The Gujarat High Court’s recent ruling in M/s. Panji Engineering Private Limited v. Union of India has significant implications for taxpayers seeking refunds under the Goods and Services Tax (GST) law. The court has affirmed that a delay in disbursing refunds by the Revenue Department entitles the assessee to interest on the refund amount. This decision adds weight to the principles governing refunds and the legal rights of assessees.
Facts:
M/s. Panji Engineering Private Limited (“the Petitioner”) exported goods and discharged Integrated Goods and Services Tax (“IGST”) on such export supplies and thereafter applied for refund of IGST under the GST law.
However, the Revenue department (“the Respondent”) denied the refund citing the reason of mismatch between Input Tax Credit (“ITC”) availed in GSTR-3B and GSTR-1 and the refund claim was withheld for more than 6 months even after filing complaint to Centralized Public Grievance Redress and Monitoring System. Thereafter the Petitioner was put under the category of ‘Risky Exporter’ and red flagged without assigning any reasons.
The Petitioner contended there was no mismatch of ITC in the forms as mentioned above.
The Petitioner filed writ before the Hon’ble Gujarat High Court seeking to direct the Respondent to disburse the refund claim. However, during the pendency of the writ the Respondent disbursed the refund claim.
But, the Petitioner through an additional Affidavit alleged before the Hon’ble High Court for grant of interest on delayed refund under section 56 of the Central Goods & Services Tax Act, 2017 (“the CGST Act”).
Issue:
Whether the assessee is entitled for interest on refund which was withheld by the Revenue Department without any intimation for more than 6 months?
Held:
The Hon’ble Gujarat High Court in R/SPECIAL CIVIL APPLICATION NO. 560 of 2022 held as under:
- Relied upon the judgement of Ranbxi Laboratories Ltd. v. Union of India 2011 [Civil Appeal No. 6823 of 2010] wherein the Hon’ble Supreme court held that in case of delayed refunds, applicant shall be entitled for interest on such delayed refund amount.
- Held that, the Petitioner case is fit for grant of interest on refund under section 56 of the CGST Act due to a delay of more than 60 days from the date of application under as prescribed under Section 54(1) of the CGST Act.
Conclusion: The Gujarat High Court’s decision in M/s. Panji Engineering Private Limited v. Union of India underscores the importance of upholding the rights of assessees in the context of refund claims under the GST law. It asserts that delays in refund disbursements by the Revenue Department will lead to the grant of interest, reaffirming the legal safeguards for taxpayers. This judgment will likely influence future handling of refund claims and underscores the necessity of efficient administration by the Revenue Department. It serves as a reminder of the accountability and responsibility required in managing tax refunds and the legal consequences of delays.
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