Delayed GST refund interest cannot be denied solely for full payment through the electronic credit ledger and subsequent re-credit.
Section 56 provides for interest when an eligible refund is not made within sixty days of receipt of the refund application. Interest cannot be denied solely because the disputed demand was paid through the electronic credit ledger and subsequently re-credited; the debited input tax credit remains unavailable until restored. Section 107 prescribes a minimum pre-deposit and stays recovery of the balance, but does not prohibit payment of the full demand or treat it as a waiver of refund or interest rights. Full payment does not, by itself, extinguish the interest claim.
Issues: (i) Whether interest is payable on an admissible refund delayed beyond sixty days; (ii) whether interest may be denied because the disputed tax was paid through the electronic credit ledger and subsequently re-credited; (iii) whether payment of the entire disputed demand rather than the minimum statutory pre-deposit defeats a claim for interest on its refund.
Issue (i): Whether interest is payable on an admissible refund delayed beyond sixty days.
Analysis: Section 56 provides for interest when an eligible refund is not made within sixty days of receipt of the refund application. The record established a delay in sanctioning the refund, which the department did not dispute.
Conclusion: Interest is payable for the qualifying delay beyond sixty days, in favour of the assessee.
Issue (ii): Whether interest may be denied because the disputed tax was paid through the electronic credit ledger and subsequently re-credited.
Analysis: Section 49 recognises statutory electronic ledgers for payment. Input tax credit debited against the disputed demand remained unavailable for use until it was restored, and no provision was identified that denied delayed-refund interest solely because payment was made through the credit ledger.
Conclusion: Interest cannot be denied merely because payment was made through the electronic credit ledger and subsequently re-credited, in favour of the assessee.
Issue (iii): Whether payment of the entire disputed demand rather than the minimum statutory pre-deposit defeats a claim for interest on its refund.
Analysis: Section 107 prescribes a minimum pre-deposit for an appeal and provides for a stay of recovery of the balance. It does not prohibit payment of the full demand or treat such payment as a waiver of statutory refund or interest rights. Payment in full may also avoid interest consequences if a demand is ultimately confirmed.
Conclusion: Payment of the entire disputed demand does not, by itself, extinguish the statutory claim for interest on its refund, in favour of the assessee.
Final Conclusion: The taxpayer's statutory entitlement survives both the mode and amount of payment, with the interest calculation to be examined and the amount payable disbursed by the proper officer.
Ratio Decidendi: Statutory interest on an eligible delayed tax refund cannot be denied solely because the disputed demand was paid in full through an electronic credit ledger and subsequently re-credited.