2024 (3) TMI 118 - HC - GST

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 ... Refund of IGST on export of goods - deemed application for refund by filing of shipping bill - procedure for transmission of export details under Rule 96 - interest on delayed refunds under Section 56 - automatic entitlement to statutory interest despite absence of express claimRefund of IGST on export of goods - deemed application for refund by filing of shipping bill - procedure for transmission of export details under Rule 96 - Sanction of IGST refund for the tax periods indicated was granted by respondent; the procedural compliance for claiming refund was satisfied. - HELD THAT: - The petitioner exported goods on payment of IGST and furnished returns in FORM GSTR-3B and submitted refund applications by filing shipping bills and FORM GST RFD-01. Rule 96 contemplates that the shipping bill is to be treated as the application for refund and that details in FORM GSTR-1 are to be transmitted to the Customs system; acknowledgements in FORM GST RFD-02 were issued and refunds have been sanctioned by the respondent. The Court recorded that the procedural requirements for processing export refunds were met and that the refunds for the specified tax periods have been sanctioned (albeit without interest). [Paras 2, 4, 6, 7]Refunds of IGST for the tax periods December 2022, February 2023, March 2023 and May 2023 stand sanctioned; procedural requirements under Rule 96 and related provisions were satisfied.Interest on delayed refunds under Section 56 - automatic entitlement to statutory interest despite absence of express claim - Whether petitioner is entitled to interest under Section 56 on the delayed IGST refund despite not having claimed interest in FORM GST RFD-01. - HELD THAT: - Section 56 mandates payment of interest at the prescribed rate where a tax ordered to be refunded is not refunded within sixty days from receipt of the application; such interest is statutory and becomes payable automatically once the sixty-day period is exceeded. The CBEC Circular cited by the petitioner clarifies that interest is to be calculated from the date immediately after expiry of sixty days until the date the amount is credited to the applicant's bank account, and that refund is to be treated as effected only upon credit to the bank account. Payment of interest under Section 56 does not depend upon an express claim for interest in the refund application form; therefore absence of a claim for interest in FORM GST RFD-01 does not disentitle the petitioner. The respondent has shown no justification for non-payment within the statutory period. [Paras 9, 10, 11, 12]Petitioner is entitled to statutory interest at the rate of 6% from the date immediately after expiry of sixty days from receipt of the refund applications until the date on which the refund was credited to the petitioner's bank account; respondent directed to process and credit the interest within four weeks.Final Conclusion: The writ petition is allowed in part: IGST refunds for December 2022, February 2023, March 2023 and May 2023 having been sanctioned, the petitioner is additionally entitled to statutory interest at 6% for the period from the day after sixty days from receipt of the refund applications until the date of credit; the respondent is directed to process and credit the interest within four weeks. The petition is disposed of. 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 ClaimThe 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 RefundsThe 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.