GST Dept Liable to Pay Interest for Delayed Re-Credit of Rejected Refund Due to Technical Glitches: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that the GST department is liable to pay interest for delay in re-crediting rejected refund amounts when such delay is caused due to technical glitches on the GST portal. The court directed the department to process and sanction interest.

Sumit Gupta, the petitioner, filed a writ petition before the Delhi High Court seeking directions to the GST authorities to re-credit the rejected refund amount into his Electronic Credit Ledger along with interest. The total disputed amount was Rs. 2,77,501 arising out of two refund applications.

The petitioner had filed the first refund application for the period from July 2019 to March 2021, claiming a refund of Rs. 3,90,027. This refund was partly sanctioned on 12 November 2021 for Rs. 3,51,036, while the balance amount of Rs. 38,991 was rejected. Thereafter, the petitioner filed another refund application on 24 August 2022 for a sum of Rs. 2,38,510, which was also rejected.

The grievance of the petitioner was that despite repeated requests, the GST department failed to re-credit the rejected refund amounts to the Electronic Credit Ledger through Form GST PMT-03. Due to this inaction, the petitioner approached the High Court.

The petitioner’s counsel argued that once a refund claim is rejected, the law requires the corresponding amount to be re-credited to the Electronic Credit Ledger. They further argued that the delay in re-crediting the amount was not attributable to the petitioner and that interest was payable as per law.

The GST department filed a counter affidavit stating that the delay occurred due to technical glitches on the GST portal. The department explained that tickets were raised on 22 September 2023 and, once the system enabled the option, Form GST PMT-03 was issued on 27 September 2023, resulting in the re-credit of the amount.

The Division Bench of Justice Prathiba M.Singh and Justice Shail Jain observed that the department itself admitted that the delay was caused due to technical issues. The court explained that the petitioner could not be deprived of interest merely because the re-credit took place during the pendency of the writ petition.

The court also observed that the question of the deposit being voluntary or involuntary did not arise in the facts of the case. The High Court directed the GST authorities to process and sanction interest payable to the petitioner in accordance with law and to pass an appropriate order within two months.

The writ petition was disposed of, while all rights and remedies of the petitioner were kept open.

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