BLOCK 1 — VERBATIM TEXT Marginal note — Interest on refund of amount paid for admission of appeal 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…
115
CGST Act · Section 115
Interest on pre-deposit refund
Chapter XVIII — Appeals and RevisionCGST Act, 2017
Section 115 — INTEREST ON PRE-DEPOSIT REFUND
BLOCK 1 — VERBATIM TEXT
Marginal note — Interest on refund of amount paid for admission of appeal
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 amount from the date of payment of the amount till the date of refund of such amount.
[Section 115 enforced w.e.f. 01.07.2017 by Notification 9/2017-CT dated 28.06.2017. The provision compensates the appellant for the time-value of pre-deposit money locked up during pendency of appellate proceedings, where the outcome ultimately requires the pre-deposit to be returned. Companion provisions — Section 107(6) (AA pre-deposit), Section 112(8) (GSTAT pre-deposit), Section 54 (refund procedure), Section 56 (interest rate — 6% per annum per CGST Rule 60 read with Notification 13/2017-CT). The interest entitlement is statutory and automatic — no separate application is needed for the interest component, though the underlying refund application under s. 54 framework remains the operational gateway.]
BLOCK 2 — STATUTORY MAP
ELEMENT OF THE PROVISION
OPERATIVE READING
Trigger — amount paid under s. 107(6) or s. 112(8)
Only the pre-deposit components carry interest under s. 115. Section 107(6) — admitted amount in full plus 10% of disputed tax (capped at Rs. 25 crore) for AA appeal. Section 112(8) — additional 10% of disputed tax (capped at Rs. 20 crore post-Finance (No. 2) Act 2024) for GSTAT appeal. Refunds of other components (e.g., tax recovered during pendency without stay, voluntary deposits) follow the general s. 56 framework, not s. 115.
Trigger — ‘required to be refunded consequent to any order’
The refund obligation must arise as a direct consequence of an AA or GSTAT order. Three operative scenarios: (a) appeal allowed entirely — full pre-deposit refundable; (b) appeal allowed in part — proportionate pre-deposit refundable; (c) underlying demand quantum reduced — pre-deposit excess refundable. The trigger is automatic on order pronouncement; no Departmental discretion.
Applicable orders — AA orders under s. 107 and GSTAT orders under s. 113
‘Order of the Appellate Authority’ refers to s. 107(11) orders. ‘Order of the Appellate Tribunal’ refers to s. 113(1) orders. Orders by the Revisional Authority under s. 108, High Court under s. 117, or Supreme Court under s. 118 are not directly within s. 115’s text, though the refund obligation flowing through earlier-tier orders ultimately carries the s. 115 interest where the pre-deposit was made for AA or GSTAT appeal.
Rate — ‘at the rate specified under section 56’
Section 56 read with CGST Rule 60 and Notification 13/2017-CT specifies 6% per annum simple interest. This is the same rate as for general refund interest under s. 56. The proviso to s. 56 (9% for delayed refund post-AA order) does not apply to s. 115 — the s. 115 rate is the base 6%.
Period — date of payment till date of refund
Interest accrues from the actual date of pre-deposit (the date of debit from electronic cash ledger / payment challan, not the date of filing of appeal) and runs until the date the refund is credited to the appellant. The period covers the entire period during which the Government held the pre-deposit amount, irrespective of how long the appellate proceedings took.
No application required for interest — statutory entitlement
Unlike general refund under s. 54 which requires Form GST RFD-01, the interest component of pre-deposit refund is statutorily attached to the principal refund. The Departmental refund order must include interest computed in accordance with s. 115. Failure to include or short-computation of interest is a separate cause of action for grievance / writ relief.
Operative even if appellate order is silent on interest
Section 115 operates by force of statute, not by direction in the appellate order. The AA or GSTAT order need not specifically direct refund or interest — once the order produces a refund consequence, s. 115 attaches automatically. Practitioners should resist Departmental objections that interest was not directed by the order.
Distinguished from s. 56 general refund interest
Section 56 general refund interest applies to delayed refunds (post 60 days from refund application or 60 days from appellate order on refund matter). Section 115 is specific to pre-deposit refunds and runs from date of payment (not from any delay-triggering event). The two frameworks operate in different domains; s. 115 is the lex specialis for pre-deposit.
