Case Law Details
Altisource Business Solutions India Pvt Ltd Vs Union of India (Bombay High Court)
Bombay High Court in Altisource Business Solutions India Pvt. Ltd. vs Union of India (judgment dated September 2025) ruled that interest on delayed GST refunds is payable from the date of the original refund application, not from the date of a subsequent reapplication following an appellate order. The Court followed its earlier decision in Lupin Limited vs Union of India (2025) and reaffirmed the settled principle that the statutory 60-day period for granting refunds under Section 54 of the CGST Act begins from the original application date.
The petitioner, engaged in exporting software development services, filed a refund claim of ₹2.85 crore on April 23, 2020, on the ground that exports were zero-rated under GST. The refund was rejected by the adjudicating authority on September 14, 2020. The petitioner appealed, and the Appellate Authority on October 27, 2023, allowed the appeal and directed that the refund be granted. The petitioner reapplied on November 28, 2023, and the refund was sanctioned and credited by February 5, 2024. However, the authorities did not pay any interest on the delayed refund.
The petitioner claimed interest at 6% per annum for 1,232 days—counted from 60 days after the initial refund application date—citing Ranbaxy Laboratories Ltd. v. Union of India (2011) 273 ELT (SC), Lupin Ltd. v. Union of India (Bombay HC, 2025), and similar rulings of the Delhi, Punjab & Haryana, and Telangana High Courts. The Revenue opposed the claim, arguing that since the refund was granted within 60 days of the reapplication made after the Appellate Authority’s order, no interest was due under Sections 54 and 56 of the CGST Act.
The Court noted that this issue was no longer res integra, as it had been conclusively decided in Lupin Ltd. In that decision, the coordinate Bench held that Sections 54 and 56 form a unified scheme ensuring both refund and compensation for delay. Interest is levied not as a penalty but as compensation to the taxpayer when refunds are delayed beyond the statutory 60-day limit. Importantly, the 60-day period is computed from the date of the original refund application under Section 54(1), not from a later date of appellate approval or reapplication.
The Court emphasized that even when a refund is sanctioned following an appellate order, the right to interest under Section 56 arises from the initial application date, since the original rejection order was later found to be unsustainable. The Bench explained that the statute contemplates two distinct contingencies:
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If the refund is not granted within 60 days of the original application, interest at 6% per annum is payable; and
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If the refund ordered by an appellate or judicial authority is not paid within 60 days of the appellate order or reapplication, interest at 9% becomes payable under the proviso.
Referring to Ranbaxy Laboratories Ltd., the Court reiterated that when statutory provisions governing refunds and interest are pari materia—as between the Central Excise Act and the CGST Act—the principle remains that delay beyond the prescribed period triggers liability for interest. The Court also cited decisions from the Delhi High Court in Bansal International v. DGST, Punjab & Haryana High Court in SBI Cards & Payment Services Ltd. v. UOI, and Telangana High Court in Qualcomm India Pvt. Ltd. v. Deputy Commissioner (ST), which uniformly held that the liability to pay interest arises automatically after 60 days from the original application, irrespective of appellate proceedings.
Rejecting the Revenue’s contention that interest was payable only if delay occurred after the appellate order, the Court clarified that “First Authority” in Section 56 refers to the adjudicating authority, not the “First Appellate Authority.” Since the petitioner sought only 6% interest (and not 9%), the Court found the claim fully justified.
Accordingly, the High Court set aside the impugned order dated September 9, 2024, which had denied interest. It directed the GST authorities to pay interest at 6% per annum, calculated from the expiry of 60 days after the original refund application of April 23, 2020 (and from corresponding dates in connected petitions), within six weeks of the order’s uploading. The Court concluded that since the original rejection was declared illegal by the Appellate Authority, the Revenue could not withhold statutory interest accruing from the initial refund claim date.
The judgment thus reinforces that in GST refund matters, taxpayers are entitled to interest from the original application date once their refund claim is ultimately allowed, ensuring adherence to statutory timelines and compensation for delayed reimbursements.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard Mr Tushar Jarwal, who appears with Mr Rahul Sateja and Ms Daliya Singh, learned counsel for the petitioner, Ms Vyas, who appears with Mr Abhishek Mishra, learned counsel for the Respondent No. 1, and Ms Chavan, learned counsel for the Respondent Nos. 2 and 3.
2. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
3. Learned counsel for the parties agree that a common order can be passed in these writ petitions, as they involve substantially similar issues of law and fact. They request that Writ Petition No. 5312 of 2024 be taken up as the lead petition.
