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TMI BlogRefund of interest on GST Refund of pre-depositX X X X Extracts X X X X X X X X Extracts X X X X ..... Refund of interest on GST Refund of pre-deposit X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment has no right to retain your amount without any authority of law. The amount of pre-deposit was meant for availing right of appeal. It was subject to decision of the appeal. So why the department should retain the pre-deposit amount without payment of interest. ? You are strong on merits. >(ii) First step is to write a letter to the Officer who has partly rejected refund claim. If the concerned officer does not listen to you, then meet the jurisdictional Commissioner. Even then if the problem is not solved, then Appeal has to be filed against the partly rejected refund claim. >(iii) Refund Rejection Order/Sanction Order is an Adjudication Order/Order-in-Original. It is appealable to the Appellate Authority. It is afresh Order-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Original. Reply By Sarjeet Shekhawat: The Reply: >can I file fresh refund application on GST Portal for Interest part only? Reply By KASTURI SETHI: The Reply: >NO. Only filing an appeal is the option. I have dealt with such issue. Reply By Sarjeet Shekhawat: The Reply: >but how can i file appeal bcoz department processed my refund claim which i filed as an original application and i did not claim interest part in original refund application, only claim tax amount which was deposited as a pre deposit and department processed the same. Reply By KASTURI SETHI: The Reply: >You should have disclosed full facts in your query dated 10.9.24 at the first instance. Reply By kailash chandra: The Reply: >appeal can be filed against r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund order , where by interest has not been given against sactioned refunded amount , even if interest has not been claimed specifically in refund claim/application ..giving interest on any refundable amount is integrated machenism & bound to be given , if it is admissible , > Reply By KASTURI SETHI: The Reply: >Interest should have been sanctioned by the refund sanctioning authority on its own. Interest is automatic. You can file appeal. There are case laws on this issue in your favour. Reply By Shilpi Jain: The Reply: >Appeal against refund sanction order. >Interest is automatic. No issue if not applied for separately. Interest due from date of pre-deposit. Reply By KALLESHAMURTHY MURTHY: The Reply: >Dera Sir, >Yo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur query does not mention that the refund was made beyond the statutory period of 60 days from the date of application filed for refund. >As per Sec. 56, the interest is payable for the delayed period after 60 days of the refund application filed. If the refund is made within 60 days no interest is payable. >If you have paid interest at the time of pre-deposit, you can get interest so paid. >If there is any violation of provisions in the grant of refund, you can demand, the refund authority in writing for the interest. Reply By KASTURI SETHI: The Reply: >Sh. Kalleshamurthy Murthy Ji,: >Section 56 talks of refund of tax. Pre-deposit is not a payment of tax. It is a pre-deposit for availing right of appeal though pre-deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been allowed to pay through Electronic Credit Account. Interest is refundable from the date of deposit. >Pre-deposit is not a payment duty (now tax) but only a pre-deposit for availing right of appeal.---Hon'ble Supreme Court in the case of UOI Vs. Suvidhe Ltd. reported as 1996 (2) TMI 136 - BOMBAY HIGH COURT. Bombay High Court and upheld by the Supreme Court in 1996 (8) TMI 521 - SC ORDER. Reply By KASTURI SETHI: The Reply: >It is also worthwhile to know the difference between the terms, 'pre-deposit' and 'deposit'. Reply By KASTURI SETHI: The Reply: >The following judgement is worth reading though pertains to pre-GST era :- >CONTINENTAL ENGINES PVT. LTD. Versus COMMISSIONER (APPEALS), C. EX. & CGST, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JAIPUR-I - 2022 (5) TMI 903 - CESTAT NEW DELHI > Reply By KALLESHAMURTHY MURTHY: The Reply: >Dear Learned Experts, >As per Sec.115, the interest is payable from the date of deposit. But the interest rate is prescribed u/s 56 under the heading, -Interest on delayed refunds -when the appeal order favoured the appellant at 9%. >Sec. 56 reads as under. >Provided that 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 Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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. >So, the Appellant has to apply for a refund. The interest payable arises only after the expiry of 60 days after the receipt of the application. That is the interest rate comes into the picture only after the expiry of 60 days. There was no rate of interest fixed for regular payments. How can the rate of interest prescribed under this provision be applicable from the date of deposit? >So, Sec.115 and Sec. 56 are contradictory provisions. The departmental authorities follow this provision. Is further appeal only the way to get the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy? Reply By KASTURI SETHI: The Reply: >Dear Sh.Murthy Ji, >How Sections 115 and 56 are contradictory ? Have you perused the meaning and essence of 'deposit' explained by the Hon'ble Supreme Court ? Reply By SHARAD ANADA: The Reply: >Interest allowable on Refund of Pre-Deposit paid for filing Appeal. Pl. Refer Delhi High Court Judgement in the case of MRF LTD. vs THE COMMISSIONER OF TRADE AND TAXES & ANR - 2018 (8) TMI 995 - DELHI HIGH COURT. Reply By KALLESHAMURTHY MURTHY: The Reply: >Respected Kasturi Sethi Ji, >I am in line with the provisions under the GST Act. >Sec. 115 states the interest rate on the deposit from the date of payment of pre-deposit as prescribed u/s 56. According to section 56, The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest rate is applicable from the date after the expiry of 60 days. We can't choose the interest rate directly. Reply By Padmanathan KV: The Reply: >Kalleshamurthy sir, >On a plain reading of section 115 and 56, it appears that Sec 115 borrows only the rate of interest from sec 56. The period for which interest is calculated is specified in section 115 itself. Reply By KALLESHAMURTHY MURTHY: The Reply: >Learned Padmanathan KV Sir, >I agree 100% with you. It is only for the discussion purpose where a litigation can be created in the legality perspective. Reply By KASTURI SETHI: The Reply: >Sh. Kalleshamurthy Murthy Ji, >Just for discussion sake >Extract of FAQ dated 15.12.18 >Q49. When will interest becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payable in a refund claim? >Ans. As per Section 56 of CGST Act, if any tax ordered to be refunded under section 54 (5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1), 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 attain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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. >Where the claim relates to refund of pre-deposit made as per Section 107 or 112 of the GST Act, different provisions will apply for interest As per Section 115 of the GST Act, where an amount paid by the appellant under section 107(6) or section 112(8) is required to be refunded consequent to any order of the Appellate Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority 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. Thus, in cases of refund of pre-deposit amount, interest will have to be paid from the date of payment till the date of refund of the amount (and not from date of receipt of claim for such refund of pre-deposit) Reply By KASTURI SETHI: The Reply: >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. Bobd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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] Reply By Sarjeet Shekhawat: The Reply: >what is the rate of interest 6% or 9% ? Reply By KALLESHAMURTHY MURTHY: The Reply: >Dear Sir, >In the cases of finality of appeal, the interest rate is applicable @9%. >With regards. Reply By SARTHAK GUPTA: The Reply: >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 Reply By KALLESHAMURTHY MURTHY: The Reply: >Sri - SARTHAK GUPTA >Sir, > ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Reply By KASTURI SETHI: The Reply: >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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judged 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless 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 X X X X Extracts X X X X X X X X Extracts X X X X
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