INTEREST ON REFUND OF AMOUNT PAID FOR ADMISSION OF APPEAL

[Dr. Sanjiv Agarwal]

Statutory provision on Interest on refund of amount paid for admission of appeal (Section 115)

Where an amount paid by the appellant under sub-section (6) of section 107 or sub-section (8) of section 112 is required to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount.

Section 115 of CGST Act, 2017 provides for payment of interest on refund of amount which was paid at the time of admission of appeal. It may be noted that for filing an appeal under section 107 of CGST Act, 2017, a deposit is required to be made. It has been provided in section 112(8) of CGST Act, 2017 for filing the appeal before appellate tribunal that 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 twenty 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 134 subject to a maximum of fifty crore rupees, in relation to which the appeal has been filed.

Further, section 56 of CGST Act, 2017, provides for interest on delayed refunds. Accordingly, if any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax.

Where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).

Interest on refund

Where the assessee gets a favourable decision (fully or partially), the amount paid as pre-deposit would be refunded along with interest which is computed from the date of deposit till date of refund.

Interest shall be payable at the rate specified in section 56 and it shall be payable in respect of refund from the date of payment of the amount till the date of refund of such amount. Section 56 of the CGST Act, 2017 specifies the rate of interest payable which will be notified by the central or state government on the recommendation of GST Council.

According to section 115 of the CGST Act, 2017, where an amount deposited by the appellant is required to be refunded consequent to any order of the appellate authority or of the appellate tribunal, interest shall be payable in respect of such refund from the date of payment of the amount till the date of such refund amount. The rate of interest shall be 9% (Notification No. 13/2017-Central Tax dated 28.06.2017).

The interest will be calculated from the date of pre-deposit to the date of actual refund of the deposit.

Discussions to this article

[AJAY MISHRA]

Dear Sir,

Your benign views are solicited on following aspects related to refund of pre-deposit made under section 107(6) or 112(8):

1. Whether, the refund of pre-deposit made under section 107(6) or 112(8) of the CGST/SGST Act, 2017 is subject to principle of 'unjust enrichment' since, exception thereto made in section 54(8) does not include pre-deposit made under said sections? and

2. Whether, the application claiming refund of pre-deposit (RFD-01) requires to be accompanied with the Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise?

[Dr. Sanjiv Agarwal]

Dear Sir,

The doctrine of unjust enrichment does not apply to refund of pre-deposit when the same is not passed on to others.

No, the application claiming refund of pre-deposit does not require to be accompanied either with a self-declaration nor certification under rule 89(2)(l,m) of CGST Rules, 2017. As per rule 89(2)(a) of CGST Rules, 2017, the application shall be accompanied in Annexure-1 in Form GST RFD-01, the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified in sub-section (6) of section 107 and sub-section (8) of section 112 claimed as refund.

Hope, the clarification suffice the purpose.                                                                                                                          

Regards ,

CA. Neha Somani