Interest on refund of pre-deposit _Amount deposited for filing GST Appeals

[Aap Consulting Pvt. Ltd.]

Dear Experts

Please guide whether interest is payable by department on refund of pre-deposit once the assessees appeal is allowed. As per section 115 of the CGST Act, 2017 interest is payable from the date of payment till the date of refund; however the officer is of the view that as per section 56 of the Act, interest is payable only if the refund is given beyond a period of 60 days from the date of application of refund.

In my opinion this 60 days limit is only for 'any tax ordered to be refunded' or 'refund arising from an order passed by adjudicating authority'; however the amount deposited for filing Appeal u/s 107 is neither 'tax' nor 'arising from the order passed by Adjudicating Authority' it is an amount paid for admission of Appeal; hence section 56 of the Act is not applicable on this refund and interest is payable u/s 115 only.

[Sadanand Bulbule]

Section 115 of the CGST Act, 2017:

It provides that pre-deposit made for filing an appeal is not in the nature of “tax” but a statutory deposit.  Refund of such pre-deposit has to be made with interest from the date of deposit till the date of refund, once the appeal is decided in favour of the assessee.

2. Section 54 of the CGST Act, 2017 -- It governs interest on refund of tax (not pre-deposit). Interest is payable only if the refund is delayed beyond 60 days from the date of application.

Clarification for Your Case:

The officer’s stand that Section 54 applies is not correct, because Section 54 deals with “tax refunds”. The amount paid under Section 107 for filing appeal is not tax, but a statutory pre-deposit. Therefore, Section 115 applies, and interest is payable from the date of deposit till refund, irrespective of 60 days condition. 

Conclusion: On refund of pre-deposit made for appeal, the taxpayer is entitled to interest from the date of deposit till the date of refund, under Section 115.

Section 115 is completely an independent and it does not depend upon Section 54. Therefore Section 54 does not apply here since the amount is not tax but a statutory deposit.

[Sadanand Bulbule]

Refer Section 56 also.

[KASTURI SETHI]

Interest on pre-deposit is payable from the date of payment of the amount of pre-deposit. The view of the officer of the department is totally incorrect.

In this scenario, the amount of pre-deposit retained by the department is without any authority from the date of payment consequent upon setting aside the Order-in-Original.

Section 56 mentioned in Section 115 refers to rate of interest only.

[Aap Consulting Pvt. Ltd.]

Thank You Sir

 

 

AI Summary

Interest on pre-deposit: statutory deposit attracts interest from payment until refund, independent of the tax-refund timeline. A pre deposit for filing an appeal is a statutory deposit, not tax; when the appeal succeeds the pre deposit must be refunded with interest from the date of payment until refund under the provision governing interest on pre deposits. The statutory timeline applicable to tax refunds addresses refunds of tax and does not supplant the independent rule requiring interest on pre deposits; a separate cross reference cited in the discussion is said to prescribe only the interest rate.