Assessee is entitled to Interest immediately after the expiry of sixty days from date of GST refund applications till date on which refund was credited to bank account
The Hon’ble Delhi High Court, in the case of Raghav Ventures vs. Commissioner of Delhi [W.P.(C) NO. 12209 OF 2023 dated March 01, 2024], held that the Petitioner is automatically entitled to interest at 6% under Section 56 of the Central Goods and Services Tax Act (“the CGST Act”) if the refund is not processed within 60 days from the date of refund application till date on which refund was credited to the bank account of the Petitioner.
Facts:
M/s Raghav Ventures (“the Petitioner”), was an exporter of mobile phones of various brands and accessories to M/s AZ Logistic, Dubai, UAE, on payment of the Integrated Goods and Services Tax (“the IGST Act”). During the months of December 2022, February 2023, March 2023, and May 2023 (“the Impugned Period”), the Petitioner made exports and paid IGST amounting to Rs. 1,63,16,851/-, Rs. 50,46,889/-, Rs. 17,26,288/-, and Rs. 13,85,382/-, respectively. The Petitioner furnished returns in Form-GSTR-3B and submitted applications for refunds of IGST for the aforementioned tax periods via Form-GST-RFD-01, as per the prescribed procedure under Rule 96 of the Central Goods and Services Tax Rules, 2017 (“the CGST rules”). System-generated acknowledgments were issued via Form-GST-RFD-02, acknowledging the receipt of refund applications.
The IGST refund for the Impugned Period was sanctioned and credited into the Petitioner’s bank account on December 4, 2023, but without any interest. The Petitioner filed an application dated December 6, 2023, to the Revenue Department (“the Respondent”), praying for the grant of interest at the rate of 6% from the date of filing of refund applications till December 3, 2023.
Issue:
Whether the Petitioner is entitled to interest on the delayed refund of IGST?
Held:
The Hon’ble Delhi High Court, in the Writ Petition (C) NO. 12209 OF 2023 held as under:
- Observed that, under Section 56 of the CGST Act, interest becomes payable if the refund amount ordered under Section 54(5) of the CGST Act is not refunded within 60 days from the date of receipt of the application under Section 54(1) of the CGST Act.
- Opined that, the payment of interest under Section 56 of the CGST Act is statutory and does not depend on the claim made by the assessee. It is automatically payable if the refund is not made within 60 days from the date of receipt of the application.
- Relied on Circular No. 125/44/2019-GST dated November 18, 2019, which clarifies that interest will be calculated starting from the date immediately after the expiry of sixty days from the date of receipt of the application till the date on which the amount is credited to the bank account of the applicant.
- Held that the Petitioner was entitled to statutory interest at the rate of 6% 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 was credited to the Petitioner’s bank account.
- Directed that, the Respondent process the refund of interest and credit the same into the Petitioner’s account within four weeks.
Relevant Sections:
Section 54, read with Section 56 of the CGST Act
“Section 54 (12) talks about Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.”
Conclusion: The ruling establishes a crucial precedent ensuring promptness in processing GST refunds. It underscores the statutory nature of interest entitlement, irrespective of specific claims made by taxpayers. This judgment serves to protect taxpayers’ rights and emphasizes compliance with refund timelines mandated under the CGST Act.
In conclusion, the decision of the Delhi High Court in the case of Raghav Ventures vs. Commissioner of Delhi provides clarity on the entitlement of taxpayers to interest on delayed GST refunds, setting a significant precedent for future cases.
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