Erroneous Refund of Accumulated ITC Recoverable Under Section 73 Even Without First Reversing RFD-06 Through Departmental Appeal — Interest Under Sections 73 and 50 Is Substantive Statutory Consequence, Not Dependent on Fault: GSTAT Raipur Bench Delivers Landmark 88-Paragraph Ruling in Hindalco

The GSTAT Raipur Bench has dismissed the appeal of Hindalco Industries Limited and sustained a demand of Rs. 44,51,491 as interest under Section 50 read with Section 73, holding that a monetary refund of Rs. 90,35,671 sanctioned under Section 54(3) read with Rule 89(5) (inverted duty structure) and subsequently found erroneous was validly recoverable under the ‘erroneously refunded’ limb of Section 73, and that interest under Section 50 is a substantive statutory consequence expressly embedded in the scheme of Sections 73(1), (5), (8) and (9) — not dependent on proof of fraud, fault or culpability. The ruling by Member (Technical) Chandra Bhushan Singh and Member (Judicial) Pradeep Kumar Vyas in APL/15/RPR/2026 (decided 24.09.2026) runs to 88 paragraphs and provides the most detailed GSTAT analysis to date of seven distinct legal issues arising from the intersection of Section 54(3), Rule 89(5), Section 73, Section 50, Sections 107(2)/108, VKC Footsteps (SC) and the authorities relied upon by both sides.

On the central jurisdictional question, the Tribunal held that Sections 107(2), 108 and 73 must be read harmoniously: departmental appeal/revision tests the legality of the refund order as an order, while Section 73 provides independent demand-and-determination machinery for amounts erroneously refunded. The express erroneous-refund limb of Section 73 cannot be rendered otiose merely because the payment originated in RFD-06. The Tribunal carefully distinguished the Gujarat HC’s Patanjali Foods (where the very substantive basis for recovery — a subsequently struck-down circular — did not survive) and the Orissa HC’s Auroglobal (where a subsisting appellate determination in the taxpayer’s favour existed). On interest, the Tribunal rejected the contention that Section 50 is confined to delayed payment and does not extend to erroneous refunds, holding that Section 73 repeatedly and expressly couples the erroneous refund with interest under Section 50 across sub-sections (1), (5), (8) and (9). The appellant’s characterisation of the DRC-03 payment as made ‘as abundant caution to buy peace of mind’ after VKC Footsteps was acknowledged as not constituting an admission, but the absence of any alternative Rule 89(5) computation, the uncontroverted negative maximum refund, and the appeal memorandum quantifying only the interest as disputed left no surviving restitutionary controversy.

- 2026-juristway.com-2661-GSTAT(Raipur)-GST  |  GSTAT Raipur Bench  |  APL/15/RPR/2026  |  24.09.2026