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2024 (1) TMI 1205 - HC - GSTClaim of interest on delayed refund - The claim was rejected on the ground that the amount was recredited to the credit ledger - HELD THAT - From a bare perusal of Section 56 of the CGST Act, it is evident that if any eligible tax amount ordered to be refunded under subsection (5) of section 54 is not refunded within sixty (60) days from the date of receipt of application, interest at such rate not exceeding six per cent is to be given, as may be specified in the notification to be issued by the Government on the recommendations of the Council. The petitioner had made application for refund on 17.1.2018 and refund has been granted/recredited vide order dated 10.8.2022. As per the provisions of Section 56, the petitioner is entitled for interest @ 6% on the amount ordered to be refunded from the date of expiry of sixty (60) days from the date of the application for refund, i.e. 17.1.2018, till the date of refund/credit to petitioner's credit ledger, as per notification No. 9/2017 dated 28.6.2017 - Ext. P5 order rejecting petitioner's claim for interest on the tax amount ordered to be refunded is quashed and the respondents are directed to calculate the interest on the amount, which was refunded/credited to the petitioner s cash credit ledger, as directed above, and disburse the same within a period of two months from today. The present writ petition stands finally disposed of.
Issues involved:
The issues involved in this case are the rejection of a refund claim by the authorities, the eligibility for refund of certain tax portions, and the entitlement to interest on the refunded amount. Rejection of Refund Claim: The petitioner filed a writ petition to challenge the rejection of their refund application by the 2nd respondent based on availing a higher rate of duty drawback previously. The SGST portion was allowed, but the IGST and CGST portions were rejected. The delay in recrediting the rejected refund claim was attributed to technical glitches. The authorities contended that interest was not payable on the rejected amount as per Section 56 of the CGST Act. Eligibility for Refund: The counter affidavit filed on behalf of the respondents indicated that the petitioner was found eligible for a refund of the SGST portion. The petitioner had claimed duty drawback of central taxes paid and unutilized input tax against zero-rated supply. The eligible refund amount was determined to be the SGST portion only, and this amount was released while the IGST and CGST portions were deemed inadmissible and rejected. Entitlement to Interest on Refunded Amount: Section 56 of the CGST Act addresses interest on delayed refunds. The provision specifies that if a tax amount ordered to be refunded is not refunded within sixty days from the application date, interest is payable at a specified rate. The petitioner applied for a refund on a certain date, and the refund was granted later. Consequently, the petitioner was entitled to interest at 6% from the expiry of sixty days from the application date until the refund was credited to their ledger. Decision: The court found that the petitioner was entitled to interest on the refunded amount as per Section 56 of the CGST Act. The order rejecting the petitioner's claim for interest was quashed, and the respondents were directed to calculate and disburse the interest within two months. The writ petition was disposed of with this direction, and any pending interlocutory application was dismissed.
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