What CBIC has clarified
The Central Board of Indirect Taxes and Customs (CBIC) has settled seven recurring disputes about the money a taxpayer must deposit before a GST appeal can be heard. Circular No. 259/05/2026-GST, dated 26 October 2026, clarifies the pre-deposit requirements under Section 107(6) and Section 112(8) of the Central Goods and Services Tax Act, 2017 (CGST Act) — the provisions that govern appeals to the Appellate Authority and to the Appellate Tribunal respectively.
The circular was issued under Section 168(1) of the CGST Act, after representations from trade and industry that different field formations were interpreting the pre-deposit rules differently — confusion that was generating litigation of its own. It is one of the batch of circulars dated 26 October 2026 issued following the recommendations of the 57th GST Council meeting, alongside Circulars 257 (registration), 258 (demand and adjudication) and 264 (Rule 96(10) export refunds).
💡 In one line: before you appeal, pay everything you admit you owe in full, then deposit 10% of only the tax you are actually disputing — and if you win, your deposit comes back without needing the order to say so, and without waiting out a departmental appeal that has not stayed the order.
First, the two buckets: admitted vs disputed
The circular's foundation is a distinction taxpayers must draw for themselves at the time of filing. The admitted amount is the portion of the demand that the taxpayer acknowledges as payable and does not intend to challenge; it must be paid in full before the appeal is filed. The tax in dispute is everything else — the remaining contested liability — and the pre-deposit is calculated as 10% of that disputed amount, not of the whole demand.
That distinction is what stops the common error of depositing 10% of the entire demand, or of treating the whole demand as disputed to shrink the admitted payment. The taxpayer decides the split when filing the appeal, and the split is captured in the appeal forms: Table-14 of Form APL-01 (appeal to the Appellate Authority) and Table-20 of Form APL-05 (appeal to the Tribunal). Because the taxpayer makes the call, the forms — not an officer's later view — are where the admitted-versus-disputed position is recorded.
The seven clarifications, in detail
1. Admitted in full, 10% of the disputed balance. The admitted amount — what the taxpayer accepts and will not challenge — is paid in full before filing. The pre-deposit is 10% of the tax in dispute only. For a first appeal that is the whole formula; for a Tribunal appeal the same formula applies, in addition to what was paid at the first-appeal stage.
2. Tribunal pre-deposit after a modified order follows the modified liability. Where the Appellate Authority has modified the original order, the Tribunal-stage pre-deposit is computed on the liability as confirmed by the Appellate Authority and disputed by the appellant — not on the original demand as first raised. This stops taxpayers being asked to deposit on amounts the first appeal already knocked out.
3. The taxpayer draws the admitted-versus-disputed line. It is the appellant, at the time of filing, who decides what is admitted and what is disputed, and the position is captured in Table-14 of APL-01 or Table-20 of APL-05. Officers cannot re-draw that line after the fact to inflate the deposit.
4. Refund of the pre-deposit needs no express direction in the order. If the appeal succeeds, the taxpayer does not need the appellate order to expressly direct a refund of the pre-deposit. The refund is claimed under Serial No. 7 of Form GST RFD-01, under the category "on account of order". This removes a frequent practical block, where refunds were delayed while taxpayers sought a specific direction the order never contained.
5. A departmental appeal does not by itself block the refund. The refund of a pre-deposit cannot be denied merely because the department intends to appeal, or has appealed, against the favourable order. The only exception the circular preserves is where the favourable order has actually been stayed by the Tribunal or a Court. An intended appeal, or a filed appeal without a stay, is not a reason to hold the money.
6. Interest is computed separately for each stage. Interest under Section 115 on pre-deposit amounts is computed separately with reference to each actual payment date, for each appellate stage. A first-appeal deposit and a Tribunal deposit therefore earn interest from their own payment dates, rather than being lumped together.
7. Remand cases: full remand refunds, partial remand adjusts first. Where the Tribunal remands the matter fully to the original adjudicating authority, the pre-deposit is refundable within the prescribed time. Where the remand is only partial, the confirmed demand and the interest on it are recovered or adjusted first, and only the balance is refunded. The circular also directs that trade notices be issued to publicise its contents, and that implementation difficulties be brought to the Board's notice.
What this circular does not do
It prescribes no new form, no new procedure and no new taxpayer deadline. It does not change the 10% rates, does not create a new refund form (the existing RFD-01 route is the one to use), and does not alter the substantive grounds on which an appeal can succeed. It is a clarification circular: its value is that field formations must now apply one uniform reading, instead of the varying interpretations that prompted it.
Taxpayers should also note what the circular does not promise. A favourable order gets the pre-deposit back, but a stay against that order will hold the refund; and a partial remand means part of the deposit is adjusted against the confirmed demand before anything is returned. The practical lesson is to file the RFD-01 claim promptly on a favourable order, and to check whether any stay actually exists before assuming a delay is improper.
Who is affected, and what to do next
Anyone with a GST appeal pending or planned is affected — manufacturers, traders, service providers and exporters with demands under Sections 73 or 74, and any taxpayer whose first appeal has been decided and who is considering the Tribunal. Before filing, split the demand honestly into admitted and disputed portions and record them in the correct table of APL-01 or APL-05; deposit the admitted amount in full plus 10% of the disputed tax. If an earlier appeal has already succeeded, file the refund claim under Serial No. 7 of RFD-01 ("on account of order") without waiting for an express direction, and challenge any refusal that rests only on a departmental appeal where no stay exists.
Frequently asked questions
How much pre-deposit must I pay for a GST appeal?
Pay the admitted amount in full, plus 10% of the tax in dispute. For a Tribunal appeal, the same basis applies in addition to the amount paid at the first-appeal stage.
Who decides what is admitted and what is disputed?
The taxpayer, at the time of filing the appeal — recorded in Table-14 of APL-01 or Table-20 of APL-05.
Do I need the appellate order to direct a refund of my pre-deposit?
No. Claim it under Serial No. 7 of Form GST RFD-01 ("on account of order"); no express direction in the order is required.
Can the department block my pre-deposit refund by appealing?
Not merely by intending to appeal or by filing an appeal. The refund can be held only if the favourable order has been stayed by the Tribunal or a Court.
What happens to my pre-deposit if the Tribunal remands the case?
On a full remand it is refundable within the prescribed time; on a partial remand the confirmed demand and interest are adjusted first and the balance is refunded.
Does Circular 259 create a new deadline?
No. It prescribes no new form, procedure or taxpayer deadline; it clarifies how the existing pre-deposit provisions are to be applied.
Sources
CBIC Circular No. 259/05/2026-GST, dated 26 October 2026 (F. No. CBIC-20001/2/2026-GST, GST Policy Wing, signed Gaurav Singh, Commissioner (GST)) — official CBIC Tax Information Portal. Sections 107(6), 112(8), 115 and 168(1) of the CGST Act, 2017, as cited in the circular. This article is general information only and is not tax or legal advice; taxpayers should confirm their position with their tax advisers.
