Case Law Details
Qualcom India Private Limited Vs Deputy Commissioner (ST)(FAC) and Ors. (Telangana High Court)
Introduction: The Telangana High Court recently addressed the issue of interest on delayed refunds of Input Tax Credit (ITC) under Section 54 of the Central Goods and Services Tax (CGST) Act, 2017. Two writ petitions brought by different establishments questioned whether interest was due on delayed refund of ITC claimed under Section 54. This analysis delves into the court’s interpretation of the statutory provisions and its implications.
Detailed Analysis: The court extensively analyzed Section 56 of the CGST Act, 2017, which governs interest on delayed refunds. It emphasized that the provision clearly mandates the payment of interest if any tax ordered to be refunded is not refunded within the stipulated period. The court highlighted that the provision’s heading, “Interest on delayed refund,” unequivocally indicates that interest automatically accrues on delayed refunds by the department. The proviso to the section also addresses scenarios where refunds arise from orders passed by adjudicating authorities or appellate bodies, reinforcing the obligation to pay interest on delayed refunds.
Furthermore, the court examined Rule 94 of the CGST Rules, 2017, which provides periods not included in the computation of interest payable on delayed refunds. It concluded that interest on delayed refunds is automatic, triggered by any delay beyond the stipulated period.
Drawing from legal precedents, including decisions of the Supreme Court and various High Courts, the Telangana High Court affirmed the principle that interest on delayed refunds is a beneficial provision intended to compensate taxpayers for the denial of funds due to them. It emphasized that the department’s failure to promptly release refund amounts, without any legal impediment, constitutes a failure to discharge its statutory duty.
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