Case Law Details

Case Name : M/s. Saraf Natural Stone Vs Union Of India (Gujarat High Court)
Appeal Number : Special Civil Application No. 15925 of 2018
Date of Judgement/Order : 12/10/2018
Related Assessment Year :

M/s. Saraf Natural Stone Vs Union Of India (Gujarat High Court)

While admitting a petition seeking interest / compensation for delay in both provisional as well as final refund of GST beyond stipulated period, the Gujarat High Court has issued notices to Centre, CBIC and GSTN.
The petitioner M/s Saraf Natural Stone has filed the writ petition before the Gujarat High Court asking for directions against the government to grant them not only interest @ 6% statutorily payable to them on delayed GST refund beyond 60 days from the date of application, but also interest in the nature of compensation for delay in provisional refund of 90% of the amount beyond seven days from the date of acknowledgment of application even though statute does not provide for the same.
Further, they submitted that that provisions of CGST Act, 2017 and Rules relating to refunds applies, mutatis mutandis, in relation to integrated tax as they apply in relation to central tax.
Counsel for the Petitioners Mr. Vinay Shraff, Mr. Vishal J Dave , Mr. Prateek Gattani and Mr. Nipun Singhvi  submitted before the Court that the, that such inaction, leading to inordinate delay in granting of refund, is arbitrary and unreasonable and therefore is violative of Article 14 of the Constitution of India. It severely impacted working capital of the petitioner and therefore substantially diminished its ability to continue business which is a serious affront to its right to carry on its trade or business guaranteed under Article 19(1)(g) of the Constitution. It has also caused the deprivation of the petitioner’s enjoyment of the property and therefore, this is positively violative of the provision of Article 300A of the Constitution of India.
The next date of the matter is 23.11.2018
CA Abhishek Chopra, GST Consultant opined that “The claim made by petitioner is mandatorily payable to them by the department suo-motu and admission of writ for payment of the same is good news for exporters as they have been getting delayed refund which blocks their working capital cycle. The increased cost of capital has posed serious threats to their ability to do business.”


Case of the petitioners is that the Department had paid refund to the petitioners after a long period for which the statute provides for interest for the period beyond sixty days from the date of application for refund. Such interest has not been paid. The petitioners’ second prayer is that the statute provides for provisional refund of ninety per cent of the amount within seven days of the application. This provisional refund also was not granted. Counsel for the petitioner agreed that for such delay, the statute does not separately provide for interest. However, he argued that the Court should grant interest in the nature of compensation for delay.
Notice, returnable on 23rd November 2018.
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    There should be a PIL or court should take a suo motu call for changing interest provision in GST. Why should government levy interest of 18%(very high rate) and also penalty per day for late payment of GST when it pays only 6% on delay beyond 60 days in GST refund. Government should pay 18%PA interest for delay in GST refund beyond 20 days (same as delay in GST payment).
    Government, its ministers, officers should come out of mentality of taking public and its business for granted and put them on any kind of misery. There should be parity in both type of provisions. Government can not take its citizen’s businesses for granted.

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