Refund Following an Appeal: Pre-Deposit, Interest and Section 54(11)

Refund Following an Appeal 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.

An appeal succeeds. The order is set aside. The money does not arrive.

Three separate provisions govern what happens next, and each has its own rate and its own timeline.

Section 54(1) applies — a fresh refund application is required, with the relevant date being the date of communication of the judgment, decree, order or direction. Section 115 gives interest on the pre-deposit refunded, at the rate specified under s.56, from the date of payment of the amount till the date of refund. Section 56 proviso gives 9% where the refund arises from an order that has attained finality and is not paid within sixty days. And section 54(11) lets the Commissioner withhold it where further proceedings are pending.

Winning does not disburse

Section 54(1) requires an application. There is no automatic disbursement following an appellate order.

Relevant date — Explanation (d) to s.54: "the date of communication of such judgment, decree, order or direction" where the tax becomes refundable as a consequence of a judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.

So the two-year clock starts on communication, not on the date of the order and not on the date it becomes final. Record the date of receipt. The relevant date →

Documents — Rule 89(2)(a): the reference number of the order and a copy of the order passed by the proper officer, appellate authority, Appellate Tribunal or court resulting in the refund, or the reference number of the payment of the amount specified in s.107(6) and s.112(8) claimed as refund.

That second limb is the pre-deposit.

Section 115: interest on the pre-deposit

"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, as the case may be, 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 s.56 interest:

It runs from the date of payment, not from sixty days after an application. The appellant's money was with the Government from the day of the pre-deposit, and interest runs for that whole period.

The rate is "as specified under section 56" — the six per cent notified rate.

The pre-deposits it covers:

• s.107(6) — 10% of the disputed tax for a first appeal, subject to the cap;
• s.112(8) — a further 10% for a Tribunal appeal, subject to the cap, in addition to the amount paid under s.107(6).

Section 56: 9% on the refunded tax

Separate from the pre-deposit interest.

Where the tax itself becomes refundable consequent to an order that has attained finality, and is not refunded within sixty days of the application filed consequent to that order, interest at nine per cent applies.

And the Explanation to s.56 widens it: where an order of refund is made by an Appellate Authority, Appellate Tribunal or court against an order of the proper officer under s.54(5), that order is deemed to be an order under s.54(5).

So a claimant whose refund was rejected and who wins on appeal is claiming under a deemed s.54(5) order, and the nine per cent proviso applies to any delay beyond sixty days. Section 56: interest on delayed refunds →

Section 54(11): the withholding power

"Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending, and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine."

Three conditions, all of which must be present:

• an appeal or further proceedings pending, or other proceedings under the Act;
• the Commissioner's opinion that the refund would adversely affect revenue;
• on account of malfeasance or fraud committed.

The third is the limiting one. A pending departmental appeal, without any allegation of malfeasance or fraud, does not on the section's terms support withholding — and the requirement of a hearing before withholding is express.

Rule 92(2) requires the withholding order in Part A of FORM GST RFD-07, with the reasons, and release in Part B when it is no longer liable to be withheld. Rules 90 and 92 →

Section 54(12): where a refund is withheld under s.54(11) and the person subsequently becomes entitled as a result of the appeal or proceedings, he is entitled to interest at a rate not exceeding six per cent as notified.

Section 54(10): the other withholding

Distinct, and more common in practice. Where a refund is due to a registered person who has defaulted in furnishing any return, or who is required to pay any tax, interest or penalty which has not been stayed, the officer may:

(a) withhold payment until the return is furnished or the amount paid; or (b) deduct from the refund any tax, interest, penalty, fee or other amount which the taxable person is liable to pay but which remains unpaid.

Note (b) — the officer may adjust the refund against outstanding dues, and Rule 92(1) requires the sanction order to mention the amount so adjusted.

The Explanation defines "specified date" as the last date for filing an appeal — so a demand within the appeal period is not yet "unstayed" for this purpose in the same way as one that has become final.

Key takeaways

• Winning an appeal requires a fresh refund application; the relevant date is communication of the order.
• Section 115: interest on the pre-deposit, at the s.56 rate, from the date of payment.
• Section 56 proviso: 9% on the refunded tax for delay beyond sixty days where the order has attained finality.
• The Explanation to s.56 brings an appellate reversal of a rejection within the 9% limb.
• Section 54(11) withholding requires malfeasance or fraud and a hearing.
• Section 54(10) allows adjustment of the refund against unpaid dues.

Read next

• Section 56: Interest on Delayed Refunds
• Section 115 CGST Act: Interest on Refund of Pre-Deposit
• Pre-Deposit in GST Appeals: 10% and 20%
• When a Refund Is Rejected: Re-Credit, Appeal and PMT-03

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Refunds under GST (January 2026).