4. In the lead petition, the petitioners, through their application dated April 23, 2020, sought a refund of Rs. 2,85,63,804 for the export of software development services, which, according to the petitioners, were not subject to GST. By order dated September 14, 2020, the adjudicating authority rejected the petitioners’ application for a refund. The petitioners then filed an appeal on 14th December 2020, which the Appellate Authority allowed by its order dated 27th October 2023 and directed a refund. Based on this order, the petitioners applied for a refund on November 28, 2023, which was sanctioned on January 15, 2024, and the amounts were refunded on February 5, 2024. However, no interest was paid on such a refund.
5. The petitioner contended that there was a delay of 1232 days from the expiry of 60 days from the date of the original refund application dated 23rd April 2020, and therefore, interest at the rate of 6% per annum as is statutorily provided should have been paid from the refund amount.
6. By the impugned order dated 09th September 2024, this claim for interest was rejected by reasoning that since the refund was made within 60 days of the petitioner’s refund application dated 28th November 2023, pursuant to Appellate Authority order’s dated 27th October 2023, there was no question of any interest payable under the provisions of Section 54 read with Section 56 of the CGST Act.
7. Mr. Jarwal, learned counsel for the petitioner, submitted that the reasoning in the impugned order is entirely contrary to the law laid down by the Hon’ble Supreme Court and High Courts in the following decisions: –
i) Ranbaxy Laboratories Ltd vs. Union of India and Others ;1
ii) Lupin Limited vs. Union of India & Ors; 2
iii) Bansal International vs. Commissioner of DGST; 3
iv) SBI Cards & payment Services Ltd. vs. Union of India;4
v) Qualcom India Pvt. Ltd. vs. Deputy Commissioner (ST) (FAC),5
8. Mr. Jarwal has laid emphasis on the decision of this Court in Lupin Limited (supra), where, in almost identical circumstances, the contention on behalf of the revenue was rejected, and interest was directed to be paid from the date of the expiry of 60 days from the original refund application
9. Mr Jarwal submitted that in the remaining two petitions, while the dates of the refund applications, orders, etc., may vary slightly, the issue involved is identical.
10. Ms. Chavan learned Addl. The GP submitted that the petitioner’s initial application for a refund was rejected by an order dated 14th September 2020. Accordingly, there was no obligation to grant a refund, and consequently, no liability for payment on the interest of the refund. She submitted that the refund was allowed only by the order of the Appellate Authority dated 27th October 2023. Based on this order, the petitioner re-applied for a refund on 28 November 2023. This was sanctioned on January 15, 2024, and on February 5, 2024, the actual refund was credited to the petitioner’s bank account. She therefore submitted that the refund was made within 60 days from the date of the petitioner’s refund application dated 28th November 2023, and therefore, under the scheme of Sections 54 and 56 of the CGST Act, there was no obligation for payment of any interest.
11. We have considered the rival contentions.
12. The issue raised in this petition is no longer res integra, given this Court’s decision in Lupin Limited (supra).
13. In almost similar facts and situations, the coordinate Bench of this Court in paragraphs 12 and 13 of the said order observed and held as follows: –
“12. A conjoint and meaningful reading of Section 54 along with Section 56, as-we have stated, forms a Scheme for refund of tax along with the interest and make it evidently clear, that the interest is levied, on delay of the refund, with an object to compensate the person who has claimed a refund, as if refund is allowed, the same shall be immediately refunded, upon an order being passed by a proper officer within a period of 60 days. However, this period of 60 days is to be computed from the date of receipt of the application referred under subsection (1) of Section 54, and not as what has been argued before us by the Counsel for the Revenue, that it will be payable from the date of approval of refund. Similarly, when an Appellate Authority passes an order, either the Assessee or the Revenue going to the appellate forum, then a fresh application is to be filed for the purposes of convenience and bringing the refund order into the system, and the proviso clearly contemplates that within a period of 60 days from passing of the order by the Appellate Authority, the amount of refund shall be disbursed, if not, it shall carry an interest of 9%.
13. It is sought to be urged before us by Revenue, that a proviso operates only when an order is passed by an Appellate Tribunal or Appellate Authority and the interest shall run only from the date when an application is preferred for seeking refund and therefore according to Ms Desai after the appellate order was passed in favour of the petitioner, fresh application for refund was filed on 11.05.2023 and the interest would be payable from that date.
We must reject the said argument as this is not the scheme of the statute and it is trite position in law that when a statute specify or regulate the payment of interest, it must necessarily abide by all the stipulations therein and here when Section 56 contemplate two different contingencies; the first being the amount not being refunded in 60 days of filing of an application, under sub- section (1) of Section 54, and the second contingency being that the amount not being refunded within 60 days from the date of the application filed consequent to an order passed by the adjudicating Authority or the Appellate Authority or the Appellate Tribunal or Court and it having attained finality.
