Interest on delayed GST refund recognised as compensation, payable from the compliance period at 6% per annum.

Interest on delayed GST refund was treated as compensatory for deprivation of use of money, and the Court noted that interest may be payable even without an express statutory provision where amounts are retained without right. The refund was sanctioned on 04.10.2021 but released only after the writ petition was served; allowing 26 days for compliance with the sanction order, the Court accepted 01.11.2021 as the start date for interest. It also accepted 6% per annum as the applicable rate, treating it as a statutorily stipulated rate.

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Issues: Whether interest was payable on the delayed refund of GST amount sanctioned on 04.10.2021 and paid only on 27.04.2023, and if so, at what rate.

Analysis: The refund amount was sanctioned on 04.10.2021, but the CGST and IGST components were released only after the writ petition was served. The Court held that interest is a form of compensation for deprivation of use of money and that, even in the absence of an express statutory provision, interest may follow where amounts are retained without right. The Court accepted that the petitioner was entitled to interest from 01.11.2021, allowing a period of twenty-six days for compliance with the sanction order. On the rate of interest, the Court accepted 6% per annum, noting that it was a statutorily stipulated rate and no further examination was necessary.

Conclusion: Interest was held payable on Rs. 68,37,488/- from 01.11.2021 to 27.04.2023 at 6% per annum.

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