GST Notice Under Section 74A and Your Appeal to GSTAT

A GST demand for FY 2024-25 onward comes under a single provision, section 74A, with a 42-month clock, and the appeal beyond the first stage now goes to a live Tribunal with a 10% pre-deposit that must be paid in cash.

Last verified: 5 September 2026 · Applies to: demands for FY 2023-24 and earlier under ss.73 and 74, and FY 2024-25 onward under s.74A

Contents

• The first 72 hours after a notice lands
• Which provision applies: the FY 2023-24 dividing line
• The section 74A clock
• The appeal ladder now that GSTAT exists
• Pre-deposit: 10 percent, capped, and cash only
• Filing at GSTAT: APL-05 and the e-filing portal
• Limitation now that the transitional window has closed
• Illustrative example: what the pre-deposit actually costs
• Frequently asked questions
• How BVACA can help

The first 72 hours after a notice lands

Most of the damage in a GST dispute is done in the first week, by silence or by an unconsidered reply. Work through this list before you draft anything.

1. Record the date of service and compute the reply date. Notices are served on the portal and the clock runs from service, not from the day someone in the office noticed. Diarise the reply date immediately and work backwards from it.
2. Download everything, including the annexures. On the GST portal, Services > User Services > View Additional Notices and Orders. Annexures carry the working that the notice itself only summarises, and they are where the department's arithmetic is exposed.
3. Identify the financial year on the face of the notice. This is the single most important fact in the document. It determines whether you are under ss.73 or 74 or under s.74A, and the two regimes have different clocks.
4. Identify the provision cited, not the one you assume. A notice for FY 2024-25 that cites s.73 or s.74 is citing a provision that does not apply to that year. That is a point worth taking, and taking early.
5. Check the GSTIN and the State. Multi-State businesses regularly route a notice to the wrong internal owner because it was issued against a branch registration.
6. Pull the returns and reconciliations for the period before you form a view. GSTR-1 against GSTR-3B, GSTR-3B against GSTR-2B, books against the annual return. Most demands are a reconciliation difference before they are a legal question.
7. Do not pay to make it go away, and do not ignore it. Both are expensive. Payment before you have identified the issue can concede a point you would have won; silence converts a contestable demand into an ex parte order.
8. Preserve the trail. Contracts, e-way bills, delivery evidence, supplier confirmations, ledger extracts. Assemble the file in the first week, while people still remember the transactions.

Which provision applies: the FY 2023-24 dividing line

This is the split that changes everything, and it is mechanical.

Under the old regime the department's choice between s.73 and s.74 was itself a battleground, because invoking fraud bought a longer limitation period. A large part of GST litigation to date has been about whether the ingredients of s.74 were actually made out.

Section 74A removes that. From FY 2024-25 there is a single provision and a single limitation period, whether or not fraud is alleged. The fraud versus non-fraud distinction survives, but only for penalty, not for how long the department has to act.

For businesses this cuts both ways. You lose the argument that the department wrongly invoked the extended period. You also lose the exposure to a much longer clock simply because an officer chose to allege suppression.

Penalty percentages under s.74A track the old s.73 / s.74 structure. Non-fraud: 15% if paid before SCN, 25% within 30 days of SCN, 50% within 30 days of the order. Fraud / suppression / wilful misstatement: 25% pre-SCN, 50% within 30 days of SCN, 100% within 30 days of order. Paying inside the earliest window is almost always the cheapest exit — the pre-SCN 15% is a lot less than the 100% fraud rate plus interest plus a Tribunal fight.

Form numbers are the familiar DRC series: DRC-01 for the show cause notice, DRC-02 for a summary of the SCN, DRC-07 for the summary of the adjudication order. What changed with s.74A is which section is cited on the top of the form, not the form itself.

The section 74A clock

Two limbs, both counted from fixed points.

• The show cause notice must be issued within 42 months of the due date for furnishing the annual return (GSTR-9) for that financial year.
• The adjudication order must be passed within 12 months of the show cause notice, extendable by a further 6 months.

The GSTR-9 due date is 31 December following the end of the financial year, so the outer dates work out as follows. These assume the notice is issued on the last permissible day; if it comes earlier, the order deadline moves forward with it.

Two practical consequences follow.