No interest on partial appeal — pre-deposit retained
Where appeal is allowed in part such that some pre-deposit must still be adjusted against confirmed demand, only the refundable portion attracts s. 115 interest. The retained portion is treated as appropriation against tax liability and does not carry interest in favour of the appellant.
Interest on interest — not contemplated
Section 115 provides simple interest, not compound. The interest amount itself does not earn further interest if the principal-and-interest refund is delayed; that delay scenario is governed by s. 56 general framework.
Tax-exempt status of interest
Interest received under s. 115 is statutorily a refund of time-value; under Income-tax Act it is taxable as ‘income from other sources’ in the year of receipt. Practitioners should advise inclusion in the income computation for that year.
Operational flow with Form GST RFD-05
Although s. 115 interest is automatic, operationally it appears in Form GST RFD-05 (payment advice) alongside the principal refund. Practitioners verifying refund credits should reconcile both components.
Departmental delay effect
Where Department delays the refund beyond the s. 56 60-day window after the appellate order, two streams of interest run: s. 115 (date of pre-deposit to date of refund) plus s. 56 enhanced rate (9% if delay attributable to Departmental inaction post-AA order). The two are not mutually exclusive — they cover different period segments.
Pre-FA 2024 vs post-FA 2024 cap on s. 112(8)
Finance (No. 2) Act 2024 reduced the s. 112(8) cap from Rs. 50 crore to Rs. 20 crore w.e.f. 01.11.2024. For pre-deposits made before that date under the older cap, the interest computation applies to the actual amount paid (which may exceed Rs. 20 crore for legacy deposits).
Substantive policy rationale
Pre-deposit is a condition precedent to appeal — a coercive financial obligation imposed by statute. Where the appellate outcome shows the appellant was substantially or wholly right, simple compensation for the period the money was locked up is a basic restitutionary principle. Section 115 codifies this principle and removes Departmental discretion over whether to pay interest.
Subject to assessment under s. 54 / s. 73 if refund itself disputed
If the underlying refund is itself contested (e.g., Department alleges that the pre-deposit was not actually paid as claimed, or that the appellate order does not warrant refund), s. 73 / s. 74 demand framework may be invoked to recover an erroneously paid refund. In such cases, interest under s. 115 is also contested.
BLOCK 3 — COMMENTARY
1. Section 115 — the restitutionary principle in pre-deposit refund
Section 115 codifies a simple equitable principle: where an appellant has been required by statute to deposit money as a precondition of appeal, and the appellate process eventually shows that the deposit must be returned, the appellant is entitled to be put in the position he would have been in had the deposit never been collected. Time-value compensation, expressed as interest at the section 56 rate, achieves this restitution.
The provision is brief because the principle is settled. What it does — and where practitioners must focus — is foreclose three Departmental positions that would otherwise be available: (a) that interest requires a direction in the appellate order; (b) that interest is discretionary; and (c) that interest runs only from the date of the appellate order, not from the date of original deposit. Section 115 answers each by force of statute.
2. The trigger — what counts as a pre-deposit refund under s. 115
Two and only two pre-deposit categories carry s. 115 interest:
• Section 107(6) pre-deposit — admitted amount in full plus 10% of disputed tax (capped at Rs. 25 crore), paid to take an appeal before the Appellate Authority.
• Section 112(8) pre-deposit — additional 10% of disputed tax (capped at Rs. 20 crore post-FA 2024), paid to take an appeal before GSTAT.
Money paid in other circumstances — for example, voluntary deposits during investigation, amounts recovered by Department during pendency without stay, or deposits made for purposes outside ss. 107(6) and 112(8) — falls outside s. 115. Refund of those amounts is governed by the general s. 54 framework with s. 56 interest computed on the delay basis, not the deposit-date basis.
The refund obligation must arise ‘consequent to’ an order of the Appellate Authority or the Appellate Tribunal. The most common scenarios:
• Appeal fully allowed — entire pre-deposit becomes refundable. Section 115 interest runs from date of original payment to date of refund.
• Appeal partly allowed — the pre-deposit attributable to the allowed portion becomes refundable; the portion attributable to the upheld demand is appropriated against tax liability and does not carry interest.
• Demand quantum reduced — where the disputed tax is reduced, the excess pre-deposit (i.e., 10% of the reduction) becomes refundable with s. 115 interest.
