Grapes Digital Private Limited Vs Principal Commissioner, CGST, Delhi & Ors. (Supreme Court of India)
In the case of M/s Grapes Digital Pvt. Ltd. vs Principal Commissioner, CGST, Delhi & Ors., the Supreme Court admitted a Special Leave Petition (SLP) challenging a Delhi High Court decision regarding the adjustment of interest on delayed IGST payments against a refund claim. The petitioner, engaged in digital media services, exported services without paying IGST under the Letter of Undertaking (LUT). Later, the petitioner paid IGST on reverse charge mechanism (RCM) and sought a refund. The refund was sanctioned, but the tax authorities adjusted the interest due on delayed IGST payments against the refund. The Delhi High Court upheld this adjustment, stating that interest is a statutory obligation and cannot be avoided despite tax neutrality. The Court emphasized that the petitioner’s failure to deposit IGST on time resulted in accrued interest, which could be adjusted under Section 73 of the CGST Act. Disagreeing with this decision, the petitioner appealed to the Supreme Court, which has now admitted the case for further consideration. The key issue is whether interest adjustment is permissible against an IGST refund claim. The matter now awaits the Supreme Court’s final judgment.
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The Hon’ble Supreme Court in the case of M/s Grapes Digital Private Limited v. Principal Commissioner, CGST, Delhi & Ors. [Special Leave Petition (Civil) Diary No (s.) 35601/2024 dated September 06, 2024] granted leave and admitted SLP against Delhi High Court Judgment wherein it was held that the department can adjust interest on the tax amount paid by the Assessee which had had already been sanctioned for refund.
