2024 (3) TMI 118 - HC - GST

Entitlement to interest on IGST refund - case of Revenue is that petitioner has only claimed the integrated tax and not the interest on the same and therefore he is not entitled for the grant of interest on the tax amount - HELD THAT - Section 56 of the CGST/DGST Act deals with the interest on delayed refunds. It provides that if any tax ordered to be refunded under sub-section (5) of Section 54 is not refunded within 60 days from the date of receipt of application under sub-section (1) of that Section, interest at the rate of 6% shall be payable in respect of such refund from the date immediately after the expiry of 60 days from the date of the receipt of the application till the date of refund of such tax. Payment of interest does not depend on the claim made by petitioner and therefore cannot be denied on the ground of waiver on the claim of interest in FORM GST-RFD-01. Moreover, the question of payment of grant of interest arises only if the refund is not granted within 60 days from the date of receipt of application. No justification has been shown by the respondent for delay in payment of refund within the stipulated period. Thus, even though, the petitioner may not have claimed interest in his refund applications, his claim of interest cannot be denied under Section 56 of the Act as the same is mandatory and payable automatically in terms of the provisions of the Act. The petitioner is entitled to statutory interest at the rate of 6% starting from the date immediately after the expiry of sixty days from the date of receipt of refund applications till the date on which the refund is credited to the bank account of the petitioner - Respondent is accordingly directed to process the refund of interest and credit the same into the account of the petitioner within four weeks - petition disposed off.

Summary

Issues involved:
The petitioner sought direction for the respondent to grant total IGST refund for specific tax periods along with interest. The main issue revolved around the entitlement of the petitioner to receive interest on the delayed refunds as per Section 56 of the CGST/DGST Act.

Summary of the Judgment:

Issue 1: IGST Refund Claim
The petitioner, an exporter of mobile phones and accessories, filed a Writ Petition seeking IGST refunds for various tax periods. The petitioner claimed that the necessary export details were transmitted electronically to Customs as per Rule 96 of the CGST/DGST Rules, and refund applications were duly submitted. The petitioner contended that the refunds were sanctioned for the mentioned tax periods, but without interest. The petitioner further requested interest at the rate of 6% from the date of filing the refund applications.

Issue 2: Entitlement to Interest on Delayed Refunds
The respondent objected to the grant of interest, stating that the petitioner had only claimed the integrated tax amount and not the interest in the refund applications. However, Section 56 of the CGST/DGST Act mandates interest on delayed refunds if not processed within 60 days from the receipt of the application. The court referred to a Circular by CBEC emphasizing the automatic entitlement to interest if the refund is not made within the stipulated period. The court held that interest under Section 56 is statutory and payable automatically, irrespective of the petitioner's claim for interest in the refund applications.

Final Decision:
The court ruled in favor of the petitioner, stating that statutory interest at the rate of 6% should be paid from the date immediately after the expiry of sixty days from the receipt of refund applications until the refund is credited to the petitioner's bank account. The respondent was directed to process the refund of interest and credit it to the petitioner's account within four weeks. The petition was disposed of along with the pending application.