2018 (10) TMI 1619 - HC - GST

Interest on delayed refund - tax paid in respect of exported goods - section 16 of IGST Act - mismatch of invoices - Held that - The Respondents state that there is an Invoices mismatch in respect of the refund sought. Thus, leading to delay in passing the refund. This is disputed by the Petitioner. Besides, the Circulars and FAQ mentioned, inter alia, deal with grant of refund in spite of Invoices mismatch/ error, as indicated by SB005. The above Circular/ FAQ does not deal with grant of interest even for the period when there Invoice mismatched/ error. Thus, the Circular/FAQ does not decide the issue, but would require deeper consideration. The issue of grant of interest for delaying refund does requires factual determination as to the type of Invoices mismatch, who was responsible for the same and who, if any, and how, was the same corrected. This exercise would be best done by the adjudicating authorities under the Act after hearing the parties - petition allowed by way of remand.

Summary

Issues:
1. Refund of tax paid on exported goods under IGST Act.
2. Nonpayment of interest on refunded amount.
3. Invoice mismatch causing delay in refund.
4. Entitlement to interest on delayed refund.
5. Adjudication by the authorities.

Analysis:
1. The petitioner sought a refund of ?52.97 Crores with interest under Section 56 of the Central Goods & Service Tax Act for tax paid on exported goods under IGST Act. During the case, ?52.52 Crores was refunded, leaving a balance of ?2.35 Crores. The petitioner claimed entitlement to interest on the refunded amount after 60 days of filing shipping bills.

2. The respondents argued that an invoice mismatch caused the delay in refunding the amount. They contended that no interest was payable by the Revenue for the delay as it was due to the petitioner's error. The petitioner disputed the mismatch, citing Circulars and FAQs directing refund even in cases of invoice errors.

3. The court found conflicting claims regarding the invoice mismatch and the responsibility for the delay. It was decided that factual determination was necessary to ascertain the type of mismatch, responsible party, and corrective actions. The court directed the petitioner to file a representation to the Adjudicating Authority for further consideration.

4. The representation was advised to be made to a different Assistant Commissioner of Customs due to concerns regarding impartiality. The court emphasized the need for justice to not only be done but also appear to be done. The new officer was instructed to adjudicate the claim for interest on the delayed refund and the pending refund application within twelve weeks.

5. The new officer was directed to independently analyze the facts and applicable laws without influence from the previous affidavit. The decision was to be made considering the petitioner's claim of no mistake warranting denial of interest for the delayed refund. The petition was disposed of with no order as to costs.