Yes—on the facts of Hindalco Industries Ltd. v. Commissioner State Tax Chhattisgarh, the GSTAT Raipur Bench held that a cash refund originating in accumulated input tax credit (ITC) could be treated as an erroneous refund under section 73, and that interest was payable under sections 73 and 50. The tribunal upheld ₹44,51,491 in interest after Hindalco had repaid the ₹90,35,671 principal. The decision is fact-specific: it does not establish that every sanctioned ITC refund can be reopened or that every repayment automatically attracts the same result.
What the GSTAT decided
In appeal APL/15/RPR/2026, reported as 2026 TAXSCAN (GSTAT) 193, the Goods and Services Tax Appellate Tribunal (GSTAT), Raipur Bench, dismissed Hindalco Industries Ltd.’s appeal on 24 September 2026. Members Pradeep Kumar Vyas (Judicial) and Chandra Bhushan Singh (Technical) affirmed an Order-in-Appeal sustaining ₹44,51,491 in interest on a refund of ₹90,35,671.
The central point was that the refund had been paid to Hindalco as money, even though it originated in accumulated ITC. The tribunal held that the monetary refund was capable, on this record, of being treated as erroneous under section 73. It read sections 73 and 50 together as authority for interest. The full text available is a published reproduction of the order on Taxheal; Taxscan also published a contemporaneous report. The reproduced text should be checked against an official copy when exact wording or formal legal reliance matters.
How the refund became a dispute
The original refund claim
Hindalco claimed a refund of accumulated ITC for July 2017 through March 2018, citing the inverted duty structure and applying under section 54(3) and Rule 89(5). The reproduced order describes the original claim as approximately ₹24.61 crore. The refund authority rejected most of the claim and sanctioned ₹90,35,671, which was disbursed on 13 February 2019.
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The section 73 notice and repayment
The department later alleged that applying the substituted Rule 89(5) formula left no positive refund entitlement. It issued a notice under section 73, treating the amount paid as an erroneous refund. During the proceedings, Hindalco repaid the ₹90,35,671 principal through Form GST DRC-03 on 8 November 2021, but did not pay the interest demanded. The amount still contested before the tribunal was interest; the appeal did not seek repayment of the principal back to Hindalco.
Why the tribunal treated a cash payment as an erroneous ITC refund
The tribunal distinguished accumulated credit from the money paid out as a refund. It held that the refund’s origin in accumulated ITC did not, by itself, prevent section 73 from applying once the credit had been disbursed in cash and the department alleged that the payment exceeded the entitlement under the applicable statutory formula.
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The tribunal discussed the Supreme Court’s decision in Union of India v. VKC Footsteps India (P.) Ltd., which upheld the amended Rule 89(5) formula, including the restriction of “Net ITC” for inverted-duty refunds to ITC on inputs. In Hindalco, the tribunal relied on the applicable formula and the absence of an alternative computation in the appeal record. VKC Footsteps did not itself calculate Hindalco’s refund.
Why principal repayment did not end the case
Hindalco argued that the RFD-06 refund sanction had not been challenged through a departmental appeal under section 107(2) or revision under section 108, and disputed whether sections 73 and 50 authorized the interest demand. The department argued that section 73 supplied an independent recovery process. These were the parties’ submissions; the tribunal’s conclusions were narrower.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteThe tribunal held that the absence of a section 107(2) appeal or section 108 revision did not, on these facts, prevent the proper officer from proceeding under section 73. It did not treat section 73 as a general power to reopen every concluded refund decision or disregard a subsisting appellate determination. Its conclusion relied on this proceeding’s history, including the absence of a subsisting appellate determination in Hindalco’s favour and the specific allegation of an erroneous refund. Whether an earlier appeal or revision changes the analysis in another case must be assessed against that case’s record and applicable law.
On interest, the tribunal read references to section 50 across the relevant subsections of section 73. It reasoned that closure under section 73(8) required payment of the principal amount together with interest payable under section 50. Because Hindalco repaid principal but did not pay the demanded interest, repayment alone did not close the proceedings. The tribunal also said liability did not depend on proof of fraud or fault in the original refund sanction.
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The tribunal rejected the argument that Rule 88B invalidated the demand. It treated sections 73 and 50—not Rule 88B—as the source of the statutory interest liability in this decision.
Interest upheld and outcome
The reproduced order identifies 13 February 2019 as the disbursement date and 8 November 2021 as the repayment date. The tribunal upheld interest of ₹44,51,491 at 18% per annum for 999 days, finding that the appellant had not established a specific rate or arithmetic error. It dismissed the appeal and affirmed the order sustaining the interest demand.
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What section 73 timing means for a refund dispute
Section 73 addresses tax not paid or short paid, erroneous refunds, and wrongly availed or utilised ITC for reasons other than fraud, wilful misstatement, or suppression of facts to evade tax. Section 73(1) links the notice to the amount and interest payable under section 50. Official GST Council material describes a three-year deadline for an order, measured from the relevant annual-return due date or, in an erroneous-refund case, from the date of the erroneous refund; the notice deadline comes earlier.
That general description is not enough to calculate a live deadline. The applicable statutory text, amendments, tax period, and any relevant exclusion or extension must be checked for the specific matter. This case concerns Chhattisgarh State GST provisions and CGGST Rules alongside parallel central provisions; it should not be read as resolving every State GST dispute or every refund fact pattern.
Re-credit is a separate question from interest
Official PIB material on the 47th GST Council recommendations describes a route in specified erroneous-refund cases involving accumulated ITC or certain IGST refunds: after repayment with applicable interest and penalty, the amount may be re-credited to the electronic credit ledger through Form GST PMT-03A. The reproduced order also discusses Rule 86(4B) and the related circular framework, but no re-credit order was sought in Hindalco’s appeal. A taxpayer considering re-credit should verify the current rule, circulars, eligibility and procedure separately; the tribunal’s interest ruling did not determine that issue for Hindalco.
How to assess whether this ruling is relevant to another refund
The outcome turned on more than the fact that Hindalco had once received an ITC refund. For another dispute, the useful questions are:
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- Which refund period and version of the Rule 89(5) formula apply?
- Does the notice identify a specific erroneous amount and explain the alleged calculation?
- Has an appellate or revisional order already determined the refund issue?
- When was principal repaid, and was interest also paid?
- What statutory basis, start date, rate and arithmetic support the interest calculation?
- Was the section 73 notice and order issued within the applicable limitation period, after accounting for relevant amendments and exclusions?
The figures and outcome here describe one reported appeal, not a measure of how common such disputes are or a universal rule for all accumulated-ITC refunds.
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Sources
- Hindalco Industries Ltd. v. Commissioner State Tax Chhattisgarh, reproduced GSTAT Raipur order and case materials
- Goods and Services Tax Council, official material on section 73 timelines
- Press Information Bureau, material on 47th GST Council recommendations and re-credit
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