3. The rate — section 56 framework
Section 56 is the GST framework’s interest-on-refund provision. The base rate prescribed under CGST Rule 60 read with Notification 13/2017-CT dated 28 June 2017 is 6% per annum, computed as simple interest on a day-count basis. Section 115 borrows this rate directly.
The proviso to section 56, which provides 9% per annum for delayed refund arising from an order in appeal, does not extend to section 115. Practitioners should not conflate the two. The s. 115 period and rate are: 6% per annum, from date of original deposit till date of refund credit, regardless of whether the Department delays the refund or processes it promptly.
Departmental delay after the appellate order does, however, attract additional interest under s. 56(1)(b) for the delay segment. So a fully delayed refund can carry two streams of interest concurrently for the post-order period — s. 115 at 6% (continuing) plus s. 56 at 9% for delay beyond the 60-day window. Both are payable.
4. The period — date of payment to date of refund
The period for interest computation is bounded by two events:
• Start: date of payment of the pre-deposit — this is the date of debit from the electronic cash ledger or credit ledger, or the date stamped on the manual payment challan. It is not the date of filing the appeal, and it is not the date the Department acknowledges the deposit.
• End: date of refund of such amount — this is the date the refund is actually credited to the appellant’s bank account, not the date of the refund order. Where the Department issues a refund order but credit is delayed (e.g., due to bank holiday or processing lag), the credit-date controls.
The entire intervening period — including the duration of appellate proceedings, any judicial delays, any periods of Departmental processing — counts for interest. There is no carve-out for time taken by the Tribunal, the Department, or judicial intervention. The appellant’s money was held; the appellant is compensated.
5. Operational mechanics — claiming the refund and interest
The interest claim is statutorily attached to the principal refund claim. Operationally, the appellant files Form GST RFD-01 under s. 54 framework after the favourable appellate order. The application is processed by the proper officer, who must include the s. 115 interest in the refund computation.
Form GST RFD-05 (payment advice) issued to the appellant should show two line items: principal (the pre-deposit being refunded) and interest (the s. 115 component). Practitioners verifying refund credits should:
• Verify the start date used — Departmental computations sometimes use the date of acknowledgement of deposit rather than the date of actual debit. Where the appellant paid earlier, the correct start date is the earlier date.
• Verify the end date used — interest must run till date of bank credit, not date of refund order. Where these differ, the Department must include the gap days.
• Verify the day count — simple interest at 6% per annum is computed on actual days using a 365/366-day basis. Departmental computations occasionally use a 360-day basis or month-based approximation; these can be challenged for the few additional days.
• Verify Rs. 25 crore / Rs. 20 crore caps not over-applied — the caps apply to the principal pre-deposit, not to the interest. There is no cap on the interest computed.
6. Departmental positions to watch for
Three Departmental positions arise with some frequency and should be resisted:
• ‘The appellate order did not direct interest, so none is payable’ — incorrect. Section 115 operates by force of statute. The appellate authority’s silence on interest does not negate the statutory entitlement.
• ‘Interest runs only from the date of the appellate order’ — incorrect. The text says ‘from the date of payment of the amount’. The pre-deposit-date is the start, not the order-date.
• ‘The 6% rate is too high; some lower rate should apply’ — incorrect. Section 115 anchors to s. 56’s prescribed rate. The Government has not notified any lower rate; 6% is the operative rate.
Where the Department refuses to pay interest or short-computes it, the remedy is initially a grievance under the GST framework, then writ jurisdiction under Article 226. The Departmental position is not a ground for appellate proceedings since the underlying merits have already been decided; the dispute is purely about the s. 115 interest entitlement, which is suited to writ relief.
7. Treatment in books and under Income-tax Act
From an accounting standpoint, the principal refund is a recovery of pre-deposit (typically debited to a current asset account when paid; reversed on receipt). The interest is a fresh receipt and is treated as income.
Under the Income-tax Act, interest received on refund of pre-deposit is taxable as ‘income from other sources’ in the year of receipt (cash basis) or year of accrual (mercantile basis), depending on the assessee’s method of accounting. Practitioners advising on the tax-year impact of a delayed appellate outcome should factor in the timing of this taxable interest.
