Question of Payment of Grant of Interest arises only if GST Refund is not Granted within 60 days from Date of Receipt of Application: Delhi HC [Read Order]

The Delhi High Court recently observed that the question of payment of grant of interest arises only if GST refund is not granted within 60 days from date of receipt of application.

The writ petition has been filed, seeking direction to the respondent to grant the total IGST refund of Rs. 2,44,75,410/- for the tax period December 2022, February 2023, March 2023 and May 2023 with interest in terms of Section 56 of DGST/CGST Act.

The case of the petitioner is that as per sub Rule (2) of Rule 96 of the CGST/DGST Rules, 2017, details of export invoices in respect of export of goods contained in Form GSTR-I were transmitted electronically by the common portal to the system designed by the Customs. Thereafter, the system electronically transmits to the common portal a confirmation that the goods covered by the said invoices have been exported out of India, where after, refund is processed by the Customs through ICEGATE in terms of Rule 96 (3).

Section 56 of the CGST/DGST Act deals with the interest on delayed refunds. It provides that if any tax ordered to be refunded under sub-section (5) of Section 54 is not refunded within 60 days from the date of receipt of application under sub-section (1) of that Section, interest at the rate of 6% shall be payable in respect of such refund from the date immediately after the expiry of 60 days from the date of the receipt of the application till the date of refund of such tax.

A Division Bench of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “In view of the above, we are of the opinion that petitioner is entitled to statutory interest at the rate of 6% starting from the date immediately after the expiry of sixty days from the date of receipt of refund applications till the date on which the refund is credited to the bank account of the petitioner. Respondent is accordingly directed to process the refund of interest and credit the same into the account of the petitioner within four weeks.”

“Moreover, the question of payment of grant of interest arises only if the refund is not granted within 60 days from the date of receipt of application. No justification has been shown by the respondent for delay in payment of refund within the stipulated period. Thus, even though, the petitioner may not have claimed interest in his refund applications, his claim of interest cannot be denied under Section 56 of the Act as the same is mandatory and payable automatically in terms of the provisions of the Act” the Court noted.

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