Getting the Pre-Deposit Back

Winning an appeal does not return the money paid to file it. The pre-deposit stays in the Government’s account until it is claimed, through the same refund form used for every other refund, under a ground most people never need. Departments have rejected such claims as late, applying the two-year limit for tax refunds. Others have sat on them, or refunded the cash and left credit-ledger payments unrestored. The Supreme Court has now said which provision a pre-deposit is refunded under. The interest rate is still unsettled enough that the GST Council has recommended changing the law.

This guide covers the refund of the amounts paid under section 107(6) and section 112(8): the interest under section 115, the time limit, FORM GST RFD-01 and its ground, and re-credit where the pre-deposit was paid from the electronic credit ledger. How the pre-deposit is paid is covered in Pre-Deposit, and the Stay of Recovery. Refunds in general are covered in Refund of Unutilised Credit: Who Can Claim and How.

What becomes refundable

A pre-deposit is refundable to the extent the appeal succeeds. Where the Appellate Authority or the Tribunal sets aside or reduces the demand, the portal records the reduction in Part II of the electronic liability register against the demand ID. The portal’s FAQ on that register explains the result. Payment against a demand later reduced “may lead to a situation wherein the electronic liability register shows a negative balance for a particular Demand ID if appeal is allowed/partly allowed”. “Refund of pre-deposit or negative balance can be claimed for a particular demand ID if appeal is allowed even though the overall balance may still be positive.” The same FAQ adds that this is “subject to the adjustment of the refund against any liability by the proper officer”.

Where an appeal fails or is withdrawn, there is nothing to refund. The portal’s appeal FAQ states that the amount paid “is set of against the demand ID” and the person pays only the remainder.

Section 115: interest from the date of payment

Section 115 reads:

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.

Two features distinguish it from ordinary refund interest.

The period. Interest on an ordinary refund under section 56 runs only for the delay beyond sixty days from the application. Under section 115 it runs “from the date of payment of the amount”, which is the date the pre-deposit was paid, until the date of refund.

The rate is not settled. Section 115 takes “the rate specified under section 56”, but section 56 has two rates. Notification No. 13/2017-Central Tax fixes 6 per cent for section 56, and 9 per cent for its proviso. The proviso covers refunds arising from an order of an adjudicating authority, Appellate Authority, Tribunal or court that “has attained finality”. The notification has no entry for section 115. At its 57th meeting on 8 October 2026, the GST Council recommended amending section 115 “to make it a standalone provision in respect of the rate of interest applicable for the refund of such pre-deposit amount”, and “issuance of a circular to clarify issues regarding rate of interest on refund of pre-deposit”. The Council also listed a circular on “various issues relating to payment of pre-deposits”. These are recommended, not yet notified.

The section speaks of orders of the Appellate Authority or the Tribunal. It does not mention refunds that follow a judgment of the High Court or the Supreme Court.

The time limit: section 54 or not?

Section 54(1) requires an application for refund of “any tax and interest, if any, paid on such tax or any other amount paid by him” before “the expiry of two years from the relevant date”. Explanation 2(d) to the section fixes the relevant date where “the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court” as “the date of communication of such judgment, decree, order or direction”. Officers have applied that clause to pre-deposits.

M/s BLA Infrastructure Pvt Ltd v State of Jharkhand. A section 74 order of 31 August 2021 had demanded Rs 16,90,442 for September 2019, ex parte, on a mismatch between GSTR-1 and GSTR-3B. The company appealed and paid 10 per cent of the disputed tax. The appeal was allowed on 9 February 2022, and FORM GST APL-04 issued the next day. The company applied for the pre-deposit back on 11 September 2024. A deficiency memo of 6 November 2024 treated the claim as beyond the two years in section 54(1).

The Jharkhand High Court (W.P.(T) No. 6527 of 2024, Division Bench, 30 January 2025) quashed the memo. It held that the word “may” in section 54(1) made the limit directory, following the Madras High Court in Lenovo. It said that “the refund of statutory pre-deposit is a right vested on an assessee after an appeal is allowed in its favour”. It also held that retention was not saved by any question of unjust enrichment, since the pre-deposit “has been made from the own pocket”. The same court followed it in M/s GTL Infrastructure Ltd v State of Jharkhand (W.P.(T) No. 5035 of 2024, 20 August 2025). That claim had been rejected “through an automated order” on the same ground. The court noted the State’s reliance on the contrary view of the Delhi High Court in Sethi Sons (India), but treated its own Division Bench as binding.

