M S G S Industries Vs Commissioner of Central Tax And GST (Delhi High Court)
Delhi High Court has ruled that a delay in issuing a deficiency memo by Goods and Services Tax (GST) authorities cannot be used as a reason to deny an applicant full interest on a delayed Input Tax Credit (ITC) refund. The judgment in M/S G.S. Industries vs. Commissioner of Central Tax And GST provides a detailed framework for calculating interest on delayed refunds, ensuring that taxpayers are compensated for administrative delays.
The case involved M/S G.S. Industries (the Petitioner) who filed two refund applications in July 2019. Despite these applications, the first deficiency memos (FORM GST RFD-03) were issued belatedly on November 29, 2019, well beyond the 15-day period stipulated in Rule 90 of the CGST Rules. The Petitioner responded to these memos in January 2020, and acknowledgements (FORM GST RFD-02) were generated on February 11, 2020. However, the refund was not granted within the statutory 60-day period as per Section 54(7) of the CGST Act, nor was interest paid.
This led to a series of legal actions. The Petitioner first filed a writ petition (W.P.(C) 9321/2020), which resulted in the High Court on November 24, 2020, directing the GST Department to process the refund within three weeks. Despite this, the refund application was rejected on December 14, 2020. Upon appeal, the Commissioner (Appeals) allowed the refund on January 3, 2022, but without awarding interest. Consequently, the Petitioner filed a second set of refund applications in February 2022 and, as the refund remained unissued, a second writ petition (W.P.(C) 14719/2022). On March 28, 2023, the High Court directed the processing of the refund “including interest.” Finally, on June 9, 2023, the refund was sanctioned, but only a partial interest of Rs. 45,669 was granted, calculated from the date of the second High Court order until the sanction date.
