TaxTMI 
TaxTMI 
2025 (8) TMI 703
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....e' by making it returnable forthwith as the pleadings in the petition are complete upon the reply being filed by the respondents. 2. The brief facts highlighted in the petition would disclose that the petitioner is a pharmaceutical company registered under the Central Goods and Services Tax Act, 2017 and in relation to its exports undertaking for the month of February 2022 and May 2022, the petitioner filed two distinct refund applications; on 14.04.2022 and 12.08.2022, respectively, in respect of the two exports under Section 54(1) of the CGST Act. The applications claimed refund of ITC on export of goods and services without payment of tax and claimed two distinct amounts as set out therein. The two orders in original dated 30.06.2022 and 10.10.2022, granted part refund claimed under the provisions of Section 54 of the CGST Act 2017, read with Rule 89 of the Rules of 2017. As far as the first order dated 30.06.2022 is concerned, an amount of Rs. 4,32,80,504/- was held to be admissible for refund, whereas an amount of Rs. 33,38,87,556/- was held inadmissible. However, in the second order dated 10.10.2022, passed in respect of the refund application pertaining to the e....
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....claimed in the petition is computed at the rate of 6% from the date of the refund application and he has not computed it by considering the proviso to Section 156, which has permitted 9% interest. 5. The learned counsel would rely upon the decision of the Delhi High Court in case of Bansal International V/s. Commissioner of DGST 2024 (83) G.S.T.L. 190 (Del.) as well as the decision of the Telangana High Court in the case of Qualcom India Pvt. Ltd. V/s. Deputy Commissioner (ST)(FAC), Hyderabad 2024 (86) G.S.T.L. 300 (Telangana) decided on 20.03.2024. By inviting our attention to the Scheme contained in Chapter XI of the CGST Act, 2017, comprising of Section 52 and in specific Section 56, it is the submission of Mr Arora that the petitioner is entitled for interest from the date of the application, which is made under sub-section (1) of Section 54 and this is what is precisely construed by the Delhi High Court to be followed by the Telangana High Court, which has construed Section 54 as well as Section 56 along with the explanation appended therein. 6. The learned Counsel Ms Asha Desai for the Revenue, by relying upon an affidavit, at the outset, would raise a preliminary ob....
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....ed from or paid by him and the incidence of such tax and the interest had not been passed on to any other person. The application so preferred shall be scrutinized by the proper officer, who on being satisfied that the whole or part of the amount claimed as refund is refundable, make an order under sub-section (5) of Section 54, and the amount so determined shall be credited to the fund referred to in Section 57. As per sub-section (7), the proper officer shall issue the order under sub-section (5) within a period of 60 days from the date of receipt of the application. 9. For proper implementation and effective understanding of the terminology used in Section 54, an explanation appended thereto has defined the term "refund" and "relevant date". The term "relevant date" under clause (2) appended to the explanation set out as to what would amount as relevant date as indicated in sub-clause (1) of Section 54 and Ms Desai would rely upon clause (d) of the said definition as it contemplates that in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, the date of communication of such judgment, decree, orde....
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....t of Section 56, direct the interest to be paid, if any tax ordered to be refunded under sub-section (5) of Section 54 by the proper officer is not refunded within 60 days from the date of receipt of the application under sub-section (1) of Section 54 and it shall carry an interest not exceeding 6%. The proviso appended to Section 56 provide for a contingency where any claim for refund arises from an order passed by an adjudicating Authority or Appellate Authority like in the present case before us, when the order in original refused or only granted a part refund but declined the interest on the part and the Appellate Authority permitted even this refund, and, as per the proviso, if the order has attained finality and the refund is not remitted within a period of 60 days from the receipt of application, consequent to such an order being passed, then it shall carry an interest not exceeding 9%. What is most relevant is the explanation to this section, which makes it evidently clear that wherever any order has been passed by the Appellate Authority/Appellate Tribunal or Court, against an order passed by the proper officer under sub-section (5) of Section 54, then the order so p....
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....uthority or the Appellate Authority or the Appellate Tribunal or Court and it having attained finality. However, the legislature was conscious of the two different situations, as it granted 9% interest in the proviso, when consequent to an order being passed by an Appellate Authority, a fresh application for refund has been made and the amount is not paid within 60 days. In any case, a conjoint reading of Section 56, the first part along with the proviso and specifically read with the explanation, make it evidently clear that the legislature intended to give the status of an order in original as passed under Sub-section (5) by the proper officer, to the order passed by the Appellate Forum and therefore, the interest which is liable to be paid shall be governed by clause (1) as well as by the proviso and if from the date of the original order, if amount was not refunded within 60 days from the date of the first application, it shall carry an interest of 6% and also if upon the order being passed by the Appellate forum if the refund is not disbursed within a period of 60 days, it shall carry an interest at the rate of 9%. 14. This is how the Delhi High Court has also interpr....
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....person is required to be compensated at a higher rate of interest, of 9% per annum. This higher rate of interest would run from the date immediately after the expiry of sixty days of the filing of such an application - that is, the application filed pursuant to the orders of the appellate fora and not the first application. 33. It is clear from a plain reading of Section 56 of the CGST Act that whereas the main provision of Section 56 of the CGST Act refers to the rate of interest applicable on the amount of refund due, which remains unpaid even after sixty days from the date of application for refund; the proviso provides for an increased rate of interest for the period that commences from the date immediately after the expiry of sixty days from the date of application which is filed pursuant to the claim for refund attaining finality in appellate proceedings. Section 56 of the CGST Act, thus, works as follows. The applicant claiming a refund is entitled to interest at the rate of 6% per annum from a date immediately after the expiry of sixty days from making an application under Section 54(1) of the CGST Act. However, if a person's claim is denied (or if granted is n....