Retention periods are longer than most businesses plan for. A FY 2024-25 transaction can be the subject of a notice issued in mid-2029 and an order in late 2030. The people who did the transaction will have moved on. Contemporaneous documentation is the only thing that survives that.

The order deadline is a real constraint on the department. Where a notice was issued long before the outer date, the adjudicating authority is working to 12 months from that notice, not to 2030. Adjournments have a cost on both sides.

The appeal ladder now that GSTAT exists

For most of GST's life there was no Tribunal, so the only route past the first appellate authority was a writ petition to a High Court. That changed on 24 September 2025, when the Goods and Services Tax Appellate Tribunal was launched (PIB PRID 2170932).

What exists now:

• A Principal Bench at New Delhi, plus 31 State Benches across 45 locations
• Each bench constituted with 2 Judicial Members and 2 Technical Members
• President: Justice Sanjaya Kumar Mishra
• e-filing at https://efiling.gstat.gov.in
• The Principal Bench also acts as the National Appellate Authority for Advance Rulings, so a conflict between State Advance Ruling Authorities now has a forum

That last point is easy to miss and matters commercially. Divergent advance rulings between States on the same product or service were previously unresolvable in any practical forum. They now have one.

GSTAT adjudicatory hearings began on 16 February 2026 at the Principal Bench, with State Benches rolling on through Q2 of that year.

The ladder for a s.74A demand runs: adjudication order, then the first appellate authority, then GSTAT, then the High Court and Supreme Court on questions of law.

The first appeal goes to the first appellate authority under CGST s.107, in Form GST APL-01, within three months of the order (extendable by a further month on sufficient cause), with a 10% pre-deposit of the disputed tax capped at ₹20 crore per tax head — the same reduction that applies at the GSTAT stage, applicable from the Finance (No.2) Act, 2024.

Pre-deposit: 10 percent, capped, and cash only

To appeal to GSTAT you must pre-deposit 10% of the disputed tax remaining after the first appellate order, capped at ₹20 crore per tax head.

Three things about that sentence deserve attention.

It is 10%, not 20%, and the cap is ₹20 crore, not ₹50 crore. The Finance (No.2) Act, 2024 cut both. Any checklist, engagement note or older article quoting 20% and ₹50 crore for a GSTAT appeal is out of date.

"Per tax head" means the cap applies separately. CGST, SGST and IGST are separate heads. For very large demands this changes the arithmetic materially.

"Remaining after the first appellate order" means the base is the reduced figure. If the first appellate authority allows part of the demand, the 10% is computed on what survives, not on the original number.

For penalty-only cases, where there is no tax in dispute, the pre-deposit is 10% of the penalty, applicable from 1 April 2025.

And the point most businesses miss until the week they need the money:

The pre-deposit is payable from the Electronic Cash Ledger only. Input tax credit cannot be used.

A business can be sitting on a large balance in its electronic credit ledger and still have to find the pre-deposit in cash. If you have a demand that is heading to appeal, that cash requirement belongs in the working capital forecast the day the first appellate order is received, not the week the appeal is due.

Filing at GSTAT: APL-05 and the e-filing portal

An appeal to the Tribunal is filed in Form GST APL-05, electronically at https://efiling.gstat.gov.in.

Practical sequencing:

1. Compute the pre-deposit on the tax remaining after the first appellate order, head by head.
2. Fund the electronic cash ledger and make the payment. Keep the challan.
3. Prepare APL-05 with the grounds of appeal, the order appealed against and the pre-deposit evidence.
4. File within the limitation period, counted from communication of the order.
5. Assemble the paper book: the notice, the reply, the adjudication order, the first appeal and its order, and the documentary evidence relied on.

The grounds are worth drafting properly rather than reciting. A Tribunal bench with two technical members reads the reconciliation, and a ground that says "the demand is bad in law" without the numbers behind it does not survive that reading.

Limitation now that the transitional window has closed

Because GSTAT did not exist for years, a transitional window was provided for appeals against orders passed before 1 April 2026. That window closed on 31 July 2026.

From now on, the normal three-month limitation applies. There is no residual backlog concession. If you have been holding an old order on the basis that the Tribunal was not functioning, that basis is gone, and any such order needs to be reviewed against the ordinary limitation position immediately.