8. Departmental View (CBIC Handbook on Appeals)
The CBIC Handbook of GST Law and Procedures (DGGST, 2024) treats s. 115 as a statutory entitlement, not a discretionary refund. The Handbook directs proper officers to compute interest automatically as part of any refund order arising from appellate proceedings, without requiring a separate application. The Handbook also acknowledges the run-from-deposit-date principle and confirms that s. 56’s general framework does not displace the specific s. 115 framework for pre-deposits.
STATUTORY REFERENCES & RULES
• Section 107(6) — AA pre-deposit framework dated Statutory — Source of pre-deposit covered by s. 115. Section 107(6) requires the appellant to pay (a) the admitted amount of tax, interest, fine, fee and penalty in full; and (b) 10% of the remaining amount of disputed tax, subject to a maximum of Rs. 25 crore. Refund of either component, where the appellate order so requires, attracts s. 115 interest.
• Section 112(8) — GSTAT pre-deposit framework dated Statutory — Source of additional pre-deposit covered by s. 115. Section 112(8) requires an additional 10% of the remaining amount of disputed tax (over and above the s. 107(6) deposit), subject to a maximum of Rs. 20 crore post-Finance (No. 2) Act 2024. Refund of this additional component on a favourable GSTAT outcome attracts s. 115 interest.
• Section 56 — Interest on delayed refund dated Statutory — Source of the interest rate borrowed by s. 115. Section 56 prescribes interest on delayed refunds — 6% per annum simple interest (CGST Rule 60 read with Notification 13/2017-CT dated 28 June 2017). The proviso prescribes 9% for delay arising from order in appeal. Section 115 borrows only the base 6% rate, not the proviso’s 9%.
• Section 54 — Refund procedure dated Statutory — Operational gateway for the principal refund. Section 54 read with CGST Rules 89-97A provides the operational refund framework. The s. 115 interest is processed as part of this framework; Form GST RFD-01 is filed for the principal, and the refund order under Form GST RFD-06 read with Form GST RFD-05 should reflect both principal and interest.
• Notification 13/2017-CT dated 28 June 2017 dated Statutory (Notification) — Substantive interest rate notification. Notification 13/2017-CT fixed the rate of interest under s. 56 at 6% per annum (with the proviso rate at 9%). This notification supplies the operative rate for s. 115 read with s. 56.
• CBIC Handbook of GST Law and Procedures (DGGST, 2024) — Chapter XII dated Departmental — Operational guidance on s. 115 interest. The CBIC Handbook directs proper officers to include s. 115 interest automatically in any refund order arising from appellate proceedings. The Handbook confirms (a) start date is date of original deposit; (b) end date is date of bank credit; (c) the appellate authority’s silence on interest does not negate the statutory entitlement.
PROCEDURE — STEP-BY-STEP
Step 1: Confirm the favourable appellate outcome
Identify whether the AA order under s. 107(11) or GSTAT order under s. 113(1) gives rise to a refund of pre-deposit. This may be express (e.g., ‘refund pre-deposit’) or implicit (e.g., demand reduced from Rs. 80 lakh to Rs. 20 lakh — 10% of the reduction is refundable).
Step 2: Quantify the refundable principal
For full allowance: full pre-deposit. For partial allowance: 10% of the reduction in disputed tax, plus any over-payment in admitted amount. Reconcile against the original s. 107(6) or s. 112(8) payment.
Step 3: Identify the dates
Start date — actual date of debit from electronic cash/credit ledger or payment challan. End date — anticipated date of refund credit (use date of order receipt as a working estimate; final computation uses actual credit date).
Step 4: Compute the interest manually
Days between start date and end date × refundable principal × 6% / 365 (or 366 for leap years). Use actual day-count, not month approximation.
Step 5: File Form GST RFD-01
Under s. 54 framework. Use refund category appropriate to appellate refund. Attach the appellate order, the pre-deposit payment challan(s), and the interest computation working.
Step 6: Track the refund application
Departmental processing should be completed within the s. 54 framework timeline (60 days). Delay beyond this triggers additional interest under s. 56 proviso (9%) for the delay segment, concurrent with s. 115 (6%) continuing.
Step 7: Verify Form GST RFD-05 payment advice
Check both line items — principal and interest. Verify dates used by Department match the actual dates. Verify rate computation. If the Department has used wrong start date or omitted interest, raise the issue immediately.
