Refund interest must run from the original claim date when the initial rejection is set aside as unlawful.

Where an original refund application under the CGST Act is wrongly rejected and that rejection is later set aside as unsustainable, statutory interest on delayed refund must be tested from the date of the original claim, not from a later application filed after judicial intervention. The Gujarat HC treated the original refund request as the operative reference point for interest entitlement and held that denying interest by relying on the later application was unsustainable. The impugned orders were set aside to that extent, and the matter was remitted for reconsideration of the interest claim on the basis of the original refund application date.

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Issues: Whether interest on refund under Section 56 of the Central Goods and Services Tax Act, 2017 was to be computed from the date of the original refund application, where the earlier rejection of that application had already been set aside as illegal.

Analysis: The earlier refusal to process the refund application dated 14.10.2023 had been held unsustainable. In that situation, the subsequent refund application filed after the Court's earlier order could not be treated as the operative starting point for denying interest. The authority was required to treat the original refund claim as the relevant date for testing entitlement to interest on delayed refund.

Conclusion: The denial of interest was unsustainable. The respondents were directed to reconsider and decide the interest claim on the basis of the original refund application date, and the impugned orders were set aside to that extent.

Ratio Decidendi: Where an initial refund application was wrongly rejected and that rejection was set aside, entitlement to statutory interest on refund must be determined with reference to the original refund claim and not a later application filed after judicial intervention.

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