Statutory Interest Mandatorily Payable U/S 56 GST Act On Refunds Delayed Beyond 60 Days: Gujarat High Court

The Gujarat High Court held that statutory interest mandatorily payable under Section 56 GST Act on refunds delayed beyond 60 days. Justices Bhargav D. Karia and Pranav Trivedi stated that the provision of section 56 of the GST Act is a mandatory provision and the interest which is required to be paid under section 56 is compensatory in nature for delayed payment of refund which otherwise is not in dispute. In this case, the petitioner/assessee filed 05 Shipping Bills of Polyester drawn texturised yarn at Hazira Port. The assessee paid an IGST amount of Rs. 7.53 Lakhs for which no refund was sanctioned by the system on filing of the Shipping Bills. As the assessee was entitled to the refund of the IGST paid on the export, in view of the incorrect code, the scroll amount pertaining to the assessee was showing 'NIL', which was transmitted from GSTIN and therefore, such data transmitted from GSTIN was not reflected properly. It is the case of the respondents/department that several efforts were made to resolve the issue by writing letters to the DG Systems and Saksham Seva Help Desk but no fruitful result was received and written request of the assessee was rejected by the concerned State GST Authority citing the reason that as per ICE-GATE Help Desk the assessee had to contact the local customs and proceed for scroll generation as GST scroll status was ready. It is also a case of the Department that efforts were made to give supplementary IGST for the Shipping Bills; however, the system did not permit the same. The assessee filed a special civil application before the Gujarat High Court for refund of the IGST amount of Rs. 7.53 Lakhs. The counsel for the assessee argued that the respondent-authorities have sanctioned the refund pursuant to the refund claim made by the assessee; however, no interest is awarded to the assessee as per the provision of section 56 of the Central/State Goods and Services Tax Act, 2017. The bench found that there was no fault on the part of the assessee for submitting the Shipping Bills, but there was a technical glitch in the system which has resulted into delayed payment of refund, as the Commissioner was required to direct for manual processing to issue the refund after filing of this petition. The provision of section 56 of the GST Act is a mandatory provision and the interest which is required to be paid under section 56 is compensatory in nature for delayed payment of refund which otherwise is not in dispute. Therefore, the respondents/department are required to pay the interest as per the provision of section 56 of the GST Act on the delayed payment of refund, stated the bench. The bench further referred to the case of Panji Engineering Pvt. Ltd vs. Union of India [2023 (78) G.S.T.L. 214 (Guj.)], where the Court directed the respondent-authority to grant interest on the delayed refund as per Section 56. In view of the above, the bench allowed the petition. Case Title: Vineet Polyfab Pvt. Ltd. & Anr. v. Union of India & Ors. Case Number: R/SPECIAL CIVIL APPLICATION NO. 17720 of 2024 Counsel for Petitioner/Assessee: Himanshi Patwa Counsel for Respondent/Department: Ankit Shah and CB Gupta Click Here To Read/Download The Order Citation : 2025 LiveLaw (Guj) 171

Statutory Interest Mandatorily Payable U/S 56 GST Act On Refunds Delayed Beyond 60 Days: Gujarat High Court

Mehak Dhiman

Tags