Step 8: Reconcile bank credit
Confirm the principal and interest amounts have been credited to the registered bank account. Note the actual credit date; if it differs from the refund order date, the interest period extends to the credit date.
Step 9: If interest is short-paid or denied — raise grievance
First step: written grievance to the jurisdictional officer, citing s. 115, the dates, and the correct computation. Allow a reasonable response window.
Step 10: If grievance not redressed — escalate to Commissioner
Departmental escalation through Joint Commissioner / Commissioner. Cite CBIC Handbook position confirming automatic operation of s. 115.
Step 11: If Departmental escalation fails — writ remedy
Article 226 in High Court is the appropriate remedy. The dispute is on the s. 115 interest entitlement, which is statutory; writ jurisdiction is well-suited as there is no factual dispute requiring appellate adjudication.
Step 12: Record the interest in books in the year of receipt
Credit interest income (or other sources income head, depending on classification policy). The principal refund reverses the original pre-deposit asset.
Step 13: Include in Income-tax return
Interest is taxable as ‘income from other sources’. Include in the income computation for the relevant year as per the assessee’s method of accounting.
Step 14: Document the interest computation for future reference
Retain the day-count working, the dates, the rate basis, and the refund order copy. This documentation supports any future Departmental query, particularly in subsequent assessments.
Step 15: Consider strategic implications for ongoing or future appeals
Where the same factual matrix gives rise to further demands or to similar pre-deposits in other periods, the favourable outcome and interest recovery support stronger negotiating positions and stay applications.
PRACTITIONER CHECKLIST
Section 115 interest framework checklist
□ Favourable appellate outcome confirmed (AA s. 107(11) or GSTAT s. 113(1) order).
□ Refundable principal quantified (full / partial / quantum reduction).
□ Start date identified — actual date of debit from cash/credit ledger.
□ End date estimated — anticipated bank credit date.
□ Interest computed at 6% per annum simple, actual day-count basis.
□ Form GST RFD-01 filed under s. 54 framework with supporting documents.
□ Pre-deposit payment challan(s) attached to refund application.
□ Appellate order copy attached to refund application.
□ Interest computation working attached to refund application.
□ Refund processing timeline (60 days) tracked.
□ Form GST RFD-05 payment advice verified — both principal and interest.
□ Bank credit date confirmed; gap with refund order date noted.
□ Departmental delay beyond 60 days — concurrent s. 56 interest at 9% claimed.
□ Departmental short-payment or denial — grievance escalation framework.
□ Article 226 writ remedy preparation if Departmental escalation fails.
□ Interest income recorded in books in year of receipt.
□ Inclusion in Income-tax return as ‘income from other sources’.
□ Documentation retained — dates, computation, refund order, credit confirmation.
□ Strategic implications for related appeals or pre-deposits assessed.
WORKED EXAMPLES
Example 1 — Full allowance, AA tier, Rs. 10 lakh pre-deposit, 14-month cycle
Facts: M/s ABC Industries paid Rs. 10 lakh pre-deposit on 15 March 2024 for AA appeal under s. 107(6). The AA passed an order on 15 May 2025 (14 months later) fully allowing the appeal. The refund was credited on 31 July 2025.
Step 1: Refundable principal: Rs. 10,00,000 (full pre-deposit).
Step 2: Start date: 15 March 2024 (date of debit from cash ledger).
Step 3: End date: 31 July 2025 (date of bank credit).
Step 4: Day count: 504 days (365 in year 1; 138 in year 2 from 16 March to 31 July).
Step 5: Interest: 10,00,000 × 6% × 504 / 365 = Rs. 82,849.
Step 6: Total receivable: Rs. 10,82,849.
Step 7: Note: refund order was dated 15 July 2025 but credit hit the bank only on 31 July — the 16 additional days are included in the s. 115 period.
Step 8: Note: refund processing was 2 months after the AA order, within the 60-day s. 54 window, so no concurrent s. 56 proviso interest at 9%.
Result: Practitioner point: verify the bank-credit date, not the order date, when computing the closing day-count. Department sometimes uses order date — the gap can be material.
Example 2 — Combined AA + GSTAT pre-deposit, full allowance at GSTAT, 36-month total cycle
Facts: M/s DEF Telecom’s disputed tax was Rs. 600 crore. AA pre-deposit Rs. 25 crore (capped) paid 1 January 2023; GSTAT additional Rs. 20 crore (post-FA 2024 cap, paid 1 January 2024 after FA 2024 had taken effect notionally). GSTAT order on 31 December 2025 fully reversed the demand. Refund credited 31 March 2026.
