The Kerala High Court quashed the order of the GST Commissioner rejecting claim for interest on tax amount ordered to be refunded.
The petitioner has filed the present writ petition seeking to quash order dated 10.1.2023 issued by the 2nd respondent, whereby the petitioner’s application in Form RFD01A dated 17.1.2018 was rejected on the ground that the refund amount claimed by the petitioner by way of CGST and IGST was inadmissible as the petitioner had availed higher rate of duty draw back during the month of August, 2017.
However, the SGST portion was allowed and the said SGST portion was sanctioned for disbursement. It was also said that, according to Rule 93(1) of the Central Goods and Services Tax Rules, 2017 ( ‘CGST Rules’ ) the rejected amount of refund of IGST and CGST portion was to be recredited to the credit ledger of the petitioner, after getting an affidavit under Rule 93(2) of the Rules from the petitioner/tax payer stating that they would not file any suit against the IGST and CGST portion, after recrediting the amount to the credit ledger.
The delay in recrediting the rejected refund claim was due to the technical glitches faced in the old back end portal and after implementation of model 2 back end portal, the amount was recredited to the credit ledger on 10.8.2022. It was further said that the petitioner had filed an application claiming interest on the recredited amount. The recredited amount was the claim of refund, which was rejected by the proper officer. As per Section 56 of the CGST Act, interest was not payable to the amount rejected by the authorities.
From a bare perusal of Section 56 of the CGST Act, it is evident that if any eligible tax amount ordered to be refunded under subsection (5) of section 54 is not refunded within sixty (60) days from the date of receipt of application, interest at such rate not exceeding six per cent is to be given, as may be specified in the notification to be issued by the Government on the recommendations of the Council.
As per the provisions of Section 56, the petitioner is entitled for interest @ 6% on the amount ordered to be refunded from the date of expiry of sixty (60) days from the date of the application for refund, i.e. 17.1.2018, till the date of refund/credit to petitioner’s credit ledger, as per notification No.9/2017 dated 28.6.2017.
A Single Bench of Justice Dinesh Kumar Singh observed that “In view of the above, Ext.P5 order rejecting petitioner’s claim for interest on the tax amount ordered to be refunded is quashed and the respondents are directed to calculate the interest on the amount, which was refunded/credited to the petitioner’s cash credit ledger, as directed above, and disburse the same within a period of two months from today.”
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