InSpecial Civil Application No. 560 of 2022 -GUJ HC- Gujarat High Court upholds Taxpayers’ entitlement to interest on delayed GST Refunds under the CGST Act
Justice Vipul M. Pancholi & Justice Devan M. Desai [10-07-2023]

Read Order: M/s. Panji Engineering Private Limited V. Union of India

Chahat Varma

New Delhi, July 20, 2023: The Gujarat High Court has upheld the entitlement of taxpayers to claim interest on delayed refunds under the provisions of Section 56 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The brief facts of the case were that according to M/s. Panji Engineering Private Limited (petitioner), they had availed input tax credit as per the provisions of the CGST Act on goods and services used in the manufacture of submersible pumps, which were subsequently supplied in India and exported abroad. The petitioner filed the necessary forms and paid the IGST amount, but their refund was not sanctioned as per the provisions of the Integrated Goods and Services Tax Act (IGST Act). Despite lodging grievances and sending reminders, the petitioner received no response from the authorities, and their complaint was closed without granting the refund. However, during the proceedings, the petitioner stated that except for the refund involved in a specific shipping bill, they had received the IGST refund for the exported goods. However, the refund in question was yet to be received, and the petitioner claimed entitlement to interest under Section 56 of the CGST Act since the refund was not sanctioned within 60 days from the application date.

The division bench of Justice Vipul M. Pancholi and Justice Devan M. Desai observed that the provisions of Section 56 were clear and mandatory, entitling the petitioner to claim interest on delayed refunds. The Authorities failed to grant interest on the delayed amounts, which the bench deemed contrary to the provisions of the law.

Considering the totality of the facts and developments during the proceedings, the bench directed the concerned authority to release the refund to the petitioner, associated with the Shipping Bill No.8723678 dated 17.02.2021 and grant interest on the delayed refunds as per the provisions of the law.