GST Appellate Authority Approves Cash Refund of ₹3.96 Lakh Pre-Deposit with Interest @ 6% p.a. in Penalty Dispute Case
The GST Appellate Authority referred to prior Circulars and Notifications to note that pre-deposit must be granted together with interest from the date of deposit until the actual date of refund
In a significant procedural development within the GST appellate framework, the competent authority has sanctioned the refund of a pre-deposit amounting to ₹3,96,000 along with interest calculated at 6% per annum, following the resolution of a penalty dispute case.
This decision, rendered by the office of the Deputy Commissioner, Division-VI, CGST & Central Excise, Belapur Commissionerate against an application made by a GST-registered applicant who sought to contest the service tax liability levied on him.
The origins of the dispute lie in the issuance of a show cause notice pertaining to an alleged service tax liability. In response to the adjudication order, the party aggrieved by the demand was required to make a mandatory pre-deposit as a condition for filing an appeal.
The pre-deposit, made on August 31, 2023, was held during the pendency of the appellate proceedings. The matter was subsequently taken up before the Commissioner (Appeals), Raigad, who proceeded to remand the issue back to the adjudicating authority for fresh consideration.
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Following the remand, a claim for refund of the pre-deposit was submitted, along with a request for statutory interest as per the provisions of Section 35FF of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. The office of the Deputy Commissioner undertook a detailed review of the application, including verification of the payment records, the appeal orders, and compliance with prescribed procedures under the Central Excise and GST statutes.
O.P. Meena, Deputy Commissioner, observed that CBEC Circular No. 984/08/2014-CX and the Notification No. 24/2014-CE(NT) mandate that refund of pre-deposit must be granted together with interest from the date of deposit until the actual date of refund, particularly where the matter is decided in favour of the appellant or remanded for de novo adjudication.
The interest for the relevant period was subsequently calculated at 6% per annum from the date of pre-deposit to the date of sanction, amounting to ₹42,833, thereby resulting int a total refund amount of ₹4,38,833.
The decision of the authority underscores the obligation on the GST Department to duly process and disburse such refunds within fifteen days from the date of receipt of the refund application, regardless of any further departmental proceedings, unless a stay has been specifically obtained from any higher authority.
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