Assessee entitled to interest on GST Refund from date of expiry of 60 days of application filed pursuant to refund claim attaining finality

Assessee entitled to interest on GST Refund from the date of expiry of 60 days of the application filed pursuant to refund claim attaining finality: Delhi HC

The Hon’ble Delhi High Court in the case of Bansal International v. Commissioner of DGST and Anr. [W.P.(C) 11629/2023 dated November 21, 2023] allowed the writ petition and held that interest at the rate of six percent would be payable for the period which commences from the date immediately after the expiry of sixty days from the first application till the filing of the second application according to the appellate orders.

Facts:

Arun Bansal (“the Petitioner”) is engaged in the business of export of goods operating under the name and style of proprietorship concern, Bansal International. The Petitioner filed an application for claiming of refund of Input Tax Credit (“ITC”) in respect of the goods exported without the payment of tax in the month of November 2019.

The Petitioner’s application for refund was acknowledged by the Revenue Department (“the Respondent”), however, the Respondent vide Order dated November 10, 2020, sanctioned a refund amount of Rs. 1,08,293/- but rejected the remaining refund claim of Rs.52,84,223/- as not tenable under Section 62(2)(c) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

Aggrieved by the Order, the Petitioner filed an appeal before the Respondent Appellate Authority. The Appeal was allowed, and the Petitioner was directed to file a fresh application for a refund. However, the amount of Interest was denied by the Respondent.

The Petitioner filed a fresh application for refund along with interest. The Respondent vide order dated December 28, 2022, sanctioned refund amount but interest on the said amount was denied. The Petitioner further filed an application for claiming interest on the amount of refund which was rejected by the Respondent vide order dated July 11, 2023 (“the Impugned Order”).

Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble Delhi High Court for claiming interest on the refund amount pertaining to the tax period November 2019.

Issue:

Whether the Assessee is entitled to interest on GST Refund from the date of expiration of 60 days of the first application filed when the subsequent application for refund is filed as per Appellate Order?

Held:

The Hon’ble Delhi High Court in the case of W.P. (C) 11629/2023 held as under:

• Observed that, the provision of Section 56 of the CGST Act, refers to the rate of six percent interest applicable on the amount of refund due, which has not been paid after sixty days from the date of application for refund whereas the proviso provides for increased rate of nine percent interest for the period from the date of application in cases wherein the claim for refund attains finality in appellate proceedings.
• Noted that, the applications for refund filed pursuant to the orders passed by the Appellate Authority are filed to implement the orders already passed, therefore the said application does not require fresh adjudication. The subsequent application filed pursuant to the successful orders issued by the Appellate Authority is solely to push the process of disbursal claim and for the proper officer to determine and disburse the interest as payable.
• Opined that, that interest at the rate of six percent would be payable for the period which commences from the date immediately after the expiry of sixty days from the first application till the filing of the second application pursuant to the appellate orders.
• Held that, the Impugned Order is set aside. Hence, the writ petition is allowed.
• Directed that, the Respondent shall process the Petitioner application for refund.

Conclusion: In conclusion, the Bansal International case establishes a crucial precedent, affirming the entitlement of an assessee to interest on GST refund from the date following the expiration of 60 days from the first application. The court’s clear interpretation of Section 56 and the distinction between initial and subsequent applications provide clarity on the applicability of interest rates. This ruling has significant implications for taxpayers, emphasizing their rights in the GST refund process. The article has provided a detailed analysis of the case, shedding light on its importance and potential impact on future refund claims.

****

(Author can be reached at [email protected])