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2020 (4) TMI 62 - HC - GSTInterest on delayed refunds - section 56 of CGST Act - this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum - case of applicant is that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act. HELD THAT - No case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum. Application dismissed.
Issues Involved:
1. Application for recall or review of the order dated 10.07.2019. 2. Determination of the applicable interest rate on delayed refunds under Section 56 of the CGST Act. Issue-wise Detailed Analysis: 1. Application for Recall or Review of the Order Dated 10.07.2019: The original respondents filed an application to recall or review the order dated 10.07.2019 passed in Special Civil Application No.18591 of 2018. The prayers included admitting and allowing the petition, recalling or reviewing the order in the interest of justice, and granting any other relief deemed just and expedient by the court. The court had previously allowed the main matter, referencing paragraphs 14 to 25 of a similarly situated writ application, Special Civil Application No.15925 of 2018. 2. Determination of the Applicable Interest Rate on Delayed Refunds under Section 56 of the CGST Act: The court examined the provisions of Section 56 of the CGST Act, which stipulates that if any tax ordered to be refunded is not refunded within sixty days from the date of receipt of the application, interest at a rate not exceeding 6% shall be payable. However, if the refund arises from an order passed by an adjudicating authority or Appellate Tribunal that has attained finality and is not refunded within sixty days, interest at a rate not exceeding 9% shall be payable. The court also reviewed Rule 94 of the CGST, which provides for the order sanctioning interest on delayed refunds. According to Rule 94, the proper officer shall make an order specifying the amount of refund delayed, the period of delay, and the amount of interest payable, which shall be electronically credited to the applicant's bank account. The court cited several precedents, including the Calcutta High Court's decision in Shiv Kumar Jain Vs. Union of India, which held that unreasonable delay in refunding money is unjustified and violates Article 300A of the Constitution of India. The Supreme Court's decision in K.T. Plantation Pvt. Ltd. & Anr. Vs. State of Karnataka was also referenced, emphasizing that public purpose is a pre-condition for deprivation of property under Article 300A, and compensation is inbuilt in that Article. The court observed that the respondents did not explain the delay in any manner, and the chart indicating the delay in refunds spoke for itself. Consequently, the court held the respondents liable to pay simple interest on the delayed payment at the rate of 9% per annum, directing the concerned authority to calculate the aggregate amount of refund and pay the interest within two months. The applicants sought a review of the order to the extent that the interest rate should have been 6% per annum as provided under Section 56 of the CGST Act. However, the court, after hearing the parties and reviewing the materials on record, concluded that no case was made out for review. The court emphasized that the peculiar facts and circumstances of the case warranted awarding interest at 9% per annum. Conclusion: The application for review was rejected, and the rule was discharged, affirming the original order directing the payment of interest at 9% per annum on the delayed refunds.
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