Illustrative example: what the pre-deposit actually costs

Illustrative example. A company receives an adjudication order under s.74A confirming a demand of ₹1.2 crore of tax plus penalty. It appeals to the first appellate authority, which reduces the tax demand to ₹80 lakh. The company decides to appeal to GSTAT.

• Disputed tax remaining after the first appellate order: ₹80 lakh
• Pre-deposit for the GSTAT appeal: 10% of ₹80 lakh = ₹8 lakh
• The ₹20 crore per-tax-head cap is not reached, so it does not bite
• The company has ₹3 crore sitting in its electronic credit ledger. None of it can be used. The ₹8 lakh must be deposited in the electronic cash ledger

Had this appeal been governed by the pre-Finance (No.2) Act 2024 position of 20%, the same appeal would have required ₹16 lakh. The reduction is real, but the cash constraint is unchanged: this is ₹8 lakh of working capital immobilised for as long as the appeal runs.

Figures here are illustrative and are not a client matter.

Frequently asked questions

What is section 74A of the CGST Act?

Section 74A is the single unified demand provision that applies from FY 2024-25 onward, replacing the earlier split between s.73 for non-fraud cases and s.74 for fraud cases. It applies one limitation period regardless of whether fraud is alleged. The fraud versus non-fraud distinction survives inside s.74A, but only for determining penalty.

Does section 74A apply to older years?

No. Sections 73 and 74 continue to apply to demands up to FY 2023-24, and s.74A applies only from FY 2024-25. The financial year on the face of the notice therefore decides which regime governs it. A notice for FY 2024-25 that cites s.73 or s.74 has cited a provision that does not apply to that year.

How long does the department have to issue a notice under section 74A?

The show cause notice must be issued within 42 months of the due date for the annual return (GSTR-9) for that year, and the adjudication order must be passed within 12 months of the notice, extendable by a further six months. For FY 2024-25, whose GSTR-9 was due on 31 December 2025, the outer date for the notice is 30 June 2029.

How much is the pre-deposit for a GSTAT appeal?

Ten per cent of the disputed tax remaining after the first appellate order, capped at ₹20 crore per tax head. This was reduced from 20% and ₹50 crore by the Finance (No.2) Act, 2024. In penalty-only cases the pre-deposit is 10% of the penalty, applicable from 1 April 2025.

Can I pay the GSTAT pre-deposit using input tax credit?

No. The pre-deposit must be paid from the Electronic Cash Ledger, and input tax credit cannot be used for it. This catches out businesses with large credit balances, who assume the ledger will cover it. Plan the cash requirement from the date the first appellate order is received.

Is it too late to appeal an old GST order now that GSTAT is running?

Possibly. The transitional window for appealing orders passed before 1 April 2026 closed on 31 July 2026, and the normal three-month limitation now applies from communication of the order. Any old order being held back on the basis that the Tribunal was not functioning should be reviewed against ordinary limitation without delay.

How BVACA can help

We handle GST demands as a document exercise before a legal one, because most of them start as a reconciliation difference between GSTR-1, GSTR-3B, GSTR-2B and the books. That means reconstructing the period, testing whether the provision and the year on the notice actually match, drafting the reply with the working attached rather than assertions, and appearing before the adjudicating authority and the first appellate authority. Where a matter goes to the Tribunal, we compute the pre-deposit head by head, flag the cash requirement early so it does not surprise the treasury, and prepare Form GST APL-05 with a paper book that a technical member can follow. Our GST litigation and departmental representation work sits alongside broader tax consultancy from our Panchkula office, serving the Tricity and clients across India.

Two related pieces are often relevant when a notice arrives: the three-year bar on filing old GST returns, because barred periods are exactly where demands originate, and the monthly IMS and GSTR-3B workflow, which is where the next set of differences is being created or prevented. Reconciliation disclosures in GSTR-9 and GSTR-9C are frequently the department's starting point.

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Author box: CA Vijender Singh Bachhal, Managing Partner, Bachhal Vijender & Associates (FRN 028355N), Panchkula. About the firm

Disclaimer: This article is general information current as at 5 September 2026, not advice for a specific situation. Tax and corporate law in India changed materially on 1 April 2026; verify the position before acting. Illustrative examples are not client matters.