2024 (7) TMI 1066 - HC - GST

Bombay HC orders 6% interest on delayed IGST refund despite assessee's GSTR-3B filing errors

Bombay HC ruled in favor of petitioner seeking IGST refund on exported goods. Despite petitioner's error in GSTR-3B returns for July-August 2017, the ... Refund of Integrated Goods and Services Tax (IGST) paid on goods exported - petitioner had made a mistake of not showing the correct amount of refund in the return Form GSTR-3B for July 2017 and August 2017 - HELD THAT:- If delay was due to technical glitch, there is no evidence as to what was the technical glitch and how long it prevailed. Moreover, once the High Court passed directions on 21st April 2023, the technical glitch mysteriously vanished and petitioner was given the refund as indicated above. The refund was given only after this Court directed respondents to consider petitioner’s representation. Therefore, the delay in grant of refund cannot be attributed to petitioner since respondents have admitted that the delay was on account of technical glitch in their portal which processed the refund. An Assessee cannot be deprived of its justifiable money. Inaction on the part of revenue is certainly contrary to the provisions of the Act and on general principles, petitioner ought to be compensated for such deprivation. The respondent nos. 3 and 4 to pay interest @6% p.a. from 1st July 2018 upto 18th September 2023 on Rs. 7,15,962/- and upto 16th October 2023 on Rs. 6,04,118/- - petition disposed off. Issues Involved:1. Failure to grant refund of IGST paid on exported goods.2. Claim for interest on delayed refund.3. Attribution of delay to technical glitches.4. Entitlement of petitioner to compensation for deprivation of funds.Issue-wise Detailed Analysis:1. Failure to grant refund of IGST paid on exported goods:The petitioner approached the court under Article 226 of the Constitution of India, alleging that the respondents failed to grant a refund of Rs. 13,21,897/- pertaining to Integrated Goods and Services Tax (IGST) paid on goods exported during July and August 2017. The petitioner made a mistake in not showing the correct amount of refund in the return Form GSTR-3B for the relevant months. Despite addressing communications to the proper officer of the GST Department and the Deputy Commissioner of Customs, no refund was initially granted. However, after the court's order dated 21st April 2023, the Customs Department processed and granted the refund in two installments: Rs. 7,15,962/- on 18th September 2023 and Rs. 6,04,118/- on 16th October 2023.2. Claim for interest on delayed refund:The petitioner claimed interest on the refunded amounts from the date it fell due until payment/realization. The court noted that the delay in granting the refund could not be attributed to the petitioner, as the respondents admitted the delay was due to a technical glitch in their portal. The court emphasized that an assessee cannot be deprived of its justifiable money and that inaction on the part of the revenue is contrary to the provisions of the Act. The court cited the case of Vinoda B. Jain Vs. Joint Commissioner of Income-Tax and Ors., where it was held that the petitioner should be compensated for the inordinate delay in refunding the money.3. Attribution of delay to technical glitches:The respondents argued that the delay was due to a technical glitch and not the department's fault. The court, however, found no evidence of the technical glitch or its duration. The court observed that the technical glitch mysteriously vanished once the High Court passed directions on 21st April 2023, leading to the refund being processed. The court concluded that the delay in granting the refund was not justifiable and was solely due to the respondents' inaction.4. Entitlement of petitioner to compensation for deprivation of funds:The court referred to several precedents, including the Supreme Court's decision in Sandvik Asia Ltd. v. CIT, which held that the revenue must compensate the assessee for wrongful withholding of funds. The court also cited Union of India Vs. Tata Chemicals Ltd., which stated that a tax refund should carry interest as a matter of course, as it compensates for the use and retention of money collected unauthorizedly by the department. The court directed the respondents to pay interest at 6% per annum from 1st July 2018 until the respective dates of payment of the refunded amounts. Additionally, if the amounts were not paid within four weeks, interest at 9% per annum would be payable on the interest amount from the end of the four-week period until the date of payment.The court ordered the respondents to directly credit the interest amounts to the petitioner's bank account within four weeks and disposed of the petition.