Court Upholds 9% Interest Rate on Delayed Payments Under CGST Act Section 56

The court rejected the application for review of the order dated 10.07.2019. It upheld the decision to award interest at a rate of 9% per annum on delayed payments under Section 56 of the CGST Act. The respondents were directed to calculate the refund amount and pay the interest within two months from the date of the court's order. The court found no justification for reviewing the previous order and discharged the rule.

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Issues Involved:
1. Application for review of the order dated 10.07.2019.
2. Interest on delayed refunds under Section 56 of the CGST Act.
3. Calculation and payment of interest on delayed refunds.

Issue-wise Detailed Analysis:

1. Application for Review of Order Dated 10.07.2019:
The original respondents of Special Civil Application No.15925 of 2018 sought to review the order dated 10.07.2019. They requested the court to recall or review the order in the interest of justice. The court examined the application and the prayers made by the petitioners, which included admitting and allowing the petition and recalling the previous order.

2. Interest on Delayed Refunds Under Section 56 of the CGST Act:
The court referred to Section 56 of the CGST Act, which mandates that if any tax ordered to be refunded is not refunded within sixty days from the date of receipt of the application, interest at a rate not exceeding 6% shall be payable. The court also noted the provision that if the refund arises from an order passed by an adjudicating authority or court, and the same is not refunded within sixty days, interest at a rate not exceeding 9% shall be payable. The court highlighted the statutory provisions and relevant rules, including Rule 94, which provides for the order sanctioning interest on delayed refunds.

3. Calculation and Payment of Interest on Delayed Refunds:
The court reviewed several precedents from different High Courts and the Supreme Court, which consistently held that interest on delayed refunds is beneficial and non-discriminatory. The court cited specific cases, such as Shiv Kumar Jain Vs. Union of India and K.T. Plantation Pvt. Ltd. & Anr. Vs. State of Karnataka, to emphasize the principles of awarding interest on delayed refunds. The court also referred to the chart indicating the delay in refunds for SARAF NATURAL STONE, highlighting the specific delays for various invoices.

The court observed that the respondents had not explained the delay in any manner and held them liable to pay simple interest at the rate of 9% per annum on the delayed payments. The court directed the respondents to calculate the aggregate amount of refund and pay the interest within two months from the date of receipt of the writ order.

Conclusion:
The court concluded that no case was made out for reviewing the order dated 10.07.2019. The court upheld its decision to award interest at the rate of 9% per annum, considering the peculiar facts and circumstances of the case. Consequently, the application for review was rejected, and the rule was discharged.

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