Refund of interest on GST Refund of pre-deposit

[Sarjeet Shekhawat]

we received GST refund of pre-deposit but department did not give us interest on such refund now my concern is that how do i get interest on such refund ?

[KASTURI SETHI]

Sh.Kalleshamurthy Murthy Ji,

The department filed SLP on  10.12.2018 which is still pending decision with the Supreme Court 

Refund of pre-deposit — Interest on refund whether payable from date when appeal allowed ?

The Supreme Court Bench comprising Hon’ble Mr. Justice S.A. Bobde and Hon’ble Mr. Justice Navin Sinha on 10-12-2018 issued notice in the Petition for Special Leave to Appeal (C) No. 31522 of 2018 filed by Commissioner of Trade and Taxes against the Judgment and Order dated 10-8-2018 of Delhi High Court in Writ Petition (C) No. 3118 of 2018 as reported in 2018 (19) G.S.T.L. 478 (Del.) (MRF Limited v. Commissioner of Trade and Taxes). While issuing the notice, the Supreme Court passed the following order :

“Issue notice.

Until further orders, the operation of the impugned judgment and order passed by the High Court shall remain stayed.”

The Delhi High Court in its impugned order had held that since refund of pre-deposit became due and payable from the date when appeal was allowed, assessee was also entitled to interest calculable from the date such appeal was allowed.

[Commissioner of Trade and Taxes v. MRF Limited - 2018 (12) TMI 592 - SC ORDER]

[Sarjeet Shekhawat]

what is the rate of interest 6% or 9% ? 

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

In the cases of finality of appeal, the interest rate is applicable @9%.

With regards.

[SARTHAK GUPTA]

Respected senior,

appeal has been rejected by the authorities and now i move to GSTAT so for 20% pre deposit - should i adjust my previous 10% already paid challan amount in this or paid additional 20% fresh in despite of that

[KALLESHAMURTHY MURTHY K.N.]

Sri - SARTHAK GUPTA

Sir,

You have not clearly explained the details. The Query by Sri  Sarjeet Shekhawat is that Pre-deposit was refunded without interest. The disputed fact is interest is not paid. If your case is the same as the above issue, the appeal is for the interest not paid. So, pre-deposit doesn't come into question. If your issue is different, if you need to pay an additional pre-deposit, the pre-deposit already paid also counts.

Thanks.

[KASTURI SETHI]

Not adjustable. 20% is in addition pre-deposit made before Appellate Authority under Section 107 (6) of CGST Act. Read Section 112 (8) (b) of CGST Act which is extracted below:

(8) No appeal shall be filed under sub-section (1), unless the appellant has paid —

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and

(b) a sum equal to [ten per cent.] of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, [subject to a maximum of [twenty crore rupees],] in relation to which the appeal has been filed.

Also go through Board's Flyer

An extract of C.B.E. & C. Flyer No. 51, dated 1-1-2018

Concept of pre-deposit

As mentioned earlier, the right to appeal is a statutory right which operates within the limitations placed on it by the law. One such limitation flows from the principle that an appellant must first deposit the adjudged dues before his further appeal can be heard. However, often an appellant may succeed in his appeal, and hence it would (in retrospect) be unfair to saddle him with this financial burden. To balance these factors, tax laws mandate some “pre-deposit” so as to discourage frivolous appeals and also safeguard the bona fide interests of both the taxpayers and the revenue.

The CGST Act, 2017 require an appellant before AA to pre-deposit full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned order and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order.

In so far as appeals to the Tribunal is concerned, no appeal can be filed before the Tribunal unless the appellant has deposited in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and a sum equal to 20% of the remaining amount of tax in dispute, in addition to the amount deposited before the AA, arising from the said order, in relation to which appeal has been filed

AI Summary

Interest on pre-deposit refunds: entitlement under Sections 115 and 56 allows interest from payment date; appeal remedies available.
Entitlement to interest on refund of a pre-deposit arises where an appellant's pre-deposit is ordered refunded. Sections 115 and 56 together prescribe that the interest rate under the refund provision applies to pre-deposit refunds while the period for interest on pre-deposit runs from the date of payment until refund. The taxpayer should demand interest in writing, appeal the refund sanction/order if interest is withheld, and may pursue writ jurisdiction if administrative remedies fail.