Tax authorities must pay statutory interest on refunds despite internal disputes between departments The HC allowed the petition directing respondent no.3 to pay interest under Section 56 of CGST Act, 2017 within one month. The court held that once refund ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Tax authorities must pay statutory interest on refunds despite internal disputes between departments
The HC allowed the petition directing respondent no.3 to pay interest under Section 56 of CGST Act, 2017 within one month. The court held that once refund amount was disbursed per communication dated 05.04.2024, there was no valid reason to deny interest payment to petitioner. The court ruled that inter se disputes between State and CGST authorities cannot deprive petitioner of statutory interest, and such disputes must be resolved separately between the authorities themselves.
Issues: Petitioner seeking direction for refund disbursement with interest under CGST Act, 2017.
Analysis: The petitioner filed a writ petition seeking a direction for the disbursement of a refund amount of Rs. 38,10,351 along with interest, as sanctioned in a refund order dated 12.02.2020. Despite the order for refund with interest, the amount was not paid to the petitioner, leading to the petitioner's claim for interest under Section 56 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), which mandates interest payment at 6% per annum if the refund is delayed beyond 60 days from the application date. The respondents were directed to pay the interest to the petitioner as per the provisions of the CGST Act, 2017.
On 8.11.2024, the learned Standing Counsel for the SGST informed the court that the refund amount had been credited to the petitioner's bank account. However, the petitioner contended that interest was also due as the payment was made beyond the 60-day period from the application date. The petitioner emphasized their entitlement to interest under Section 56 of the CGST Act, 2017, irrespective of any dispute between the state and central authorities regarding liability for interest payment.
The Deputy Commissioner, State Tax, Firozabad, disowned liability for interest payment, stating that the CGST authorities were responsible for the interest payment. The petitioner maintained that their right to interest should not be affected by inter-authority disputes and insisted on receiving the interest amount owed to them under the law. The CGST authorities tried to disclaim liability based on a circular, but the court emphasized the petitioner's right to interest as per the CGST Act, 2017.
The court, after reviewing relevant communications and circulars, directed respondent no.3 to pay the interest amount to the petitioner within one month, as per Section 56 of the CGST Act, 2017 and Circular No. 17/17/2017 dated 15.11.2017. The court clarified that the resolution of any dispute between state and central authorities should not impact the petitioner's right to receive the interest amount, ensuring the petitioner's entitlement to interest payment was upheld independently of any inter-authority disagreements.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
