If you have applied for upgradation, it means you will be participating in Round 2. If you get a seat in Round 2, the seat allotted in Round 1 will be automatically cancelled. And now lets say if you participate in State Counselling and you get a seat, you will have to resign from the seat allotted in Round 2. In that case, you will have to forfeit the security deposit that you paid during NEET Counselling registration. For more information, please read the FAQs posted at MCC website: https://mcc.nic.in/UGCounselling/Documents/UGSchemeFinal.pdf