Sanctioned GST refund cannot be withheld, and delayed disbursement must carry interest

Where a GST refund has already been sanctioned and payment advice issued, the tax authority cannot withhold the sanctioned amount and must ensure disbursement in accordance with the refund order. Delayed payment also attracts interest, which must be computed and paid with the refund, and the computation particulars supplied to the taxpayer. The petitioner was entitled to release of the refund with interest, and the authorities were directed to complete payment within the stipulated time.

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Issues: Whether the CGST authorities could withhold the sanctioned CGST refund amount despite an existing refund sanction order and payment advice, and whether the petitioner was entitled to interest for delayed disbursement.

Analysis: The refund had already been sanctioned in Form GST RFD-06, and payment advice had been issued by the State respondents. In these circumstances, the CGST authorities were not entitled to retain or withhold the amount directed to be refunded under the sanction order. The entitlement to delayed payment interest also arose, and the amount was required to be computed and disbursed along with the refund, with particulars of computation furnished to the petitioner.

Conclusion: The petitioner succeeded. The CGST authorities were directed to issue the payment advice, compute and pay interest on delayed refund, and complete disbursement within six weeks.

Ratio Decidendi: Where a refund has been sanctioned under the GST regime, the concerned tax authority cannot withhold the sanctioned amount and must ensure timely disbursement together with applicable interest for delayed payment.

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