2023 (5) TMI 796 - HC - GST

Interest on delayed refund of CGST and IGST not processed despite sanctioned - rate of interest - HELD THAT:- In so far as the interest for the period commencing from 04.10.2021 is concerned, this Court had expressed its prima facie view in the order dated 01.05.2023, that the same would be payable as there has been an inordinate delay in disbursing the refund.

Interest is essentially a compensation to a person who has been deprived of use of the amounts due to him. It is relevant to refer to the observations made by the Supreme Court in UNION OF INDIA THROUGH DIRECTOR OF INCOME TAX VERSUS M/S TATA CHEMICALS LTD. [2014 (3) TMI 610 - SUPREME COURT] where it was held that The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course.

Undisputedly, if a person is denied of the payment due to him, he is required to be compensated. In SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [2006 (1) TMI 55 - SUPREME COURT] the Supreme Court has endorsed the principle that interest would be payable even in cases where there was no statutory provision for payment of interest.

Thus, the petitioner is entitled to interest on the sum of ₹68,37,488/- from 01.11.2021 (considering an allowance of twenty-six days for the respondents to comply with the refund sanction order dated 04.10.2021) till the date of payment, that is, 27.04.2023 - the present petition is disposed of by directing the respondents to pay the interest on the amount of ₹68,37,488/- from 01.11.2021 till 27.04.2023 at the rate of 6% per annum as expeditiously as possible and, in any event, before 31.05.2023.

Petition disposed off.