In a significant ruling, a two-judge bench of the Gujarat High Court has directed the GST department to pay 9% interest on the for the default of delayed refund of IGST.
The petitioners contended that there is a substantial delay in making payment of the refund of the Integrated Tax paid on the export of goods in terms of Section 16 of the Integrated Goods and Services Tax Act, 2017 and the Rule. They therefore, prayed the Court to allow compensation and interest for such default.
According to the relevant rules, the petitioners are eligible for refund within seven days.
While hearing the petition, Justice J B Pardiwala and Justice A C Rao observed that “the position of law appears to be well settled. The provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and nondiscriminatory. It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision.”
“In the overall view of the matter, we are inclined to hold the respondents liable to pay simple interest on the delayed payment at the rate of 9% per annum. The authority concerned shall look into the chart provided by the writ applicants, which is at Page 30, Annexure D to the writ application and calculate the aggregate amount of refund. On the aggregate amount of refund, the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR-03. The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards the interest. Let this exercise be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The requisite amount towards the interest shall be paid to the writ applicants within a period of two months from the date of receipt of the writ of this order.”
Advocates Vinay Sharaff, Vishal J Dave and Nipun Sighvi appeared for the petitioners.
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