Section 107: The First Appeal and the Pre-Deposit

Section 107 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The pre-deposit rule has been amended twice in eighteen months. Both changes reduce what has to be paid, and both are easy to miss.

Section 107(1): any person aggrieved by a decision or order of an adjudicating authority may appeal within three months of communication. 107(4): a further one month on sufficient cause. 107(6): no appeal unless the appellant has paid (a) in full, the admitted tax, interest, fine, fee and penalty, and (b) ten per cent of the remaining tax in dispute, subject to a maximum of twenty crore rupees — reduced from twenty-five crore by the Finance (No. 2) Act, 2024, w.e.f. 01.11.2024. The proviso, as substituted by the Finance Act, 2025, notified through Notification No. 16/2025-CT dated 17.09.2025, w.e.f. 01.10.2025: for an order demanding penalty without involving demand of any tax, no appeal unless ten per cent of the penalty is paid. 107(7): recovery of the balance is deemed to be stayed.

What changed, and when

The second change is the larger one. The earlier proviso applied 25% and only to s.129(3) detention orders. The substituted proviso applies 10% to any order demanding penalty without involving a demand of tax — which reaches s.122 penalties, s.125 general penalty, s.129(3) orders and s.130 penalties alike.

For a business appealing an e-way bill detention penalty, the pre-deposit has fallen from a quarter of the penalty to a tenth. Section 129 →

The two components of the pre-deposit

(a) The admitted amount, in full. Such part of the tax, interest, fine, fee and penalty arising from the impugned order as is admitted by the appellant. All five heads, in full, and no cap.

(b) Ten per cent of the remaining tax in dispute. Note what this is not: it is ten per cent of the tax in dispute, not of interest, not of penalty, and not of the total demand. On an order confirming ₹1 crore of tax with ₹80 lakh of interest and ₹10 lakh of penalty, the 10% is on the disputed tax alone.

The cap of ₹20 crore applies to the component in clause (b).

Payment mechanics. The pre-deposit is a payment against the demand, and where it is made through a DRC-03, it should be linked to the demand in the electronic liability register by an application in DRC-03A under Rule 142(2B) — otherwise the register still shows the demand outstanding. Rule 142 →

Section 107(7): the automatic stay

"Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed."

Deemed. No application, no order, no discretion. Paying the pre-deposit stays recovery of the balance by operation of law.

Three practical consequences:

• the stay covers the balance only — the admitted amount under clause (a) is payable in full and is not stayed;
• it operates from payment, so the pre-deposit should be made before the s.78 three months from service of the order expires, not merely before the appeal is heard; Section 78 and 79 →
• where recovery has already begun — a DRC-13 with a customer, an attachment — the deemed stay should be communicated in writing to the officer and to the third party, with the pre-deposit challan.

The timeline

Three months from communication under s.107(1) — communication, not the date on the order.

One further month under s.107(4), where the Appellate Authority is satisfied the appellant was prevented by sufficient cause. Applicable to both the taxpayer's three months and the department's six months under s.107(2).

Four months is the outer limit for the taxpayer. There is no power in s.107 to condone beyond it. Condonation of delay →

Rule 108(1): the appeal is filed in FORM GST APL-01 with the relevant documents, electronically, and a provisional acknowledgement is issued immediately.

The proviso to Rule 108(1) allows manual filing in APL-01 only where (i) the Commissioner has so notified, or (ii) it cannot be filed electronically because the decision or order is not available on the common portal.

Rule 108(3): where the order appealed against is uploaded on the common portal, the final acknowledgement in FORM GST APL-02 issues and the date of the provisional acknowledgement is the date of filing. Where the order is not uploaded, the appellant must submit a self-certified copy within seven days of filing the APL-01, and the final acknowledgement then issues. Rule 108 and the date of filing →

What the Appellate Authority may and may not do

Section 107(8) — shall give the appellant an opportunity of being heard.

Section 107(9) — may adjourn on sufficient cause, for reasons recorded, but not more than three times to a party.

Section 107(10) — may allow an additional ground not in the grounds of appeal, if satisfied the omission was not wilful or unreasonable.

Section 107(11) — shall pass such order as it thinks just and proper, confirming, modifying or annulling the decision appealed against, but shall not refer the case back to the adjudicating authority. No remand. Section 107(11) →

Section 107(12) — the order shall be in writing and shall state the points for determination, the decision thereon and the reasons.

Section 107(13) — shall, where it is possible to do so, hear and decide within one year of filing, excluding any period of stay by a court or Tribunal.

Section 107(16) — every order is final and binding, subject to s.108 revision, s.113 the Tribunal, s.117 the High Court and s.118 the Supreme Court.

Key takeaways

• Three months from communication, plus one on sufficient cause — four months is the outer limit.
• Pre-deposit: the admitted amount in full, plus 10% of the remaining tax in dispute, capped at ₹20 crore.
• For an order demanding penalty without a tax demand, 10% of the penalty — reduced from 25% and widened beyond s.129(3), w.e.f. 01.10.2025.
• Section 107(7) stays recovery of the balance automatically on payment.
• APL-01 electronically; manual filing only where notified or where the order is not on the portal.
• The Appellate Authority cannot remand under s.107(11).

Read next

• Rule 108: APL-01 Filing and the Date of Filing
• Section 107(11): No Remand, and the Two Provisos
• Section 112: Appeal to the GSTAT and the Second Pre-Deposit
• Condonation of Delay in GST Appeals

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).