GST WEEKLY UPDATE :1/2026-27 (05.04.2026) By Vipul Khandhar

1. When “NIL” Means No Appeal: A GST Portal Glitch Undermining Taxpayers’ Statutory Rights:

In a system designed to streamline tax administration and enhance ease of doing business, an unexpected procedural roadblock is leaving taxpayers stranded. Across India, businesses attempting to challenge Goods and Services Tax (GST) adjudication orders are encountering a perplexing issue: when demand orders reflect a “NIL” liability, the GST portal refuses to accept their appeals—even where a genuine dispute exists.

The Emerging Problem

The issue, now acknowledged by the Goods and Services Tax Network (GSTN), typically arises in cases where taxpayers, during the Show Cause Notice (SCN) stage, make voluntary payments—either in full or in part—without admitting liability. Such payments are often made to mitigate interest exposure or avoid penal consequences, while still preserving the right to contest the underlying tax demand.

However, complications arise when the adjudicating authority subsequently issues an order treating this prior payment as a full discharge of liability—without explicitly determining or recording the actual tax demand. The result: a “NIL” demand order on record.

System Limitation, Legal Consequence

From a system perspective, the GST portal automatically generates a Demand ID in the Demand and Collection Register (DCR), also known as the liability ledger, upon issuance of any adjudication order. When the order reflects zero demand, the DCR records no outstanding liability.

This creates a critical barrier at the appellate stage. When taxpayers attempt to file an appeal in Form APL-01, the system rejects the application, often displaying the error: “Disputed amount cannot be more than demand amount itself.”

In effect, the absence of a recorded demand disables the appeal mechanism altogether.

A Clash with Statutory Rights

This technological constraint stands in stark contrast to the legal framework under Central Goods and Services Tax Act, 2017, particularly Section 107, which grants taxpayers an unequivocal right to appeal against adjudication orders.

Importantly, jurisprudence and established principles of tax law recognize that:

• Payments made during the SCN stage do not constitute acceptance of liability unless explicitly admitted.
• Taxpayers retain the right to contest such liabilities, even after making payments.

Thus, the current system behavior effectively curtails a statutory right due to a procedural and technical anomaly.

The Way Forward: Rectification as a Remedy

Recognizing the gravity of the issue, GSTN has advised an interim workaround. Taxpayers facing this situation are encouraged to seek rectification of the adjudication order by approaching the concerned adjudicating authority.

Through the rectification mechanism available on the GST portal, taxpayers can request the authority to:

• Explicitly determine and record the disputed liability, and
• Issue a revised order reflecting the correct demand amount.

Once the rectified order is uploaded and the demand is appropriately reflected in the system, the taxpayer can proceed to file an appeal within the prescribed timelines.

A Need for Systemic Alignment

While the suggested remedy provides temporary relief, it also underscores a deeper need for alignment between legal rights and digital infrastructure. As GST compliance becomes increasingly system-driven, such mismatches can have far-reaching implications—not only delaying justice but also increasing compliance burdens.

For now, taxpayers and practitioners must navigate this additional procedural step. But the episode serves as a reminder: in the digital tax era, the integrity of legal rights must be matched by the robustness of the systems that enforce them.

2. GST Compliance Update: E-Invoicing Enablement & Mandatory 2FA Requirements for Taxpayers:

In a continued effort to strengthen compliance, enhance transparency, and improve system security under the GST regime, the Goods and Services Tax Network (GSTN) has issued important updates concerning e-invoicing applicability and portal security protocols.

E-Invoicing Enablement for Taxpayers (AATO Rs. 5 Cr to Rs. 10 Cr)

Taxpayers having Aggregate Annual Turnover (AATO) between ₹5 crore and ₹10 crore are now enabled for e-invoicing on the GST portal. This move aligns with the phased implementation strategy adopted by the government to widen the e-invoicing framework across businesses of varying sizes.

Further, taxpayers whose AATO exceeds ₹5 crore but who are not yet enabled for e-invoicing may opt for voluntary enablement. This can be done by navigating to:

Registration → e-Invoice Enablement on the GST portal.

Voluntary adoption is expected to facilitate smoother compliance, improve invoice standardization, and reduce reconciliation issues in the long run.

Mandatory Two-Factor Authentication (2FA)

To enhance portal security and safeguard taxpayer data, GSTN has made Two-Factor Authentication (2FA) mandatory for all taxpayers with AATO exceeding ₹20 crore.

This requirement has been effective from 1st November 2023, and applicable taxpayers must ensure compliance to avoid login disruptions or restricted access to GST services.

3. CBIC’s One-Time Relief for SEZ Units: Concessional DTA Sales to Cushion Global Trade Disruptions:

Policy Context: Responding to Global Headwinds

SEZ units, traditionally export-oriented, have faced sustained pressure due to global demand slowdowns, supply chain disruptions, and geopolitical uncertainties. Recognizing these challenges, the Government, through the Union Budget 2026–27, proposed a temporary framework to provide domestic market access at moderated duty rates—without undermining domestic industry competitiveness.

Legal Backing and Notification Framework

The relief has been formalized via Notification No. 11/2026-Customs dated 31 March 2026, issued under Section 25 of the Customs Act, 1962.

This special dispensation is effective from 1st April 2026 to 31st March 2027, thereby creating a one-year window for eligible SEZ units to leverage this opportunity.

Revised Concessional Duty Structure

Under this relief mechanism, CBIC has prescribed a graded concessional duty structure for notified goods cleared into DTA:

The calibrated reduction ensures a balanced approach, offering relief to SEZ units while maintaining a level playing field for domestic manufacturers.

Eligibility Criteria: Guardrails for Targeted Relief

To prevent misuse and ensure that the benefit reaches genuinely affected units, CBIC has laid down clear eligibility conditions:

• Operational Timeline: Units must have commenced production on or before 31 March 2025.
• Minimum Value Addition: Goods cleared must have undergone at least 20% value addition over inputs.
• Export Discipline Maintained: DTA clearances under this scheme must not exceed 30% of the highest annual FOB value of exports in any of the preceding three financial years.

These conditions reaffirm that SEZs remain fundamentally export-driven while offering limited domestic flexibility.

Technology-Driven Implementation

The scheme will be administered through CBIC’s automated customs system, with faceless assessment of Bills of Entry for DTA clearances. This aligns with India’s broader push toward digitization, transparency, and reduced interface between taxpayers and authorities.

Sectoral Exclusions: Protecting Domestic Sensitivities

Acknowledging concerns from domestic industries, certain sensitive sectors have been explicitly excluded from the scope of this relief window. This selective approach ensures that the measure does not distort market dynamics or adversely impact local manufacturing.

Balancing Relief with Reform

This one-time measure reflects a nuanced policy balancing act—providing short-term relief to SEZ manufacturers while preserving the integrity of India’s domestic industry and long-term export orientation.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.