Bharat Metal Exchange Ltd requested Circular clarifying GST Refund mechanism for statutory pre-deposit

BHARAT METAL EXCHANGE LTD. (Formerly known as Bombay Metal Exchange Ltd.) wrote letter on 22.06.2026 to The Chairman, Central Board of Indirect Taxes & Customs (CBIC), Ministry of Finance, Government of India, New Delhi requesting for issuance of comprehensive Circular clarifying refund mechanism for statutory pre-deposits under Sections 107(6), 112(8) and 115 of the CGST Act in light of the Hon’ble Supreme Court judgment in BLA Infrastructure Pvt. Ltd.

Respected Sir/Madam,

Bharat Metal Exchange Ltd., as the apex body representing the Non-Ferrous Metal Trade and Industry in India, with a diverse membership comprising traders, small-scale industries (SSI), and MSME enterprises from across the country., respectfully draws attention to the practical difficulties being faced by taxpayers in obtaining refunds of statutory pre-deposits deposited for filing appeals under the GST regime.

The Hon’ble Supreme Court, in the case of State of Jharkhand & Others vs. BLA Infrastructure Pvt. Ltd., has categorically held that refund of statutory pre-deposit made for maintaining an appeal is governed by the specific provisions of the GST law relating to appellate predeposits and interest thereon, namely Sections 107(6), 112(8) and 115 of the CGST Act, and is distinct from an ordinary refund claim under Section 54.

Despite the above authoritative pronouncement, taxpayers across various jurisdictions continue to face considerable hardship due to divergent practices adopted by field formations. In numerous cases, refund applications relating to statutory pre-deposits are being processed as ordinary refund claims under Section 54 and are being subjected to repeated procedural objections and deficiency memos.

Particularly concerning is the issuance of vague deficiency memos merely stating that “supporting documents are incomplete” without identifying the specific document alleged to be missing. Such non-speaking communications leave taxpayers unable to rectify any perceived defect and result in avoidable delays, increased compliance costs, multiplicity of proceedings and unnecessary litigation.

The issue assumes greater significance because statutory pre-deposits are not voluntary refund claims. They are amounts compulsorily deposited as a pre-condition for availing the statutory right of appeal. Once the appeal is decided in favour of the taxpayer, refund of such amount should ordinarily follow as a matter of course along with applicable statutory interest.

In the interest of uniformity, certainty and ease of doing business, we respectfully request the CBIC and GST Council to issue an appropriate Circular clarifying the following:

1. That refund of statutory pre-deposits made under Sections 107(6) and 112(8) shall be governed by the specific appellate provisions and interest provisions contained in the GST law and not by the general refund provisions applicable to ordinary refund claims.
2. That field formations shall not insist upon documents unrelated to verification of appellate pre-deposit refunds.
3. That a standardised list of documents required for processing such refunds may be prescribed on a pan-India basis.
4. That no deficiency memo shall be issued unless the precise deficiency and specific missing document are clearly identified.
5. That speaking orders and reasoned communications should be mandatory in all casesinvolving refund deficiencies.
6. That refund applications relating to statutory pre-deposits should be disposed of within a prescribed time frame and monitored through the GST portal.
7. That appropriate instructions be issued to all Principal Chief Commissioners, Chief Commissioners and State GST authorities to ensure uniform implementation of the law declared by the Hon’ble Supreme Court.

India’s tax administration has made significant progress towards faceless compliance and taxpayer facilitation. A timely clarification on this issue will substantially reduce avoidable disputes, improve taxpayer confidence and ensure consistent implementation of the GST framework throughout the country.

We, therefore, earnestly request the CBIC, GST Council and Ministry of Finance to issue suitable clarifications at the earliest in the larger interest of trade, industry and effective tax administration.

Thanking you.
Yours faithfully,
For BHARAT METAL EXCHANGE LTD.

Sushil R. Kothari Sandeep T. Jain
PRESIDENT IMM. PAST PRESIDENT
93220 22055 93222 22552

CC :

• Smt. Nirmala Sitaraman, The Hon’ble Finance Minister, Government of India.
• Adv. Shri Ashish Jaiswal, Minister of State for Finance. Maharashtra