DRC-07 Appeal Procedure: Form APL-01 and 10% Pre-Deposit
When a tax officer rejects your submissions and uploads a summary demand order in Form GST DRC-07, the formal recovery clock starts ticking. To challenge this assessment, you must file a first appeal under Section 107 within three months using Form GST APL-01 on the GST portal. Filing this appeal requires a mandatory ten percent pre-deposit of the disputed tax, which grants an automatic statutory stay against recovery of the balance demand.
What is Form GST DRC-07 and when is it issued?
Receiving Form GST DRC-07 marks the conclusion of original adjudication proceedings. Under Rule 142(5) of the Central Goods and Services Tax Rules, whenever an adjudicating authority passes a final order determining tax liability under Section 73, Section 74, or Section 74A, a digital summary of that order must be uploaded electronically on the common portal in Form GST DRC-07.
This digital summary quantifies the final liability across central tax, state tax, integrated tax, cess, interest under Section 50, and penalty. Crucially, under Rule 142(6), the uploaded DRC-07 summary serves as the legal notice for recovery. Once uploaded, the amount is posted to the Electronic Liability Register (Part II) of the taxpayer.
Statutory deadlines for appeals under Section 107
First appeals against orders passed by adjudicating authorities are governed by Section 107 of the CGST Act. The timeline rules are strict:
- Standard limitation period: Under Section 107(1), any aggrieved taxpayer must file an appeal to the Appellate Authority within three months from the date on which the decision or order is communicated to them.
- Condonation window: Under Section 107(4), if you were prevented by sufficient cause from presenting the appeal within three months, the Appellate Authority has the discretion to admit the appeal within a further period of one month.
- The statute does not allow the Appellate Authority to condone any delay beyond four months (three months normal plus one month condonable). An appeal submitted after four months will be rejected for limitation, leaving high court writ jurisdiction as the only legal option.
Mandatory pre-deposit requirements under Section 107(6)
An appeal cannot be admitted merely by submitting legal arguments. Under Section 107(6) of the CGST Act, filing requires payment of a specific pre-deposit:
- Full admitted liability: You must pay one hundred percent of the tax, interest, fine, fee, and penalty arising from the impugned order that you admit as payable.
- Ten percent disputed tax: You must pay a sum equal to ten percent of the remaining amount of tax in dispute, subject to a maximum cap of twenty crore rupees.
- Where the appeal involves tax, the ten percent pre-deposit is calculated strictly on the disputed tax component. You do not need to deposit ten percent of the disputed interest or penalty.
- Under the proviso to Section 107(6), if the impugned order demands only a penalty without demanding any tax, the appellant must deposit ten percent of the disputed penalty.
Payment of the pre-deposit can be discharged by debiting the Electronic Cash Ledger or the Electronic Credit Ledger for the tax component, whereas interest and penalties must always be paid via cash.
Worked example: calculating pre-deposit on an ITC demand
Consider Shiva Engineering Works, a supplier facing an order under Section 73 summarized in Form GST DRC-07 following an ITC mismatch with Form GSTR-2B. The adjudicating officer confirmed the following liabilities:
- Disallowed input tax credit (tax demand): ₹6,00,000
- Interest calculated under Section 50: ₹1,08,000
- Penalty confirmed under Section 73(9): ₹60,000
- Total confirmed demand in DRC-07: ₹7,68,000
After reviewing the underlying invoices, Shiva Engineering Works concedes that ₹1,00,000 of ITC pertained to personal motor car repairs blocked under Section 17(5). They admit this portion along with corresponding interest of ₹18,000 and penalty of ₹10,000. However, they contest the remaining ₹5,00,000 ITC demand on the grounds that the supplier reported the invoices late in a subsequent tax period.
| Demand Component | Total Confirmed (₹) | Admitted Amount (₹) | Disputed Amount (₹) | Mandatory Pre-Deposit (₹) |
|---|---|---|---|---|
| Tax (Disallowed ITC) | 6,00,000 | 1,00,000 | 5,00,000 | 1,50,000 (1,00,000 admitted + 10% of 5,00,000) |
| Interest (Section 50) | 1,08,000 | 18,000 | 90,000 | 18,000 (100% of admitted interest) |
| Penalty (Section 73) | 60,000 | 10,000 | 50,000 | 10,000 (100% of admitted penalty) |
| Total payable | 7,68,000 | 1,28,000 | 6,40,000 | ₹1,78,000 |
By paying ₹1,78,000 (comprising ₹1,28,000 admitted dues plus ₹50,000 pre-deposit on the disputed tax), Shiva Engineering Works stays the recovery of the remaining ₹5,90,000 demand.
