Case Title: M/s. Britannia Industries Ltd. v. Assistant Commissioner of Commercial Taxes, LGSTO-155 & Anr.
Court: High Court of Karnataka, Bengaluru
Petition Number: W.P. No. 33963 of 2024 (T-RES)
Category: Refund – Interest recovery contrary to Section 107(7)
Date of Judgment: 18 June 2025
Relevant Sections: Sections 107(6) & 107(7) of the Central Goods and Services Tax Act, 2017
Facts (Para 1–3)
M/s Britannia Industries Ltd. filed a writ petition challenging the order dated 03.09.2024 issued by the Assistant Commissioner, LGSTO-155, Ramanagara, rejecting its refund claim for interest amounting to ₹13,92,041/-. The petitioner had filed an appeal under Section 107(1) of the CGST Act against the assessment order. However, during pendency of that appeal, the Assessing Officer unilaterally debited the disputed interest from the petitioner’s electronic cash ledger on 12.02.2024. Britannia sought refund of this amount, contending that such recovery during the appeal stage was impermissible.
Questions of Law (Para 2–4)
The principal issue before the Court was whether the Assessing Authority could debit or recover disputed interest from the taxpayer’s electronic cash ledger while the statutory appeal under Section 107(1) was pending, in view of the stay provision under Section 107(7) of the CGST Act.
Observations (Para 4–6)
Justice Sachin Shankar Magadum observed that Section 107(7) explicitly provides that upon payment of the pre-deposit under sub-section (6), all recovery proceedings for the balance amount are deemed to be stayed. Hence, any debit of the disputed interest during pendency of the appeal violated the statutory protection.
The Court noted that the second respondent (Audit authority) had already recognized the debit as erroneous and recommended re-credit of the same. Despite this, respondent no. 1 wrongly rejected the refund application. Such unilateral action, the Court held, was without jurisdiction and contrary to the express mandate of Section 107(7).
Judgment (Para 7)
The High Court allowed the writ petition and set aside the refund rejection order dated 03.09.2024. It directed respondent no. 2 to re-credit ₹13,92,041/- to the petitioner’s electronic cash ledger, holding that the debit of disputed interest during pendency of appeal was legally unsustainable.
Summary of Cases Referred
| Case Name | Citation / Reference | Held / Relevance |
|---|---|---|
| M/s Britannia Industries Ltd. (present case) | W.P. No. 33963/2024, Karnataka HC | Recovery of disputed interest during pendency of appeal is barred by Section 107(7); refund rejection order quashed. |
Between Fine Lines
This ruling affirms that once a taxpayer has filed an appeal and made the statutory pre-deposit under Section 107(6), the authorities cannot proceed with any recovery for the balance amount—including interest or penalty—until the appeal is finally decided. Any debit from electronic cash ledger during this period is ultra vires and must be re-credited. For industry, this serves as a safeguard against premature recoveries while appellate remedies are pending.
 of the CGST Act.){kind=link}