Taxpayer entitled to automatic 6% interest on delayed IGST refund under Section 56 without claiming it Delhi HC held that petitioner was entitled to statutory interest on delayed IGST refund despite not claiming interest in the refund application. The court ...
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Taxpayer entitled to automatic 6% interest on delayed IGST refund under Section 56 without claiming it
Delhi HC held that petitioner was entitled to statutory interest on delayed IGST refund despite not claiming interest in the refund application. The court ruled that Section 56 of CGST/DGST Act mandates automatic payment of 6% interest when refunds exceed 60 days from application receipt, regardless of specific claim by taxpayer. Revenue's contention that interest requires explicit claim was rejected as the provision is mandatory, not dependent on petitioner's request. Court directed respondent to process and credit interest within four weeks from expiry of 60-day period until actual refund date.
Issues involved: The petitioner sought direction for the respondent to grant total IGST refund for specific tax periods along with interest. The main issue revolved around the entitlement of the petitioner to receive interest on the delayed refunds as per Section 56 of the CGST/DGST Act.
Summary of the Judgment:
Issue 1: IGST Refund Claim The petitioner, an exporter of mobile phones and accessories, filed a Writ Petition seeking IGST refunds for various tax periods. The petitioner claimed that the necessary export details were transmitted electronically to Customs as per Rule 96 of the CGST/DGST Rules, and refund applications were duly submitted. The petitioner contended that the refunds were sanctioned for the mentioned tax periods, but without interest. The petitioner further requested interest at the rate of 6% from the date of filing the refund applications.
Issue 2: Entitlement to Interest on Delayed Refunds The respondent objected to the grant of interest, stating that the petitioner had only claimed the integrated tax amount and not the interest in the refund applications. However, Section 56 of the CGST/DGST Act mandates interest on delayed refunds if not processed within 60 days from the receipt of the application. The court referred to a Circular by CBEC emphasizing the automatic entitlement to interest if the refund is not made within the stipulated period. The court held that interest under Section 56 is statutory and payable automatically, irrespective of the petitioner's claim for interest in the refund applications.
Final Decision: The court ruled in favor of the petitioner, stating that statutory interest at the rate of 6% should be paid from the date immediately after the expiry of sixty days from the receipt of refund applications until the refund is credited to the petitioner's bank account. The respondent was directed to process the refund of interest and credit it to the petitioner's account within four weeks. The petition was disposed of along with the pending application.
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