Step by step: how to file Form GST APL-01 on the GST portal
Under Rule 108 of the CGST Rules, every appeal to the Appellate Authority must be filed electronically in Form GST APL-01. Follow these portal steps to complete your appeal filing:
- Access the appeal dashboard: Log in to the GST common portal at gst.gov.in. Navigate to Services → User Services → My Applications. Select Appeal to Appellate Authority from the application type dropdown and click New Application.
- Select the order: Choose the order type as Demand Order. Enter the Order Number or Demand ID from your Form GST DRC-07 and click Search. The system will auto-populate the order details, date of communication, and issuing authority.
- Define disputed and admitted amounts: In the appeal form tables, verify the confirmed demand figures. Enter the admitted tax, interest, and penalties in the designated columns. The portal automatically computes the ten percent pre-deposit required on the remaining disputed tax.
- Draft grounds of appeal: Prepare a structured statement of facts and legal grounds of appeal in PDF format. State clearly why the adjudicating authority erred in law or fact, citing relevant provisions such as Section 16(2), Section 107, or official CBIC circulars. Upload the PDF under supporting attachments.
- Discharge pre-deposit: Navigate to the payment screen. Pay the admitted liability and the ten percent pre-deposit by utilizing available balances in your Electronic Cash Ledger and Electronic Credit Ledger.
- Sign and submit: Verify the application using your Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). Upon successful submission, the system generates a provisional acknowledgement immediately.
- Obtain final acknowledgement: Under Rule 108(3), because the DRC-07 demand order is already available on the common portal, a final acknowledgement indicating the permanent appeal number will be issued in Form GST APL-02. The date of issue of the provisional acknowledgement is legally considered the date of filing of your appeal.
Common mistakes in DRC-07 appeals
Many appeals stumble on procedural hurdles rather than the merits of the case. Avoid these frequent mistakes:
- Limitation under Section 107(1) starts from the digital date the order is communicated on the portal, not the date typed on the physical order sheet. Always check the digital timestamp in your portal notices tab.
- Taxpayers often mix up initial notices with final orders. As explained in our guide to GST notice DRC-01 show cause proceedings, Form DRC-01 is only a notice. You cannot file Form APL-01 against DRC-01; an appeal lies only against the final order in Form DRC-07.
- If your demand arose from an input tax credit mismatch, lodging an appeal without verified reconciliation records will fail. You must attach an invoice-level reconciliation schedule matching your purchase register with Form GSTR-2B.
- Form GST APL-01 cannot be submitted without completing the pre-deposit payment offset. Ensure sufficient cash or credit ledger balance before the limitation deadline expires.
How gstr2bmatch.in helps you prevent DRC-07 demands
Most DRC-07 demand orders in recent years originate from unresolved input tax credit discrepancies between Form GSTR-3B and Form GSTR-2B. When an automated notice like Form GST DRC-01C or a scrutiny notice is ignored, the matter inevitably escalates to a formal demand order.
Performing consistent monthly reconciliations protects your business from costly litigation. With gstr2bmatch.in, you can reconcile your monthly purchase register against your official GSTR-2B Excel or JSON file in seconds. The tool runs locally inside your browser, comparing invoice numbers, dates, taxable values, and tax amounts without uploading financial records to any server. Catching missing invoices and vendor reporting errors early ensures your GSTR-3B claims are always substantiated, keeping your business free from recovery notices.
Prevent demand orders with monthly GSTR-2B reconciliation
Most DRC-07 demand orders trace back to unverified vendor mismatches. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
Related guides
- GST departmental audit under Section 65 notice Form GST ADT-01 procedure, records checklist, and findings ADT-02
- GST notice Form DRC-01D: recovery under Rule 142B and how to file reply
- GST notice form DRC-01C Part B reply format: reasons for difference
- GST notice Form DRC-01A: pre-SCN intimation reply guide
Frequently asked questions
What is the time limit to file an appeal against a DRC-07 demand order?
Under Section 107(1) of the CGST Act, an appeal must be filed within three months from the date the order is communicated. The Appellate Authority may condone a delay of up to one additional month under Section 107(4) if sufficient cause prevented timely filing.
How much pre-deposit is mandatory before filing a GST first appeal?
Under Section 107(6), you must pay 100 percent of any admitted tax, interest, and penalties, plus ten percent of the remaining disputed tax amount (capped at twenty crore rupees). No separate pre-deposit is calculated on disputed interest or penalties when tax is involved.
Does filing Form GST APL-01 automatically stay recovery proceedings?
Yes. Under Section 107(7) of the CGST Act, once the required pre-deposit under Section 107(6) is paid and the appeal is filed, recovery proceedings for the remaining balance demand are deemed to be stayed.
Last checked: 14 October 2026. Sources used: CBIC CGST Act Section 107, CBIC CGST Rule 108, CBIC CGST Rule 142, GST Portal Appeal User Guide.