Appeal allowed for refund of interest paid on tax under CGST Act. Retrospective amendment clarifies interest payable.

The appeal was allowed as the delay in filing was condonable under Section 107(4) of the CGST Act, and the appellant was found eligible for a refund of interest paid on tax through the Electronic Credit Ledger. The retrospective amendment clarified that interest was payable only on the portion of tax paid through the Electronic Cash Ledger, leading to the setting aside of the adjudicating authority's order and instructions to process the refund claim in accordance with the law.

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Issues Involved:
1. Timeliness of the appeal filing.
2. Legitimacy of the refund claim for interest paid on tax through the Electronic Credit Ledger.

Issue-wise Detailed Analysis:

1. Timeliness of the Appeal Filing:
The first issue addressed was whether the appeal was filed within the prescribed time limit under Section 107 of the CGST Act, 2017. The order dated 03.11.2020 was received by the appellant on 24.11.2020, and the appeal was filed on 23.02.2021. This resulted in a delay beyond the normal period prescribed under Section 107(1). However, the delay was condonable for a further period of one month if the appellant was prevented by sufficient cause. The delay of 21 days was found to be condonable under Section 107(4), and thus, the appeal was allowed to proceed on merits.

2. Legitimacy of the Refund Claim:
The appellant, a proprietorship firm engaged in manufacturing and exports, filed a refund claim for Rs. 4,265/- in interest paid on tax through the Electronic Credit Ledger for the period from July 2017 to March 2018. The claim was initially rejected by the adjudicating authority, citing administrative instructions that did not provide for a refund of interest already paid on ITC.

The appellant argued that:
- The interest was paid under protest due to unclear provisions regarding whether interest was payable on tax paid through ITC.
- The Finance Bill 2021 proposed a retrospective amendment to Section 50 of the CGST Act, effective from July 1, 2017, to charge interest only on net cash liability.
- The appellant had followed the directions issued by the government and filed the refund claim accordingly.

The adjudicating authority rejected the claim without specifying the section under which the refund was denied, leading to a non-speaking order.

Upon review, it was found that:
- The appellant had paid interest on both cash and ITC due to late filing of returns.
- The retrospective amendment to Section 50(1) of the CGST Act, 2017, effective from July 1, 2017, clarified that interest was payable only on the portion of tax paid through the Electronic Cash Ledger.
- The appellant's case did not fall under the exclusion clause of the proviso to Section 50(1).

Thus, the appellant was eligible for a refund of the interest paid in excess of the actual interest liability. The adjudicating authority's order was set aside, and the appeal was allowed. The adjudicating authority was instructed to process the refund claim in accordance with the procedures laid down under the CGST Act and rules.

Conclusion:
The appeal was disposed of by setting aside the impugned order and directing the adjudicating authority to process the refund claim as per the CGST Act and rules.

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