In short
Why the circulars came
GST orders were being set aside or sent back because they did not deal with the reply, invoked fraud mechanically, or were not reasoned. Circular No. 258/04/2026-GST lays down, stage by stage, what officers must do, drawing on the Supreme Court in G.R. Infra Projects and the Andhra Pradesh High Court in Sriba Nirman. It binds officers, though it is not to be cited in notices or orders. Circular No. 259/05/2026-GST answers six questions on the pre-deposit for appeals.
Stage by stage
| Stage | What the officer must do |
|---|---|
| Intimation, DRC-01A | Issue it wherever feasible before the notice; from 1 April 2027 it names the earlier proceeding |
| Notice, DRC-01 | State the facts and evidence, link a provision to each act, quantify the demand year by year, give the authority and reply date |
| Fraud, section 74 / 74A(5)(ii) | Only with material evidence of intent to evade; a later-period notice on the same facts goes under section 73 |
| No parallel proceedings | If the State officer has started on a subject, the Central officer does not, and vice versa (Armour Security) |
| Hearing, section 75(4) | On request or before an adverse decision; at most four chances, refusal with reasons; a record of each hearing; a fresh hearing if the officer changes |
| Order, DRC-07 | Frame the issues, analyse the evidence, accept or reject each submission with reasons, discuss case law of both sides; findings only on the notice's grounds (section 75(7)) |
| Rectification, section 161 | Only obvious errors, by the issuing authority, within three months of the application and six of the order; not a substitute for appeal |
| First appeal | Limitation decided first with reasons; merits not rejected at registration; decision within a year where possible |
The DRC-01 summary picks its ground from a list of 22 standard grounds and names the earlier proceeding. A notice whose summary ground doesn't match its body can be questioned. The guidelines also bind the Appellate Authority, so an appeal order that ignores a ground or a cited judgment is equally open to challenge before the Tribunal.
The pre-deposit, worked out (Circular 259)
The order confirms tax ₹20,00,000, interest ₹5,00,000 and penalty ₹2,00,000. The company accepts ₹4,00,000 of the tax (with its interest) and disputes ₹16,00,000. Before filing APL-01 it pays the admitted amount in full, and a pre-deposit of 10% of the disputed tax: ₹1,60,000. Interest and penalty on the disputed part need no pre-deposit. The Appellate Authority then confirms ₹10,00,000 of tax, which the company disputes before the Tribunal: a further 10%, ₹1,00,000, on top of what it already paid.
| Question | Answer |
|---|---|
| What is the pre-deposit computed on? | 10% of the tax in dispute alone; the split between admitted and disputed is the taxpayer's choice, in Table 14 of APL-01 (Table 20 of APL-05) |
| Tribunal appeal after a reduced demand | 10% of the tax confirmed by the Appellate Authority and disputed, in addition to the first deposit |
| Does the order need to direct the refund? | No. Claim it in RFD-01 'on account of order' when the order arrives |
| Can the refund wait for the department's appeal? | No. Only a stay by the Tribunal or a court holds it back |
| Interest on the refund | Under section 115, from the date of each payment, worked out separately |
| Remand by the Tribunal | Full remand: refund. Partial: the upheld amount with interest is adjusted and the rest refunded |
Also from 1 November 2026 and 1 April 2027
Provisional attachment (rule 159, from 1 November 2026): the order issues in Part A of DRC-22, and an objection can be rejected only by a reasoned order in Part B after a hearing. Blocking of the credit ledger (rule 86A, from 1 April 2027): an order in DRC-26 with reasons, an objection in DRC-27, and a decision in DRC-28 after a hearing. Until then, a blocking order is contested by representation to the Commissioner or a writ.
- Check the notice for facts, evidence, the provision for each act and a year-wise demand; note any gap in your reply.
- If section 74 is invoked, look for evidence of intent in the notice itself; argue for section 73 if there is none.
- Ask for a hearing in writing, and ask for a virtual one if it suits you; keep a record of each.
- Decide what to admit and what to dispute before filing the appeal: the pre-deposit follows that choice.
- After a favourable order, file RFD-01 for the pre-deposit straight away.
Can I cite Circular 258 in my reply?
The circular says it isn't to be cited in notices or orders, but it binds the officer, and the judgments it relies on (G.R. Infra Projects, Sriba Nirman, Armour Security) can be cited.
Is the pre-deposit on interest and penalty too?
No. It is 10% of the disputed tax alone.
The department has appealed against my win. Must I wait for my refund?
No, unless the Tribunal or a court has stayed the order.
Facing a GST notice?
Aypa's notice desk drafts replies from the notice, your points and the law library, and tracks each stage to the order.
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