Section 115 of CGST Act 2017 — Interest on Refund of Amount Paid for Admission of Appeal

Section 115 of CGST explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Section 115 of the CGST Act 2017 provides that where the pre-deposit paid to admit an appeal becomes refundable because the appellate authority or court decides in the taxpayer's favour, interest at the Section 56 rate is payable on that amount from the date of payment until the date of refund.

What Section 115 Says — In Plain English

To file a GST appeal, a taxpayer must first put money on the table — a mandatory pre-deposit. Section 115 makes sure that money is not treated as an interest-free loan to the Government. It states that where an amount deposited under Section 107(6) (before the first Appellate Authority) or Section 112(8) (before the Appellate Tribunal) has to be refunded because of a favourable appellate order, interest at the rate specified under Section 56 is payable on that amount, running from the date it was paid to the date it is refunded.

In plain terms: if you deposit money to be allowed to appeal, and you win, you get your deposit back plus interest for the time the department held it. This compensates the taxpayer for being kept out of that money and removes any financial penalty for exercising a legitimate right of appeal.

Clause / Sub-section Breakdown

Applicability & Scope

Section 115 applies when two conditions are met. First, the taxpayer made the statutory pre-deposit — 10% of the disputed tax before the Appellate Authority under Section 107(6), and a further amount (10% of the remaining disputed tax, subject to the prescribed cap) before the Tribunal under Section 112(8). Second, an order of the Appellate Authority or Tribunal makes that deposit refundable, typically because the appeal succeeds wholly or partly. Once both hold, interest at the Section 56 rate arises automatically on the refundable pre-deposit. It does not cover voluntary deposits beyond the statutory pre-deposit.

Worked Examples

Example 1 — Full success. A taxpayer disputes a demand of ₹10,00,000 and pays a 10% pre-deposit of ₹1,00,000 on 1 April 2024 to appeal before the Appellate Authority. The appeal is fully allowed and the ₹1,00,000 is refunded on 1 April 2025. Under Section 115, interest at the Section 56 rate of 6% p.a. is payable on ₹1,00,000 for one year — ₹6,000 — over and above the principal refund.

Example 2 — Tribunal stage. The same taxpayer loses partly, appeals to the Tribunal and pays a further pre-deposit of ₹90,000 under Section 112(8) on 1 June 2024. The Tribunal decides in the taxpayer's favour and the ₹90,000 becomes refundable, credited on 1 June 2026 (two years later). Interest at 6% p.a. on ₹90,000 for two years is ₹10,800, payable along with the refund of the ₹90,000.

Step-by-Step in Practice

1. Pay the mandatory pre-deposit (10% under Section 107(6), or the further amount under Section 112(8)) and preserve the challan showing the payment date.
2. Pursue the appeal to a favourable order.
3. Once the order makes the pre-deposit refundable, apply for refund through the standard refund mechanism.
4. Claim interest under Section 115 at the Section 56 rate from the date of payment to the date of refund.
5. Reconcile the interest received against your own computation and pursue the balance if short-paid.

Common Mistakes & Practical Notes

• Forgetting that interest runs from the date of payment, not the date of the favourable order.
• Assuming interest is separate from the refund process — the principal follows the refund machinery, and Section 115 interest is added on top.
• Trying to claim Section 115 interest on voluntary deposits — only statutory pre-deposits under 107(6) and 112(8) qualify.
• Not tracking the challan date, which is essential to compute the interest period accurately.

Timelines & Related Sections

The interest period under Section 115 is measured strictly from date of payment to date of refund. Where the dispute escalates, remember the 180-day limit to appeal to the High Court under Section 117 and that filing further appeals does not stop recovery (Section 119) unless stayed. Section 115 draws its rate from Section 56 (interest on delayed refunds), operates on pre-deposits under Sections 107 and 112, and interacts with Section 54 (refund of tax). Authorised representatives under Section 116 typically handle the refund-and-interest claim on the taxpayer's behalf.

Recent Amendments & Context

With the GST Appellate Tribunal (GSTAT) becoming operational from 2024 following the Finance Act 2023 restructuring, Section 115 has real practical bite for the first time. Many Tribunal-stage pre-deposits under Section 112(8) that had been held pending constitution of the GSTAT are now being adjudicated, so refund-with-interest claims are rising. The Section 56 rate remains notified at 6% per annum. Taxpayers who deposited amounts years ago while awaiting the Tribunal should ensure the full interest period is captured when the pre-deposit is finally refunded.