2022 (4) TMI 55 - HC - GST

Refund of IGST paid on exports alongwith statutory interest - exports made for the month of September 2018 - refund was withheld on account of large difference between the FOB value and the IGST taxable value in the shipping bill - HELD THAT - The writ-applicant offered satisfactory explanation to the authorities concerned pointing out that the Circular dated 17.06.2019, upon which, the Department was placing reliance, was not applicable having regard to the facts of the case - Ultimately, the refund amount was credited in the account of the writ-applicant on 17.01.2022 i.e. during the pendency of the present writ-application. Statutory interest to be paid on the delayed refund amount - Section 56 of the CGST Act, 2017 - HELD THAT - The plain reading of Section 56 of the Act would indicate that if any tax, which is ordered to be refunded under Sub-section (5) of Section 54 to any applicant, is not refunded within sixty days from the date of receipt of the application under Sub-section (1) of that section, interest at the rate not exceeding 6% six percent shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under Sub-section (5) of Section 54 of the Act. The writ-applicant herein is entitled to interest on the delayed payment towards refund at the rate of 6% six percent as provided under Section 56 of the Act - this writ-application is disposed off with a direction to the authorities concerned to calculate the amount towards interest towards the delayed refund amount in accordance with the provisions of Section 56 of the Act.

Summary

Issues:
1. IGST refund for exports not processed
2. Delay in processing refund amount
3. Entitlement to statutory interest on delayed refund
4. Calculation of interest amount

Analysis:

Issue 1: IGST refund for exports not processed
The petitioner, a Limited Liability Partnership engaged in the export of Fly Ash, filed a writ-application seeking a mandamus to direct the respondents to grant and release the IGST refund for exports made in September 2018 along with statutory interest. The petitioner exported goods to Qatar, paid IGST, and filed shipping bills with IGST details. The refund was withheld due to a large difference between FOB value and IGST taxable value in the shipping bill. The petitioner explained the issue citing inapplicability of a Circular. The refund was eventually credited during the pendency of the writ-application.

Issue 2: Delay in processing refund amount
The authorities acknowledged a delay in processing the refund amount, attributing it to a technical glitch. The petitioner, however, contended that the delay entitled them to statutory interest on the delayed payment as per Section-56 of the CGST Act, 2017.

Issue 3: Entitlement to statutory interest on delayed refund
Section-56 of the CGST Act, 2017 mandates payment of interest if a tax ordered to be refunded is not processed within sixty days from the receipt of the application. The court, after considering the facts and circumstances, held that the petitioner was entitled to interest on the delayed refund amount at a rate not exceeding 6% as provided under the Act.

Issue 4: Calculation of interest amount
The court directed the authorities to calculate the interest on the delayed refund amount within six weeks as per the provisions of Section-56 of the Act. The writ-application was disposed of with this direction, granting the petitioner the entitlement to statutory interest on the delayed refund.

This judgment highlights the importance of timely processing of refund amounts under GST laws and the entitlement of taxpayers to statutory interest in case of delays, ensuring that the rights of taxpayers are protected in such situations.