IGST Refund Delays on Zero-Rated Exports Must Include 7% Interest Payment Within Six Weeks

The HC ruled in favor of the petitioner in a case involving delayed IGST refund on zero-rated exports. While the principal amount of Rs. 7,69,093 was paid during proceedings, the court ordered respondents to calculate and pay statutory interest at 7% within six weeks. The decision relied on precedent from M/s. Amit Cotton Industries vs. Principal Commissioner of Customs, which established the obligation to pay interest on delayed refunds. This judgment reinforces exporters' rights to timely refunds and confirms that interest is mandatory when tax authorities delay processing legitimate refund claims.

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Issues:
- Refund of IGST on Zero Rated Supplies
- Payment of interest on delayed refund

Refund of IGST on Zero Rated Supplies:
The petitioner filed a writ application under Article 226 seeking relief for the immediate sanction of a refund of IGST amounting to Rs. 7,69,093 paid for goods exported as Zero Rated Supplies. The petitioner also requested interest at 12% on the refund amount until payment. The court heard arguments from both parties, where the petitioner's counsel highlighted that while the refund had been sanctioned and paid during the proceedings, the statutory interest at 7% for the delayed payment had not been included. The court referred to a previous judgment in the case of M/s. Amit Cotton Industries vs. Principal Commissioner of Customs, establishing the obligation to pay interest on delayed refunds. Consequently, the court directed the respondents to calculate and pay the interest on the principal amount at the rate of 7% within six weeks from the date of the judgment.

Payment of interest on delayed refund:
The main issue addressed in this judgment was the payment of interest on delayed refunds of IGST. The court held that the obligation to pay interest on delayed refunds is established by previous judgments, citing the case of M/s. Amit Cotton Industries vs. Principal Commissioner of Customs. The court directed the respondents to calculate and pay the interest at a rate of 7% on the principal refund amount within six weeks from the date of the judgment. This decision ensures that the petitioner receives the full entitlement, including the interest on the delayed refund, in accordance with legal principles and precedents.

This judgment sets a precedent for cases involving delayed refunds of IGST, affirming the obligation to pay interest on such delays. The court's decision emphasizes the importance of timely and complete refund processes, ensuring that petitioners are not deprived of their rightful entitlements. The judgment provides clarity on the legal framework surrounding refund claims and establishes a standard for addressing similar issues in the future.

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