Assessee is entitled for interest in case of delayed refund by Revenue Department

[CA Bimal Jain]

The Hon’ble Gujarat High Court in M/S. PANJI ENGINEERING PRIVATE LIMITED VERSUS UNION OF INDIA - 2023 (7) TMI 533 - GUJARAT HIGH COURT held that, disbursement of refund by department beyond the statutorily prescribed period, makes assessee entitle for interest on such refund amount.

Facts:

M/s. Panji Engineering Private Limited (“the Petitioner”) exported goods and discharged Integrated Goods and Services Tax (“IGST”) on such export supplies and thereafter applied for refund of IGST under the GST law.

However, the Revenue department (“the Respondent”) denied the refund citing the reason of mismatch between Input Tax Credit (“ITC”) availed in GSTR-3B and GSTR-1 and the refund claim was withheld for more than 6 months even after filing complaint to Centralized Public Grievance Redress and Monitoring System. Thereafter the Petitioner was put under the category of ‘Risky Exporter’ and red flagged without assigning any reasons.

The Petitioner contended there was no mismatch of ITC in the forms as mentioned above. 

The Petitioner filed writ before the Hon’ble Gujarat High Court seeking to direct the Respondent to disburse the refund claim. However, during the pendency of the writ the Respondent disbursed the refund claim.

But, the Petitioner through an additional Affidavit alleged before the Hon’ble High Court for grant of interest on delayed refund under section 56 of the Central Goods & Services Tax Act, 2017 (“the CGST Act”).

Issue:

Whether the assessee is entitled for interest on refund which was withheld by the Revenue Department without any intimation for more than 6 months?

Held:

The Hon’ble Gujarat High Court in M/S. PANJI ENGINEERING PRIVATE LIMITED VERSUS UNION OF INDIA - 2023 (7) TMI 533 - GUJARAT HIGH COURT held as under:

• Relied upon the judgement of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. - 2011 (10) TMI 16 - SUPREME COURT wherein the Hon’ble Supreme court held that in case of delayed refunds, applicant shall be entitled for interest on such delayed refund amount.
• Held that, the Petitioner case is fit for grant of interest on refund under section 56 of the CGST Act due to a delay of more than 60 days from the date of application under as prescribed under Section 54(1) of the CGST Act.

  (Author can be reached at [email protected])