Vineet Polyfab Pvt. Ltd. & Anr Vs Union of India & Ors. (Gujarat High Court)
Statutory interest under Section 56 GST Act is mandatorily payable on undisputed refund delayed beyond 60 days
Gujarat High Court, in its recent decision, directed the GST authorities to pay statutory interest under Section 56 of the CGST Act, 2017 for delayed IGST refund arising from exports, emphasizing that such interest is compensatory and mandatory. The petitioner had exported polyester yarn and paid IGST of ₹7,53,469 through five shipping bills at Hazira Port. Although the refund was sanctioned only after the petitioner approached the Court, no interest was granted. The authorities blamed data mismatches and technical glitches (error code SB000 in the ICES system) but failed to show any fault by the petitioner. The Court observed that even the department’s affidavit admitted that the delay resulted from a technical glitch and that the refund had to be processed manually only after the Court’s intervention. Citing Section 56 of the GST Act and the Supreme Court’s ruling in Ranbaxy Laboratories Ltd. v. Union of India (2011) and the Gujarat High Court’s own precedent in Panji Engineering Pvt. Ltd. v. Union of India (2023), the Court reiterated that the right to interest accrues automatically after 60 days from the date of refund application. Since the refund delay was not attributable to the exporter, the department was bound to pay interest. The Court, therefore, allowed the petition and directed the GST authorities to release the interest on delayed refund within 12 weeks, affirming that systemic lapses or portal errors cannot deprive taxpayers of their statutory rights.
