Case Law Details
Kuehne Nagel Pvt. Ltd. Vs Union of India (Gujarat High Court)
The Gujarat High Court heard a batch of writ petitions involving an identical issue and, with the consent of the parties, took them up for final disposal by treating Special Civil Application No. 4373 of 2026 as the lead matter.
The petitioner challenged the order dated 09.02.2026 to the extent it denied interest on a GST refund. While the refund amount of Rs. 2,29,32,535 had been sanctioned, the claim for interest of Rs. 29,51,700 was rejected on the ground that the conditions for accrual of interest under Section 56 of the Central Goods and Services Tax Act, 2017 were not satisfied.
The petitioner had originally filed a refund application on 14.10.2023. That application was not accepted, compelling the petitioner to file Special Civil Application No. 12151 of 2025. By judgment dated 06.11.2025, the High Court set aside the respondents’ action in refusing the refund application and directed the authorities to process the refund claim in accordance with law. Following that order, the petitioner filed another refund application on 11.11.2025. The respondent authority thereafter sanctioned the refund but denied interest by treating the subsequent application as the relevant application for the purposes of Section 56 of the CGST Act.
The High Court referred to its earlier judgment dated 06.11.2025, wherein it had observed that the Chartered Accountant’s Certificate produced by the petitioner was required to be considered and, relying on its decision in Special Civil Application No. 13427 of 2024, directed the authorities to process the refund claim for the periods July 2021 to September 2021 and October 2021 to December 2021 within twelve weeks.
The Court noted that its earlier judgment had held the respondents’ action in refusing to process the refund application dated 14.10.2023 to be unsustainable and observed that the refund application ought to have been processed in view of the Chartered Accountant’s Certificate submitted by the petitioner.
Considering these circumstances, the High Court held that, for calculating interest, the respondent authority was required to consider the date of the original refund application filed on 14.10.2023, rather than the date of the subsequent application filed after the Court’s earlier order. The Court observed that since the respondents’ initial refusal to process the original refund application had already been held illegal, and that action had been set aside, the subsequent refund application satisfied the requirements of Section 56 of the CGST Act, and the petitioner’s claim for interest was required to be processed by taking into account the earlier application date.
Accordingly, the High Court set aside the impugned orders to the extent they denied interest and directed the respondents to pass fresh orders on the petitioner’s claim for interest on refund in light of the Court’s observations. The exercise was directed to be completed within twelve weeks from the date of receipt of the order. All the writ petitions were allowed, Rule was made absolute to that extent, and no order as to costs was passed.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Rule returnable forthwith. Learned Assistant Government Pleader and learned Senior Standing Counsel waives service of notice of Rule for and on behalf of the respective respondents in respective captioned writ petitions.
2. Since the issue involved in all the captioned petitions are identical, with consent of learned advocates appearing for the respective parties, are taken up for final disposal. The Special Civil Application No.4373 of 2026 is treated as the lead matter. For the purpose of passing the present order, the facts are incorporated from the said petition.
3. In the present petition, the petitioner has prayed for quashing and setting aside the impugned order dated 09.02.2026 passed by the respondent No.3 to the extent of denial of interest. The petitioner has been paid the amount of refund of Rs.2,29,32,535/- however, the interest claimed amounting to Rs.29,51,700/- is rejected by assigning the reason that the condition for accrual of interest under Section 56 of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) are not satisfied.
4. It is not in dispute that the petitioner had filed the original refund application dated 14.10.2023, however, the said refund application was not accepted, which constrained the petitioner to file the writ petition being Special Civil Application No.12151 of 2025. By the judgment and order dated 06.11.2025, this Court set aside the action of the respondents in refusing the refund application. Thereafter, the respondent authority passed the impugned order sanctioning the refund however, denying the interest as mentioned herein above.
4.1 The original refund application filed by the petitioner on 14.10.2023 since was rejected and pursuant to the order passed by this Court, the petitioner again filed the refund application on 11.11.2025 however, the respondent authorities have denied the interest by invoking the provisions of Section 56 of the CGST Act. The respondent – Proper Officer has construed the date of subsequent filing of the refund application to deny the interest.
5. This Court in the judgment and order dated 06.11.2025 while allowing the writ petition being Special Civil Application No.12151 of 2025, has observed thus:
“7. It was, thus, held by this Court that the Chartered Accountant’s Certificate produced by the petitioner was bound to be considered by the respondent. In view of the same and in view of the decision rendered by this Court in Special Civil Application No. 13427 of 2024, the respondent authorities are directed to process the refund claim of the petitioner filed for the period from July 2021 to September, 2021 and October 2021 to December 2021 in accordance with law within a period of twelve weeks from the date of receipt of copy of this order.”
6. Thus, the Court found the action of the respondents in denying the refund in processing the refund application, which was filed on 14.10.2023, and in fact, it is observed that the refund application ought to have been processed in view of the Chartered Accountant’s Certificate produced by the petitioner.
7. Under the circumstances, we are of the considered opinion that the respondent authority was required to consider the date of initial refund application filed by the petitioner for calculating the interest instead of the subsequent application, which was filed after the order passed by this Court, in wake of the fact that the initial action of the respondents in refusing the process the refund pursuant to the claim filed by the petitioner vide application dated 14.10.2023 was held illegal, upon setting aside the former action of denial of refund, the fresh application filed for refund satisfies the provisions of Section 56 of the Act and the claim of interest has to be processed by considering the date of earlier application. Thus, we direct the respondents to pass necessary orders on the respective claim of interest on refund filed by the petitioner in light of the observations made by this Court. The impugned orders to such extent are set aside. The same shall be done within a period of twelve (12) weeks from the date of receipt of this order. All the captioned writ petitions stand allowed, accordingly. Rule is made absolute to the aforesaid extent. No order as to costs.
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