The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 259/05/2026-GST dated 26 October 2026, clarifying several issues relating to the payment, calculation and refund of pre-deposit amounts required for filing appeals under the CGST Act, 2017.
The clarification addresses concerns raised by trade and industry regarding inconsistent interpretations of pre-deposit requirements under Section 107(6) and Section 112(8) of the CGST Act. It provides clarity on what constitutes an admitted amount and tax in dispute, how the 10% pre-deposit should be calculated, when the amount becomes refundable and how interest on refunds is to be determined.
The circular is expected to bring greater uniformity in appeal-related procedures and reduce unnecessary disputes between taxpayers and GST authorities.
1. What Constitutes an Admitted Amount and Tax in Dispute?
One of the key clarifications concerns the distinction between the admitted amount and the disputed tax liability while filing a GST appeal.
Under Section 107(6) of the CGST Act, an appellant is required to pay the full amount of tax, interest, fine, fee and penalty admitted by the taxpayer, along with 10% of the remaining disputed tax amount, subject to the applicable statutory ceiling.
Similarly, under Section 112(8), an appeal before the Appellate Tribunal requires payment of the full admitted amount along with 10% of the remaining disputed tax amount, in addition to the amount already paid for filing an appeal before the Appellate Authority.
CBIC has clarified that:
- Admitted Amount: The portion of tax, interest, fine, fee and penalty arising from the impugned order that the taxpayer acknowledges as payable and does not intend to challenge.
- Tax in Dispute: The remaining portion of the liability that the taxpayer intends to contest through an appeal.
- Pre-Deposit: The prescribed 10% amount is calculated with reference to the disputed tax component.
The decision to classify an amount as admitted or disputed must be made by the taxpayer while filing the appeal. The relevant details are captured in Table 14 of FORM GST APL-01 and Table 20 of FORM GST APL-05.
2. How Is Pre-Deposit Calculated Before the GST Appellate Tribunal?
Another important clarification deals with cases where the Appellate Authority modifies the original tax liability and the taxpayer subsequently approaches the Appellate Tribunal.
CBIC has clarified that the 10% pre-deposit required under Section 112(8) must be calculated on the remaining disputed tax liability as confirmed by the Appellate Authority.
In other words, the calculation will not automatically be based on the original demand raised by the adjudicating authority.
The relevant amount will be the tax liability confirmed by the Appellate Authority that the taxpayer continues to dispute before the Tribunal.
This clarification is particularly relevant in cases where the first appellate order reduces or otherwise modifies the original demand.
3. Is an Explicit Refund Direction Required in the Appellate Order?
CBIC has clarified that an Appellate Authority or Appellate Tribunal is not required to specifically mention in its order that the pre-deposit amount must be refunded.
Where the pre-deposit becomes refundable as a consequence of an appellate order, the absence of an express refund direction will not prevent the taxpayer from claiming the refund.
Further, taxpayers are required to file the refund application in FORM GST RFD-01 under Serial No. 7 – 'On Account of Order'.
This clarification removes procedural uncertainty regarding refund claims arising from favourable appellate decisions.
4. Will the Pre-Deposit Be Refunded If the Department Plans to File a Further Appeal?
A significant clarification has been provided for taxpayers who receive a favourable order from the Appellate Authority or Appellate Tribunal.
CBIC has clarified that where the appellate decision is in favour of the taxpayer and the taxpayer files a refund application, the taxpayer becomes entitled to receive the pre-deposit amount.
Importantly, the Department's intention to challenge the favourable order does not automatically suspend the taxpayer's refund entitlement.
Even if the Department intends to file an appeal or has already filed one, the refund of pre-deposit cannot be denied merely on that ground.
The refund can be withheld only where the favourable appellate order has been stayed by the Appellate Tribunal or a Court.
This clarification provides important relief to taxpayers who otherwise face delays in receiving refunds because of proposed departmental appeals.
5. What Is the Relevant Date for Interest on Refund of Pre-Deposit?
The circular also clarifies the date to be considered for calculating interest on pre-deposit refunds under Section 115 of the CGST Act.
Where a taxpayer has deposited pre-deposit amounts at both appellate stages, namely:
- Before the Appellate Authority under Section 107(6); and
- Before the Appellate Tribunal under Section 112(8),
the date of payment must be determined separately for each deposit.
Accordingly, interest computation will be based on the actual date on which the respective pre-deposit amount was paid.
This means that the two deposits will not be treated as having a common payment date merely because they relate to the same dispute.
6. What Happens to Pre-Deposit When the Appellate Tribunal Remands the Case?
CBIC has also addressed the refund procedure in situations where the Appellate Tribunal remands a matter.
The clarification distinguishes between complete remand and partial remand.
A. Complete Remand
Where the Appellate Tribunal remands the matter to the original Adjudicating Authority, the appellant becomes eligible for a refund of the pre-deposit amount.
The refund is required to be granted within the prescribed time limit.
B. Partial Remand
In cases of partial remand, where a portion of the tax demand is upheld, the refund will be released only after ensuring that the amount corresponding to the demand confirmed in favour of the Revenue is recovered or adjusted against the pre-deposit.
The applicable interest must also be taken into account before the balance amount is refunded to the taxpayer.
Thus, the refund entitlement will depend on the outcome of the remand proceedings and the portion of the demand that ultimately remains payable.
Key Takeaways for GST Taxpayers and Professionals
Circular No. 259/05/2026-GST provides important procedural clarity on GST appeal pre-deposits and their refunds.
The major takeaways are:
- The admitted amount must be paid in full before filing the appeal.
- The 10% pre-deposit is calculated on the disputed tax component.
- For appeals before the Appellate Tribunal, the disputed tax is determined with reference to the liability confirmed by the Appellate Authority.
- A separate refund direction in the appellate order is not necessary.
- Refund applications must be filed in FORM GST RFD-01 under Serial No. 7 – 'On Account of Order'.
- The Department's intention to appeal cannot, by itself, justify withholding the refund unless the favourable order is stayed.
- Interest on pre-deposits paid at different appellate stages is calculated separately from their respective payment dates.
- In complete remand cases, the appellant becomes eligible for a refund, while partial remand cases require adjustment or recovery of the demand upheld in favour of the Revenue.
Conclusion
CBIC Circular No. 259/05/2026-GST is an important clarification for taxpayers, tax practitioners and GST professionals dealing with appellate proceedings.
By explaining the calculation of pre-deposit, the treatment of admitted and disputed liabilities, refund eligibility, interest computation and the consequences of remand orders, the Board has attempted to address several procedural uncertainties under Sections 107 and 112 of the CGST Act.
For taxpayers involved in GST litigation, these clarifications are particularly relevant while preparing appeals, calculating pre-deposit obligations and pursuing refunds after favourable appellate orders.
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