2023 (7) TMI 533 - HC - GST

Exporter entitled to interest on delayed IGST refunds under Section 56 after six months unreasonable withholding

M/s. PANJI ENGINEERING PRIVATE LIMITED Versus UNION OF INDIA

Gujarat HC held that petitioner was entitled to interest on delayed IGST refunds under Section 56 of Central Goods and Services Tax Act, 2017. The refund ... Interest on delayed refund of IGST paid on export of the goods along with duty drawback - The refund of the petitioner was withheld for almost six months and after six months, petitioner was put in the category of ‘Risky Exporter’ without providing any reason. - HELD THAT:- Section 56 of the Central Goods and Services Tax Act provides for the interest on delayed refunds. Section 56 envisages that when any tax order to be refunded under Sub-section 5 of Section 54 to any applicant, if the applicant, is not refunded within 60 days from the date of receipt of the application, under Sub-section 1 of Section 54, interest at such rate, not exceeding six per cent as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund of such tax. The provision of section 56 entitles the petitioner to claim interest on the delayed refunds. It is worthwhile to note that pending this petition, respondent authority has released the refund to the petitioner except the refund involved in the Shipping Bill No.8723678 dated 17.02.2021. However, the respondent authority has not granted interest on the delayed refunds, which according to this Court, is against the provisions of Section 56 of Central Goods and Services Tax Act, 2017. Petitioner is entitled to interest on delayed refund. The present petition is disposed of with a direction to the concerned respondent authority to release the refund involved in the Shipping Bill No.8723678 dated 17.02.2021 and grant interest on the delayed refunds as per the provisions of law - Petition disposed off. Issues Involved:1. Inaction on sanctioning refund claims of Integrated Goods and Service Tax (IGST) paid on export of goods and duty drawback.2. Eligibility for interest on delayed refund amounts.Summary:Issue 1: Inaction on sanctioning refund claims of IGST and duty drawbackThe petitioner filed a petition under Article 226 of the Constitution of India seeking a writ of Mandamus directing the respondents to sanction the refund claim of IGST paid on export of goods and duty drawback. The petitioner availed input tax credit as per the CGST Act, 2017, and filed FORM GSTR-1 and FORM GSTR-3B, paying the IGST amount. Despite this, the refund was not sanctioned, and the petitioner lodged a grievance at the Centralized Public Grievance Redress and Monitoring System, which was closed without granting the refund. The petitioner was later categorized as a 'Risky Exporter' without any reason, and the refund was withheld for almost six months. The respondents cited an email from Customs Headquarters directing the suspension of the refund scroll, which led to the suspension of the petitioner's refund.Issue 2: Eligibility for interest on delayed refund amountsDuring the pendency of the petition, the petitioner received refunds except for the one involved in Shipping Bill No.8723678 dated 17.02.2021. The petitioner claimed entitlement to interest on the delayed refunds under Section 56 of the CGST Act, 2017, which mandates interest if the refund is not sanctioned within 60 days from the date of receipt of the application. The respondent argued that the refund was under process and would be issued soon. The court referred to the Supreme Court's decision in Ranbaxi Laboratories Ltd. Vs. Union of India, which clarified that interest becomes payable if the refund is not processed within the stipulated period.Judgment:The court concluded that the provisions of Section 56 of the CGST Act, 2017, are clear and unambiguous, entitling the petitioner to claim interest on delayed refunds. The court directed the respondent authority to release the refund involved in Shipping Bill No.8723678 dated 17.02.2021 and grant interest on the delayed refunds as per the provisions of law. The petition was disposed of with these directions, and the rule was made absolute to the aforesaid extent.