GST Refund Interest Under Section 56 Must Be Quantified Within 15 Days: Delhi HC

King Impex Vs Commissioner of Delhi Goods and Services Tax & Anr. (Delhi High Court)

Summary: Delhi High Court allowed a writ petition filed by King Impex seeking interest under Section 56 of the Central Goods and Services Tax Act, 2017 on a sanctioned refund of ₹19,76,518. The petitioner’s premises had been searched under Section 67 of the CGST Act on 24 December 2020. A demand-cum-show cause notice under Section 74 was thereafter issued in July 2021, followed by an Order-in-Original dated 5 December 2022 confirming the demand.

The petitioner challenged the demand before the Appellate Authority and deposited ₹31,44,190 as mandatory pre-deposit. The appeal was partly allowed on 4 December 2023. Consequently, the petitioner applied on 14 February 2024 for refund of the pre-deposit. After adjustment of penalty of ₹11,67,672, refund of ₹19,76,518 was sanctioned by order dated 13 January 2025. The petitioner thereafter claimed entitlement to statutory interest under Section 56 of the CGST Act on the sanctioned refund amount.

Before the High Court, counsel for the respondent submitted that the petitioner could make a representation to the Department and that such representation would be considered. The Court, however, specifically queried whether the authorities possessed any discretion to deny interest where it was otherwise payable under Section 56. The respondent’s counsel was unable to point out any such discretion.