The Central Board of Indirect Taxes and Customs (CBIC) has clarified that a taxpayer’s refund of GST appeal pre-deposit cannot be withheld merely because the Department intends to challenge, or has challenged, a favourable appellate order. Unless the order is stayed by the Appellate Tribunal or a court, the refund remains payable upon filing the refund application.

The Board has addressed six issues concerning the calculation, refund and interest treatment of pre-deposits made under Sections 107(6) and 112(8) of the Central Goods and Services Tax Act, 2017.

The circular follows representations from trade and industry highlighting inconsistent interpretations of pre-deposit requirements. According to the Board, these differences have created procedural uncertainty and increased litigation. The clarifications have been issued under Section 168(1) of the CGST Act to ensure uniform implementation across field formations.

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Departmental Appeal Alone Cannot Block Refund

The Board has clarified that where the Appellate Authority or Appellate Tribunal decides in favour of the taxpayer and the taxpayer applies for refund, the taxpayer becomes entitled to receive the refundable pre-deposit.

Where the Department proposes to appeal against a favourable order of the Appellate Authority, the refund remains payable unless the order is stayed by the Appellate Tribunal or a court.

Consequently, the mere intention to pursue further litigation, or the filing of a departmental appeal, cannot by itself justify denying the refund. The clarification makes the existence of a stay order critical to withholding refund on this ground.

Appellate Order Need Not Expressly Direct Refund

The circular also resolves whether a favourable appellate order must specifically direct the authorities to refund the pre-deposit.

CBIC has clarified that where the pre-deposit becomes refundable as a consequence of an order of the Appellate Authority or Appellate Tribunal, the order need not expressly mention that the amount must be refunded.

However, the taxpayer must submit a refund claim. The circular directs applicants to file the claim under Serial No. 7 of FORM GST RFD-01, under the category “on account of order.”

Thus, the absence of an express refund direction in the appellate order does not prevent a taxpayer from claiming the amount through the prescribed process.

Taxpayer Determines Admitted And Disputed Amounts

The Board has explained the distinction between the “admitted amount” and “tax in dispute” for purposes of filing GST appeals.

The admitted amount is the portion of tax, interest, fine, fee or penalty arising from the challenged order that the taxpayer accepts as payable and does not intend to contest. This amount must be paid in full before filing the appeal.

The contested tax component forms the basis for calculating the percentage pre-deposit.

As explained in the circular, an appeal before the Appellate Authority under Section 107(6) requires full payment of the admitted liabilities, together with a pre-deposit equal to 10% of the remaining disputed tax.

For an appeal before the Appellate Tribunal under Section 112(8), the circular similarly refers to full payment of admitted liabilities and a further 10% deposit of the disputed tax, in addition to the amount paid at the first appellate stage.

The taxpayer determines which amounts are admitted and which are disputed when filing the appeal. These particulars are recorded in Table 14 of FORM GST APL-01 and Table 20 of FORM GST APL-05.

The clarification distinguishes full payment of admitted liabilities—including admitted interest and penalty—from the percentage pre-deposit calculated with reference to disputed tax.

Tribunal Pre-Deposit Must Reflect Liability Confirmed In First Appeal

CBIC has clarified how the additional pre-deposit should be calculated where the Appellate Authority modifies the original tax demand.

For an appeal before the Appellate Tribunal, the 10% pre-deposit must be computed with reference to the tax liability confirmed by the Appellate Authority that the appellant continues to dispute.

Accordingly, where the first appellate order reduces or otherwise modifies the demand, the disputed tax surviving that order determines the basis for the Tribunal-stage deposit.

This additional deposit remains separate from the amount already paid for admission of the appeal before the Appellate Authority.

Interest Must Be Calculated Separately For Each Deposit

The circular addresses the calculation of interest where a taxpayer has made deposits at both appellate stages and subsequently becomes entitled to refund following a favourable Tribunal decision.

Referring to Section 115 of the CGST Act, CBIC has clarified that the relevant payment dates must be determined separately for the two deposits.

Interest on the amount deposited for the first appeal must be computed by reference to the actual date of that payment. Interest on the additional Tribunal-stage deposit must similarly be computed by reference to its own payment date.

The clarification ensures that the earlier deposit retains its original payment date for interest computation, even where the refund entitlement arises after proceedings before the Tribunal.

Pre-Deposit Refund Available When Tribunal Remands Matter

The Board has further clarified that where the Appellate Tribunal remands a matter to the original Adjudicating Authority, the appellant is eligible for refund of the pre-deposit within the prescribed time limit.

A separate rule applies where the Tribunal only partly remands the dispute and upholds a portion of the tax demand.

In such cases, the authorities must first ensure that the demand confirmed in favour of the Revenue, together with applicable interest, is recovered or adjusted against the pre-deposit. The balance is then refundable to the taxpayer.

The circular therefore distinguishes between a remand of the matter and a partial remand in which part of the demand remains confirmed.

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