Statutory stay on GST recovery barred unilateral cash-ledger debit of disputed interest and required re-credit of the amount.

During the pendency of an appeal, once the amount required under Section 107(6) of the CGST Act is paid, recovery proceedings for the balance are deemed stayed under Section 107(7). A unilateral debit of disputed interest from the electronic cash ledger despite that statutory stay was contrary to the provision and without jurisdiction. The rejection of the refund request was therefore unsustainable, and the amount was directed to be re-credited to the electronic cash ledger.

---

---

Issues: Whether the Assessing Authority could debit the disputed interest amount from the electronic cash ledger during the pendency of the appeal, and whether the rejection of refund of the amount so debited was sustainable.

Analysis: Section 107(7) of the Central Goods and Services Tax Act, 2017 provides that once the appellant has paid the amount under Section 107(6), recovery proceedings for the balance amount shall be deemed to be stayed. The disputed interest was debited during pendency of the appeal notwithstanding this statutory stay. The unilateral debit from the cash ledger was therefore contrary to the mandate of the provision and was without jurisdiction. The rejection of the request for refund could not be sustained.

Conclusion: The debit of the disputed interest amount was impermissible, and the order rejecting refund was set aside. The disputed amount was directed to be re-credited to the electronic cash ledger.

---