Fly Ash Exporter Wins Case for Interest on Delayed IGST Refund Under Section 56 of CGST Act

The HC ruled in favor of the petitioner, a fly ash exporter, who sought IGST refund for exports to Qatar that was delayed due to alleged discrepancies between FOB value and IGST taxable value. Though the refund was eventually credited during the pendency of the petition, the court held that the petitioner was entitled to statutory interest on the delayed refund under Section 56 of the CGST Act, 2017. The authorities were directed to calculate and pay interest at a rate not exceeding 6% within six weeks, affirming taxpayers' rights to timely refund processing.

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Issues:
1. IGST refund for exports not processed
2. Delay in processing refund amount
3. Entitlement to statutory interest on delayed refund
4. Calculation of interest amount

Analysis:

Issue 1: IGST refund for exports not processed
The petitioner, a Limited Liability Partnership engaged in the export of Fly Ash, filed a writ-application seeking a mandamus to direct the respondents to grant and release the IGST refund for exports made in September 2018 along with statutory interest. The petitioner exported goods to Qatar, paid IGST, and filed shipping bills with IGST details. The refund was withheld due to a large difference between FOB value and IGST taxable value in the shipping bill. The petitioner explained the issue citing inapplicability of a Circular. The refund was eventually credited during the pendency of the writ-application.

Issue 2: Delay in processing refund amount
The authorities acknowledged a delay in processing the refund amount, attributing it to a technical glitch. The petitioner, however, contended that the delay entitled them to statutory interest on the delayed payment as per Section-56 of the CGST Act, 2017.

Issue 3: Entitlement to statutory interest on delayed refund
Section-56 of the CGST Act, 2017 mandates payment of interest if a tax ordered to be refunded is not processed within sixty days from the receipt of the application. The court, after considering the facts and circumstances, held that the petitioner was entitled to interest on the delayed refund amount at a rate not exceeding 6% as provided under the Act.

Issue 4: Calculation of interest amount
The court directed the authorities to calculate the interest on the delayed refund amount within six weeks as per the provisions of Section-56 of the Act. The writ-application was disposed of with this direction, granting the petitioner the entitlement to statutory interest on the delayed refund.

This judgment highlights the importance of timely processing of refund amounts under GST laws and the entitlement of taxpayers to statutory interest in case of delays, ensuring that the rights of taxpayers are protected in such situations.

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