.
05The Section 107 appeal
The first appeal lies to the Appellate Authority under Section 107. The key features:
- Time limit: generally 3 months from the date the order is communicated, extendable by up to 1 month for sufficient cause.
- Form: filed on the GST portal with the grounds of appeal and the order appealed against.
- Pre-deposit: required before the appeal is entertained, as below.
Two things decide whether your GST appeal even gets heard: filing within the time limit, and making the pre-deposit. Miss either and a strong case can be shut out.
File within the window. The time limit is strict, and while the authority can condone a short delay for sufficient cause, you cannot assume it will.
06The pre-deposit
To have the appeal entertained, Section 107(6) requires you to pay the admitted amount in full, plus 10% of the remaining tax in dispute. The pre-deposit is a condition of entry, not an admission that you are wrong, and it is refundable if you win.
There is an overall ceiling on the 10% component, which has been revised over time, so confirm the current cap and the exact computation before you pay. Courts have treated the 10% pre-deposit as mandatory, so plan the cash for it as part of deciding to appeal.
07If the first appeal fails
If the Appellate Authority rules against you, the next step is the GST Appellate Tribunal (GSTAT) under Section 112, which is a forum of both fact and law and needs a further pre-deposit on top of what you paid at the first stage. Because GSTAT is still being rolled out in phases, check whether the relevant bench is accepting appeals.
Beyond the tribunal, a further appeal lies to the High Court on a substantial question of law and then the Supreme Court. For the tribunal stage in detail, see the GST Appellate Tribunal explained, and where the demand follows a credit dispute, see input tax credit disputes.
08Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
Replying to the notice and arguing the appeal is for you and your advisers, which Claw does not do. Where Claw helps is in finding the precedents and tracking the matters. Claw tracks GST Appellate Tribunal, Income Tax Appellate Tribunal and High Court tax matters, along with their appeals, across 9,102 courts, benches and forums, with alerts and monitoring, so a taxpayer or counsel can follow how a dispute and similar matters move. Its Legal GPT researches across 30 crore+ judgments, with Supreme Court decisions from 1950 and High Court decisions from 1990, so you can see how courts have treated Section 73 and 74 demands, the fraud allegation, limitation and the pre-deposit before. Results return in under 5 seconds, and Claw does not train its AI models on your documents. To follow a tax matter or an opponent, run a case search across Indian courts by name. A clean result means nothing was found on the forums and date searched, and this is general information, not legal advice.
Related reading: input tax credit disputes and the GST Appellate Tribunal explained.
09Sources and further reading
- India Code (CGST Act, 2017, Sections 73, 74, 107, 112): indiacode.nic.in
- CBIC GST (Central Board of Indirect Taxes and Customs): cbic-gst.gov.in
- GST portal: gst.gov.in
- Claw: clawlaw.in
This guide is general information, not legal advice. Time limits, pre-deposit caps and provisions change; confirm the current position and your own facts before acting.
10Frequently asked questions
What should I do when I get a GST demand order?
Read it carefully to see the amount split into tax, interest and penalty, the section it is passed under, the grounds, and the date of communication. Then decide whether to pay, appeal, or do both. If you disagree, file an appeal to the Appellate Authority under Section 107 within the time limit, with the required pre-deposit. Do not ignore the order, because the appeal window closes and recovery can follow.
What is the time limit to appeal a GST demand order?
Generally 3 months from the date the order is communicated to you, for an appeal to the Appellate Authority under Section 107. The authority can condone a further delay of up to 1 month for sufficient cause, but you cannot assume it will, so treat the 3 month window as the real deadline and file within it.
How much is the pre-deposit for a GST appeal?
Under Section 107(6) you must pay the admitted amount in full, plus 10% of the tax still in dispute, before the appeal is entertained. There is an overall ceiling on the 10% component that has been revised over time, so confirm the current cap and the exact computation before you pay. The pre-deposit is a condition of entry, not an admission, and is refundable if you win.
What is the difference between a Section 73 and a Section 74 GST order?
Section 73 is used where there is no fraud, wilful misstatement or suppression, and carries a lower penalty. Section 74 is used where fraud or suppression is alleged and carries a much higher penalty. If an order invokes Section 74, a key defence can be that there was no fraud, which if accepted removes the higher penalty. For periods from FY 2024-25 a newer Section 74A framework may apply, so check your period.
What if my first GST appeal is rejected?
The next step is an appeal to the GST Appellate Tribunal under Section 112, which looks at both fact and law and needs a further pre-deposit on top of the first stage. Because the tribunal is being rolled out in phases, check whether the relevant bench is accepting appeals. Beyond it, a further appeal lies to the High Court on a substantial question of law and then the Supreme Court.