However, the legislature was conscious of the two different situations, as it granted 9% interest in the proviso, when consequent to an order being passed by an Appellate Authority, a fresh application for refund has been made and the amount is not paid within 60 days.
In any case, a conjoint reading of Section 56, the first part along with the proviso and specifically read with the explanation, make it evidently clear that the legislature intended to give the status of an order in original as passed under Sub-section (5) by the proper officer, to the order passed by the Appellate Forum and therefore, the interest which is liable to be paid shall be governed by clause (1) as well as by the proviso and if from the date of the original order, if amount was not refunded within 60 days from the date of the first application, it shall carry an interest of 6% and also if upon the order being passed by the Appellate forum if the refund is not disbursed within a period of 60 days, it shall carry an interest at the rate of 9%.”
14. This Court has aligned with the decisions of the Delhi High Court and Telangana High Court, which have similarly interpreted the provisions and scheme of Sections 54 and 56 of the CGST Act. Mr Jarwal submitted that the basis for such interpretation is to be found in Ranbaxy Laboratories Ltd (supra), where the Hon’ble Supreme Court considered the provisions of Section 11(BB) of the erstwhile Central Excise Act, 1944, which are in pari materia to Sections 54 and 56 of the CGST Act.
15. The arguments, which are almost identical to those raised by the revenue in Lupin Laboratories (supra) have been raised before us today. Given the decision of the coordinate Bench of this Court in the case of Lupin Laboratories (supra), we are afraid we cannot accept them.
16. Ms. Chavan referred to paragraph 15 of Lupin Laboratories (supra) to once again suggest that this Court had held that under the scheme of sections 54 and 56 of the CGST Act, interest at 6% per annum becomes payable only when the amount is not refunded within 60 days of the order being made by the First Appellate Authority. She submitted that, in this case, since the refund was made within 60 days of the sanction for refund, as per the First Appellate Authority’s order, no interest becomes payable.
17. Paragraph 15 of Lupin Laboratories Ltd (supra) reads thus: –
“15. Since the two decisions above, of Delhi High Court and Telangana High Court fortify our view, and contain the reasoning, which we concur as even according to us reading of Section 56 together with the explanation, with reference to the application preferred under sub-section (1) of Section 54, clearly lead us to a conclusion that the interest shall be payable on the amount as contemplated under first part, i.e. when the amount is not refunded within 60 days from the date of the order passed by the First Authority, the proper officer and the interest at the rate of 9% from the date when the fresh application was made after the Appellate Authority allowed the appeals filed by the petitioner and revised the order in original, thereby allowing the entire claim of refund.”
18. The contention now advanced confuses between the expressions “First Authority” and “First Appellate Authority”. Even paragraph 15 in terms states that interest at the rate of 6% per annum becomes payable when the amount is not refunded within 60 days from the date of the order passed by the First Authority. If no refund is made within 60 days from the date the order is passed by the Appellate Authority or, alternatively, within 60 days of the assessee applying for a refund based on the Appellate Authority’s order, then the interest payable will be 9%. In this case, the petitioners have not claimed 9% interest, but rather 6% interest, as the amount was not refunded within 60 days from the date of the order passed by the First Authority or the adjudicating authority.
19. Although the refund application was rejected by the order dated 14 September 2020, it has been set aside by the Appellate Authority as of 27 October 2023. Therefore, based on the rejection order dated September 14, 2020, which was found to be illegal and unsustainable by the Appellate Authority, the respondents cannot resist paying statutory interest at the rate of 6% per annum.
20. For all the reasons above and following the reasoning in the case of Lupin Laboratories (supra), we allow these petitions. We set aside the impugned order dated 09 September 2024 and direct the respondents to pay the petitioner’s interest at a rate of 6% per annum, calculated from the expiry of 60 days from the application date of 23 April 2020 (in the lead petition) and from the respective dates of the original refund applications in the other two petitions, within 6 weeks of this order being uploaded.
21. The Rule is made absolute in the above terms in all these petitions. No costs.
22. All concerned are to act upon an authenticated copy of this order.
Notes:-
1. (2011) 273 E.L.T. (S.C.).
2. Order dated 5th August 2025 in WP No. 610 of 2024.
3. (2023 13 Centax 210 (Del.)
4. 2023 (72) G.S.T.L. 174 (P&H.).
5. 2024 (86) G.S.T.L. 300 (Telangana).
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