Section 115 of CGST Act, 2017 – Interest on Refund of Amount Paid for Admission of Appeal
Such amount shall be refunded along with interest at such rate as may be prescribed.
✅ Meaning in Simple Words
When a taxpayer files an appeal, he has to deposit:
✔ 10% of disputed tax (first appeal)
✔ Additional amount for further appeals
If the taxpayer wins the case:
➡ The deposited amount is refunded
➡ Along with interest
This ensures fairness and compensation for blocked funds.
💰 What is “Pre-Deposit”?
Pre-deposit is the amount required to be paid before filing an appeal.
| Stage | Pre-deposit Requirement |
|---|---|
| First Appeal (Section 107) | 10% of disputed tax |
| Tribunal Appeal (Section 112) | Additional 20% |
This deposit is mandatory for admission of appeal.
📌 When Does Section 115 Apply?
This section applies when:
✔ Appeal is decided in favour of taxpayer
✔ Pre-deposit amount becomes refundable
✔ Refund arises due to appellate or court order
⏳ Interest on Refund
• Interest is payable from date of deposit till date of refund
• Rate of interest is prescribed under GST law
This ensures compensation for time value of money.
📖 Practical Illustration
Example
A taxpayer deposits ₹1,00,000 as pre-deposit while filing appeal.
Later:
➡ Appellate Authority decides in his favour
➡ Entire amount becomes refundable
Under Section 115:
✔ ₹1,00,000 will be refunded
✔ Interest will also be paid for the period of delay
⚖️ Judicial Perspective
Courts have consistently upheld that:
• Pre-deposit is not tax, but a condition for appeal
• If appeal succeeds, amount must be refunded with interest
• Delay in refund may attract additional legal consequences
Interest ensures equity and fairness.
🎯 Objective of Section 115
The purpose of this provision is to:
✔ Compensate taxpayer for blocked funds
✔ Ensure fairness in appellate mechanism
✔ Encourage taxpayers to exercise appeal rights
✔ Maintain balance between revenue and taxpayer interest
🔄 Section 115 in Appeals Framework
| Section | Subject |
|---|---|
| Section 107 | First Appeal |
| Section 112 | Appeal to Tribunal |
| Section 115 | Interest on Refund of Pre-deposit |
Section 115 ensures financial fairness post-appeal.
📌 Important Points to Remember
• Applies only when refund arises due to appeal order
• Covers pre-deposit under Sections 107 & 112
• Interest is mandatory
• Rate is prescribed
• Refund includes both amount and interest
❓ Frequently Asked Questions (FAQs) – Section 115 CGST
Q1. What is covered under Section 115?
Interest on refund of pre-deposit made for filing appeal.
Q2. When is interest payable?
When appeal is decided in favour of taxpayer.
Q3. Is pre-deposit refundable?
Yes, if taxpayer wins appeal.
Q4. Is interest automatic?
Yes, as per statutory provision.
Q5. From which date is interest calculated?
From date of deposit till refund.
Q6. Does it apply to all appeals?
Yes, where pre-deposit is required.
Q7. Is interest rate fixed?
It is prescribed under GST rules/notifications.
Q8. Can department deny interest?
No, if conditions are satisfied.
Q9. What if refund is delayed?
Taxpayer may seek legal remedy.
Q10. Why is Section 115 important?
It ensures compensation for taxpayer’s funds blocked during appeal.
📝 Conclusion
Section 115 of the CGST Act, 2017 ensures that taxpayers are compensated by way of interest when pre-deposit amounts made for filing appeals are refunded pursuant to favorable orders. It promotes fairness, reduces financial burden, and strengthens trust in the GST appellate system.
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