The State appealed. The Supreme Court (Sanjay Kumar and K. Vinod Chandran JJ, order of 9 January 2026, arising from SLP © Diary No. 56452/2025) recorded the State’s own submission. The refund “would be under the provisions of Section 107(6) read with Section 115 of the Jharkhand Goods and Services Tax Act, 2017, and not under Section 54 thereof”. It agreed: “the subject refund was relatable to Section 107(6) read with Section 115”. To that extent, “the exercise undertaken by the High Court with regard to Section 54 thereof was unnecessary”. It set aside the High Court’s interpretation of section 54, and directed the refund “with interest thereon in accordance with law within a period of four weeks”.

The Orissa High Court applied that order in M/s Aelite Logistics and Marketing Pvt Ltd v Chief Commissioner of CT & GST (W.P.© No. 27947 of 2025, 30 March 2026). A refund of pre-deposit had been rejected because of a supposed investigation by the Serious Fraud Investigation Office. The SFIO’s own letter later showed that no investigation had been started. In court the department also relied on section 54(1)'s time limit. The court held that section 54 “is outside the purview of the application for refund of an amount deposited as a precondition to maintain an appeal”. It held that the amount “does not partake the character of tax in such stricto sensu” and falls within “any other amount” in rule 89. It set aside the rejection and directed release within four weeks.

Where this leaves the time limit. The Supreme Court did not lay down a different period. It held that the refund rests on section 107(6) and section 115, not section 54. Its order sets aside the reasoning that the section 54 limit is directory, so that reasoning is no longer authority for refunds of credit or cash under section 54. The portal itself does not check the date. Its manual for this ground states that “the system does not validate the period of limitation” and that ensuring the claim is within two years of the relevant date is the taxpayer’s responsibility. No circular yet applies the Supreme Court’s order to pre-deposits.

The form and the ground

Rule 89(1) requires a claim for refund of “any tax, interest, penalty, fees or any other amount paid” to be filed electronically in FORM GST RFD-01. Rule 89(2)(a) names the evidence specific to a pre-deposit: “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”.

Circular No. 125/44/2019-GST lists the refund grounds. One is “Refund on account of assessment/provisional assessment/appeal/any other order”. Its Annexure-A sets out the documents for that ground:

• the reference number of the order, and a copy of it
• the “reference number/proof of payment of pre-deposit made earlier for which refund is being claimed”
• a self-declaration under rule 89(2)(l) that the incidence has not been passed on, for claims up to two lakh rupees. Above that, a chartered accountant’s or cost accountant’s certificate under rule 89(2)(m)
• the undertaking in relation to section 16(2)© carried by the form

The circular predates the Supreme Court’s order in BLA Infrastructure. It has not been revised to say whether the unjust-enrichment declaration or certificate is still required for a pre-deposit.

On the portal, the ground now appears as “On account of Assessment/Enforcement/Appeal/Revision/Any Other Order”.

What to have ready

Item	Where it comes from
The appellate order (APL-04 from the Appellate Authority, APL-04A from the Tribunal) and its number	Portal; case file
The demand ID, and the negative balance against it	Electronic liability register, Part II
Proof of the pre-deposit: the debit entries or DRC-03, and whether each was paid from the cash ledger or the credit ledger	Electronic liability register; cash and credit ledgers
The place-of-supply break-up of any IGST pre-deposit	Appeal papers (APL-01 payment table)
All GSTR-1 and GSTR-3B returns due to date	Returns. The portal blocks the application otherwise
The declaration or CA certificate on incidence, if the officer requires it	Books
A validated bank account in the registration	Registration
A Legal Entity Identifier, if the claim is Rs 50 crore or more	LEI issuer

Filing on the portal

The portal’s manual for this ground describes the steps:

1. Under Services > Refunds > Application for Refund, select “On account of Assessment/Enforcement/Appeal/Revision/Any Other Order”.
2. Choose “Appeal & Revision” as the type of order, then “Demand related appeal order”. The other choice, “Refund related appeal order”, is for an appeal against a refund rejection, under Circular No. 111/30/2019-GST.
3. State whether the order was passed online or offline, and enter the order number. For an online order, the order date and demand ID fill themselves. If the order number entered has no negative balance, the portal suggests the linked order that has one. For an offline order, all details including the demand ID are entered.
4. The refundable amount fills in under each head from the demand ID. It can be reduced but not increased. IGST must be broken up by place of supply.
5. Select the bank account, and upload the order copy and supporting documents. The FAQs allow up to ten documents of up to 5 MB each.
6. Preview, then file with DSC or EVC by the authorised signatory. The portal issues an ARN by email and SMS.