Step 1: AA pre-deposit period: 1 Jan 2023 to 31 March 2026 = 1,185 days.
Step 2: AA interest: 25 crore × 6% × 1,185 / 365 = Rs. 4.87 crore.
Step 3: GSTAT pre-deposit period: 1 Jan 2024 to 31 March 2026 = 820 days.
Step 4: GSTAT interest: 20 crore × 6% × 820 / 365 = Rs. 2.70 crore.
Step 5: Total principal refund: Rs. 45 crore.
Step 6: Total interest: Rs. 7.57 crore.
Step 7: Total receivable: Rs. 52.57 crore.
Step 8: Note: even at the relatively modest 6% rate, multi-year locking of large deposits produces meaningful interest. For large taxpayers, the s. 115 interest is a material component of the overall refund.
Result: Practitioner point: each pre-deposit segment runs from its own deposit date — the AA deposit and the GSTAT deposit are computed separately, not lumped together with a common start date.
Example 3 — Partial allowance, proportionate refund and interest
Facts: M/s GHI Trading paid Rs. 5 lakh AA pre-deposit on a Rs. 50 lakh disputed tax (10%) on 1 June 2024. AA order on 1 December 2024 reduced the disputed tax to Rs. 20 lakh. Refund credited 15 January 2025.
Step 1: Reduction in disputed tax: Rs. 50 lakh – Rs. 20 lakh = Rs. 30 lakh.
Step 2: Refundable portion of pre-deposit: 10% of Rs. 30 lakh = Rs. 3 lakh.
Step 3: Retained portion: 10% of Rs. 20 lakh = Rs. 2 lakh (appropriated against confirmed demand).
Step 4: Period for refundable portion: 1 June 2024 to 15 January 2025 = 228 days.
Step 5: Interest: 3,00,000 × 6% × 228 / 365 = Rs. 11,243.
Step 6: Total receivable: Rs. 3,11,243. The retained Rs. 2 lakh does not carry s. 115 interest in favour of the appellant (it is, instead, set against the confirmed demand of Rs. 20 lakh tax).
Result: Practitioner point: in partial allowances, the refundable portion and the retained portion must be cleanly identified. Section 115 interest applies only to the refundable portion.
Example 4 — Departmental delay beyond 60 days — two interest streams
Facts: M/s JKL Pharma’s Rs. 8 lakh pre-deposit (paid 1 January 2024) was refundable consequent to AA order dated 1 January 2025. Department processed the refund only on 15 June 2025 (165 days after the AA order).
Step 1: s. 115 interest stream: continues at 6% from 1 Jan 2024 to 15 June 2025 = 531 days. Interest: 8,00,000 × 6% × 531 / 365 = Rs. 69,830.
Step 2: s. 56 proviso interest stream (delay): from 60 days after AA order (i.e., 2 March 2025) to 15 June 2025 = 105 days. At 9%: 8,00,000 × 9% × 105 / 365 = Rs. 20,712.
Step 3: Total interest: Rs. 69,830 (s. 115) + Rs. 20,712 (s. 56 delay) = Rs. 90,542.
Step 4: The two streams cover different functions — s. 115 compensates for the original lock-up period; s. 56 proviso penalises the post-order Departmental delay. They are concurrent, not alternative.
Result: Practitioner point: where Departmental processing exceeds 60 days, claim both streams. Department often acknowledges only one. The two are statutorily distinct and both must be paid.
Example 5 — Disputed interest — writ remedy
Facts: M/s MNO obtained a favourable AA order in respect of Rs. 12 lakh pre-deposit. The Department processed the refund but computed interest from the date of the AA order rather than the date of original deposit, short-paying interest by Rs. 35,000.
Step 1: MNO’s position: s. 115 text expressly says ‘from the date of payment of the amount’ — not the date of the order.
Step 2: Departmental position: the appellate order did not direct interest from the deposit date, so the post-order period is the correct measure.
Step 3: Resolution: written grievance citing s. 115 plain text and the CBIC Handbook position. If the Department maintains its incorrect position, Article 226 writ in High Court.
