The Goods and Services Tax Appellate Tribunal (GSTAT), Principal Bench, New Delhi, has restrained the respective State Benches from passing orders on the merits of eight appeals involving the refund of interest paid on the portion of GST liability discharged through the electronic credit ledger.
The Principal Bench found that the appeals prima facie involve an identical question of law concerning the retrospective operation of the substituted proviso to Section 50(1) of the Central Goods and Services Tax Act, 2017.
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Justice (Retired) Dr Sanjaya Kumar Mishra, President of the GSTAT, issued notices to the respective Commissionerates asking them to show cause why the appeals should not be transferred to the Principal Bench for consideration and final disposal on merits.
The applications were filed by MRF Limited under Section 109(5) of the CGST Act, seeking the transfer of eight appeals pending before different State Benches of the GSTAT.
Dispute Over Interest Paid on Gross GST Liability
The common legal issue raised in the appeals is whether a taxpayer is entitled to a refund of interest paid on the gross GST liability to the extent that such interest was levied on the portion of tax discharged through the electronic credit ledger.
The controversy arises in light of the retrospective amendment to Section 50(1) of the CGST Act. The substituted proviso broadly provides that interest on delayed payment of tax in respect of supplies declared in a return furnished after the prescribed due date is payable only on the portion of tax paid by debiting the electronic cash ledger, except where proceedings under Sections 73 or 74 have already commenced.
The amendment was given retrospective effect from July 1, 2017. Consequently, taxpayers who had earlier paid interest on their gross GST liability have sought refunds of the interest attributable to the tax component discharged by utilising input tax credit available in the electronic credit ledger.
In the present proceedings, MRF Limited contended that all eight appeals involve this identical legal question and should therefore be transferred to and decided together by the GSTAT Principal Bench.
GSTAT Issues Notice on Transfer Applications
After examining the applications, the Tribunal observed that the matters appeared to be second appeals filed under Section 112(1) of the CGST Act and involved an identical question of law.
“Prima facie, it appears that these second appeals are under Section 112(1) of the CGST Act, involving identical question of law,” the Tribunal recorded.
The Principal Bench accordingly directed the issuance of notices to the respective Commissionerates, requiring them to explain why the appeals should not be transferred to the Principal Bench for consideration on merits and final disposal.
The notices are required to be served through three modes—through the GST portal, by email and by speed post with acknowledgement due.
Counsel appearing for MRF Limited undertook to file the complete process and postal requisites within ten days. The Tribunal directed that the notices be made returnable within four weeks.
State Benches Directed Not to Decide Appeals on Merits
Significantly, the GSTAT directed the concerned State Benches not to pass any order on the merits of the eight appeals while the transfer applications remain pending.
At the same time, the registries of the respective State Benches were directed to complete the scrutiny and stamp-reporting process as early as possible. The Registry of the Principal Bench was asked to communicate the order to the concerned State Benches.
The interim direction prevents potentially conflicting decisions on the common question of whether interest paid on GST liability discharged through accumulated input tax credit is refundable following the retrospective amendment to Section 50(1).
The eight matters include appeals originating from Mumbai, Hyderabad, Bhubaneswar and other jurisdictions. They have been registered before the Principal Bench as Transfer of Appeal Nos. 1 to 8 of 2026.
Advocate Deepak Garg appeared virtually on behalf of MRF Limited. The matters were heard in hybrid mode.
The Tribunal has listed the transfer applications for further consideration on October 5, 2026.
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