A further claim against the same demand ID cannot be filed until the officer has issued RFD-06 on the earlier one. A draft is kept for fifteen days.

Processing

The officer scrutinises the application within fifteen days and either acknowledges it in FORM GST RFD-02 or issues a deficiency memo in RFD-03 (rule 90). Before rejecting any part, the officer must issue a notice in RFD-08 and allow a reply in RFD-09 within fifteen days. Under rule 92(3), “no application for refund shall be rejected without giving the applicant an opportunity of being heard”. The order is in RFD-06, and payment follows by RFD-05. When RFD-06 sanctions the refund, the portal posts an entry in the liability register equal to the sanctioned amount, closing the negative balance.

Pre-deposit paid from the credit ledger

Circular No. 172/04/2022-GST clarifies that output tax “payable as a consequence of any proceeding” may be paid from the electronic credit ledger, but interest and penalty may not. Many appellants therefore paid the tax portion of their pre-deposit from credit. Whether that is permitted is covered in the pre-deposit guide.

On refund, the rules return credit to the ledger it came from. Rule 92(1A) applies to refund of “any amount paid as tax”, other than zero-rated supplies and deemed exports. It directs that the refund be paid in cash “proportionate to the amount debited in cash”. For the amount debited from the credit ledger, the officer “shall issue FORM GST PMT-03 recrediting the said amount as Input Tax Credit”. Rule 86(4A) provides the same re-credit for tax paid from the ledger and found refundable. Neither rule mentions pre-deposits, and no circular addresses their re-credit specifically.

Aavya Enterprises v Assistant Commissioner of State Tax (Telangana High Court, Division Bench, W.P. No. 28017 of 2025, 22 September 2025; read on Indian Kanoon, not found on gst.bharattax.net). The petitioner had won its appeal. A refund of Rs 22,59,314 of pre-deposit, by re-credit to its credit ledger, was being withheld because it had not filed an undertaking connected with FORM GST PMT-03. The petitioner said it could not access the portal to file it. The State’s counsel told the court that the undertaking could be submitted manually and would be processed in accordance with law. The petition was disposed of on that statement. The order decides no point of law, but it shows the step on which re-credit can stall.

When the appeal is only partly won, or the department appeals

• Partial success. Only the amount by which the demand is reduced appears as a negative balance. The rest of the pre-deposit stays adjusted against the demand that survives.
• A further appeal by the department. The portal’s FAQ on the liability register says that refund “will be granted only when final order regarding the appeal is passed”. Section 54(11) separately allows the Commissioner, after a hearing, to withhold a refund arising from an order that is under appeal, where he considers that “malfeasance or fraud” makes payment likely to harm the revenue. If the person finally succeeds, section 54(12) gives interest of up to 6 per cent.

What can still be put right

• A deficiency memo. A fresh RFD-01 is filed with the deficiency cured. The proviso to rule 90(3) excludes the time from the first filing to the memo from the two-year period.
• A wrong figure. The application can be withdrawn in FORM GST RFD-01W before RFD-04, RFD-05, RFD-06, RFD-07 or RFD-08 issues. Any ledger debit is then restored (rule 90(5) and (6)).
• A rejection in RFD-06. This is appealable under section 107. Where the rejection rests only on the section 54 time limit, the Supreme Court’s order of 9 January 2026 is directly in point.
• Credit not restored. Where the cash portion is paid but credit is not re-credited, the officer issues PMT-03 under rule 92(1A). Discrepancies in the ledger are raised in FORM GST PMT-04 under rule 86(6).

The procedure in order

1. Once the appellate order issues, check Part II of the electronic liability register for a negative balance against the demand ID.
2. Note how the pre-deposit was paid: cash, credit, or both, and in which tax heads.
3. File all returns due, and confirm the bank account.
4. File RFD-01 under “On account of Assessment/Enforcement/Appeal/Revision/Any Other Order”, choosing “Demand related appeal order”, with the order number and copy, and proof of the pre-deposit. File promptly. The Supreme Court has held that the refund rests on sections 107(6) and 115, but the department may still raise the two-year limit.
5. Track RFD-02 or RFD-03, and answer any RFD-08 in RFD-09 within fifteen days.
6. On RFD-06, check that the cash portion is paid by RFD-05 and the credit portion is re-credited by PMT-03. Check that interest is computed from the date the pre-deposit was paid.
7. If interest is short-paid or the claim is rejected, appeal under section 107.

The next guide turns from disputes to rulings: applying for an advance ruling in FORM GST ARA-01, who may apply, on what questions, and what the ruling binds.