King Impex Vs Commissioner of Delhi Goods and Services Tax & Anr. (Delhi High Court)
Summary: Delhi High Court allowed a writ petition filed by King Impex seeking interest under Section 56 of the Central Goods and Services Tax Act, 2017 on a sanctioned refund of ₹19,76,518. The petitioner’s premises had been searched under Section 67 of the CGST Act on 24 December 2020. A demand-cum-show cause notice under Section 74 was thereafter issued in July 2021, followed by an Order-in-Original dated 5 December 2022 confirming the demand.
The petitioner challenged the demand before the Appellate Authority and deposited ₹31,44,190 as mandatory pre-deposit. The appeal was partly allowed on 4 December 2023. Consequently, the petitioner applied on 14 February 2024 for refund of the pre-deposit. After adjustment of penalty of ₹11,67,672, refund of ₹19,76,518 was sanctioned by order dated 13 January 2025. The petitioner thereafter claimed entitlement to statutory interest under Section 56 of the CGST Act on the sanctioned refund amount.
Before the High Court, counsel for the respondent submitted that the petitioner could make a representation to the Department and that such representation would be considered. The Court, however, specifically queried whether the authorities possessed any discretion to deny interest where it was otherwise payable under Section 56. The respondent’s counsel was unable to point out any such discretion.
In view of this position, the Division Bench comprising Justice Anil Kshetrapal and Justice Shail Jain allowed the writ petition. Respondent No. 1 was directed to quantify the interest payable to King Impex under Section 56 of the CGST Act within 15 days from 8 September 2026 and release the quantified amount within one month thereafter. The order therefore recognises that where interest is otherwise payable under Section 56, the concerned authority has no demonstrated discretion to deny such statutory interest.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Through the present Petition, the Petitioner seeks grant of interest on the sanctioned refund amount of Rs. 19,76,518/- (Rupees Nineteen Lakhs Seventy-Six Thousand Five Hundred and Eighteen only).
2. The premises of the Petitioner were searched under Section 67 of the Central Goods and Services Tax Act, 2017 (hereinafter, “CGST Act”), on 24th December, 2020. Thereafter, a demand-cum-Show Cause Notice under Section 74 of the CGST Act was issued in July, 2021, to which the Petitioner submitted a Reply. Subsequently, an Order-in-Original dated 05th December, 2022, confirming the demand, came to be passed.
3. Aggrieved thereby, the Petitioner preferred an Appeal before the Appellate Authority and deposited an amount of Rs. 31,44,190/- (Rupees Thirty-One Lakhs Forty-Four Thousand One Hundred and Ninety only) towards the mandatory pre-deposit. The Appeal was partly allowed on 04th December, 2023. Thereafter, the Petitioner filed an application dated 14th February, 2024, seeking refund of the pre-deposit amount. Ultimately, after adjustment of the penalty amounting to Rs. 11,67,672/- (Rupees Eleven Lakhs Sixty-Seven Thousand Six Hundred and Seventy-Two only), a refund of Rs. 19,76,518/- (Rupees Nineteen Lakhs Seventy-Six Thousand Five Hundred and Eighteen only) was sanctioned vide Order dated 13th January, 2025. The Petitioner claims entitlement to interest under Section 56 of the CGST Act on the aforesaid sanctioned refund amount.
4. Learned Counsel appearing for the Respondent submits that the Petitioner may make a representation in this regard to the Department, which shall be duly considered.
5. However, upon a query from the Court, learned Counsel appearing for the Respondent is unable to point out any discretion vested in the concerned Authorities to deny interest, if otherwise payable under Section 56 of the CGST Act.
6. In view of the foregoing position, the present Writ Petition is allowed. Further, considering the aforesaid disposal, Respondent No. 1 is directed to quantify the amount of interest payable to the Petitioner under Section 56 of the CGST Act within a period of 15 days from today, and release the same within a period of one month thereafter.