Step 4: The s. 115 interest entitlement is statutory and operates by force of statute — the appellate order’s silence does not displace it. The Court’s engagement is on a pure question of statutory construction, ideally suited to writ jurisdiction.
Result: Practitioner point: short-payment of s. 115 interest is one of the most common Departmental positions, particularly the wrong start-date computation. The writ remedy is fast and the legal position is settled — practitioners should not be deterred by the relatively small amounts in any one case.
PRACTITIONER PLANNING
• Pre-deposit-date discipline — record the actual date of debit from cash/credit ledger for every appellate deposit.
• Distinguish s. 115 interest (date of deposit till refund) from s. 56 delay interest (60 days post-order till refund). Both can run concurrently for the post-order delay segment.
• Operate on the assumption that s. 115 interest is automatic — do not file a separate application for interest; expect it as part of the refund order.
• Verify Form GST RFD-05 line items — principal and interest separately — to catch short-computation.
• Track bank-credit date, not refund-order date — interest runs till credit.
• For multi-year cycles or large pre-deposits, the interest component is material; treat it as a material recovery item.
• Where Department denies or short-pays interest, escalate quickly through grievance and writ — the legal position is settled.
• Account for the interest as taxable income from other sources in the year of receipt.
• Where related demands or pre-deposits are pending in other periods, the favourable outcome and interest history strengthen stay applications and negotiations.
• Retain documentation — pre-deposit challans, appellate orders, refund computations, Form GST RFD-05 — for at least 8 years (s. 36 records retention period).
• If Section 112(8) cap reduction by Finance (No. 2) Act 2024 affected a pending appeal, ensure refund computation uses the actual amount paid (which may exceed the post-FA 2024 Rs. 20 crore cap for legacy deposits).
• For appeals filed close to the cap threshold, the future-stream interest exposure should be considered in the cost-benefit analysis of whether to pursue or settle.
LITIGATION DEFENCE — KEY ATTACK POINTS
• Section 115 operates by force of statute — silence in the appellate order does not negate the entitlement.
• Start date is date of original payment, not date of appellate order — this is the most common Departmental error.
• End date is date of bank credit, not date of refund order.
• Rate is the base 6% under s. 56 read with Notification 13/2017-CT — not any lower rate.
• Simple interest, not compound — but daily basis, not monthly approximation.
• No cap on interest — the Rs. 25 crore / Rs. 20 crore caps apply only to the principal pre-deposit.
• Departmental delay beyond 60 days post-order — s. 56 proviso interest at 9% runs concurrently for the delay segment.
• Partial allowance — only the refundable portion of pre-deposit carries interest; the retained portion does not.
• CBIC Handbook position supports automatic interest computation — citable in Departmental escalation.
• Article 226 is the appropriate forum where the dispute is purely on s. 115 quantum — no factual dispute requiring appellate hearing.
CROSS-REFERENCES
• Section 54 — Refund procedure (operational gateway for the principal refund and the s. 115 interest).
• Section 56 — Interest on delayed refund (rate borrowed by s. 115; proviso’s 9% for delay runs concurrently).
• Section 107(6) — AA pre-deposit framework (source of pre-deposit covered).
• Section 107(11) — AA order (one trigger for s. 115 refund obligation).
• Section 112(8) — GSTAT pre-deposit framework (additional pre-deposit covered).
• Section 113(1) — GSTAT order (the other trigger for s. 115 refund obligation).
• Section 117 / 118 — High Court / Supreme Court appeals (refund flowing back through these tiers carries s. 115 interest for the original pre-deposit segment).
• CGST Rule 60 — Operational interest rate framework.
• CGST Rules 89-97A — Operational refund framework under s. 54.
• Form GST RFD-01 — Refund application.
• Form GST RFD-05 — Payment advice (shows principal and interest separately).
• Form GST RFD-06 — Refund sanction order.
• Notification 9/2017-CT dated 28.06.2017 — Enforcement date of s. 115.
• Notification 13/2017-CT dated 28.06.2017 — Rate of interest under s. 56 (6% base; 9% delay).
• Article 226 of Constitution — Writ jurisdiction for short-payment / denial disputes.
• Income-tax Act, 1961 — Taxability of interest received as ‘income from other sources’.
• CBIC Handbook of GST Law and Procedures (DGGST, 2024) — Chapter XII on Appeals (operational guidance on s. 115).