TMI Blog2024 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Jian International vs. Commissioner of Delhi Goods and Services Tax [ 2020 (7) TMI 611 - DELHI HIGH COURT] wherein it was held that To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90 of the CGST Rules, referred above. This could then also be construed as rejection of the petitioner s initial application for refund as the petitioner would thereafter have to file a fresh refund application after rectifying the alleged deficiencies. The respondents are directed to forthwith take steps for payment of interest on the delayed refund of ITC released to the petitioners in terms of sub-section (1) of Section 56 and the proviso thereto - petition allowed. - Hon ble Sri Justice P.Sam Koshy And Hon ble Sri Justice N.Tukaramji For the Petitioner(s) : Mr. Karan Talwar For the Respondent(s) : Mr. Swaroop Oorilla for respondent Nos.1 to 3, Mr. Gadi Praveen Kumar for respondent No.4 COMMON ORDER : PER HON BLE SRI JUSTICE P.SAM KOSHY These two writ petitions have been filed by the two establishments where the question of law needs adjudication is, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Government of the recommendations of the Council shall be payable in respect of such refund [for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed]: PROVIDED that where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund. Explanation : For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son or material available with the Department for not releasing refund amount promptly. There was no preventive or prohibitory order or any such restrictive directions from any Court of law in their favour from making refund within the stipulated time. In the said circumstances, non-granting of interest in such a case would amount failure to discharge statutory duty/obligation by the refund sanctioning authority. 11. There is a catena of decisions of the Hon ble Supreme Court and also practically of every High Court wherein it has been consistently held that in the event of there being a delay on the part of the Department in making necessary refund as quantified by the Department themselves within a stipulated period or within a reasonable period of time, the said amount shall carry interest. Such decisions have been passed even under the other statutes dealing with tax. 12. The Gujarat High Court in the case of Saraf Natural Stone vs. Union of India [2019 (28) GSTL 386 (Guj.)] in paragraph Nos.22 to 25 held as under: 22. The position of law appears to be well-settled. The provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s delay in payment of refund within 3 months from the date of receipt of application, rigour of section 11BB sets in and payment of interest on the delayed refund becomes obligatory, whicy follows automatically; as a matter of law; Non-granting of interest in such a case would amount to failure to discharge statutory duty/obligation by the refund sanctioning authority; 15. On the said finding, the Bombay High Court held that the petitioner would be entitled for interest on delayed refund. The question as to whether the payment of interest would accrue from the date of the original application or from the date the deficiencies memos were removed, the landmark decision in this is case is that of Ranbaxy Laboratories Ltd. vs. Union of India [2011 (273) E.L.T. 3 (S.C.)] wherein in paragraph Nos.11, 13 and 15 dealing with the para materia provision under the Central Excise law has held as under: 11. At this juncture, it would be apposite to extract a Circular dated 1st October 2002, issued by the Central Board of Excise Customs, New Delhi, wherein referring to its earlier Circular dated 2nd June 1988, whereby a direction was issued to fix responsibility for not disposing of the refund/r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples of law has been further reiterated by the Hon ble Supreme Court in the case of Union of India vs. Hamdard (Waqf) Laboratories [2016 (333) E.L.T. 193 (S.C.)] and again by the Bombay High Court recently in the case of M G Global Services Pvt. Ltd. vs. Union of India [2023 (383) E.L.T. 39 (Bom.)] wherein in paragraph Nos.11 and 12 it has been held as under: 11. As held by the Apex Court in Ranbaxy (supra), a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied; and there is no room for any of intendment. The liability of the revenue to pay interest under Section 11BB of the Act commenced from the date of expiry of three months from the date of receipt of application for refund under Section 11BB(1) of the Act. 12. The Division Bench of this Court in Swaraj Mazda Limited v. Union of India [2009 (235) E.L.T. 788 (Bom.)] also held that perusal of Section 11BB shows that if any duty recovered is found to be refundable, still the payment is not made within a period of three months from the receipt of application for refund then interest is liable to be paid. Even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty. Explanation. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or any Court against an order of the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, by the court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section. Perusal of the above provision shows that if any duty recovered is found to be refundable still the payment is not made within a period of three months from the receipt of application for refund then interest is liable to be paid. Perusal of the above provision makes it clear that liability to pay interest arises on expiry of period of three months from the date of receipt of application under sub-section (1) of Section 11B. We have already referred, to above as to how application under Section 11B is to be made, therefore, unless a fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in the case of Jian International vs. Commissioner of Delhi Goods and Services Tax [2020 (39) G.S.T.L. 385 (Del.)] wherein in paragraph Nos.7 to 9 it has been held as under: 7. In the event of default or inaction to carry out the said activities within the stipulated period, consequences like payment of interest are stipulated in Section 56 of CGST/DGST Act. 8. Admittedly, till date the petitioner s refund application dated 4th November, 2019 has not been processed. As neither any acknowledgement in FORM GST RFD-02 has been issued nor any deficiency memo has been issued in RFD-03 within timeline of fifteen days, the refund application would be presumed to be complete in all respects in accordance with sub-rule (2), (3) and (4) of Rule 89 of CGST/DGST Rules. 9. To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90 of the CGST Rules, referred above. This could then also be construed as rejection of the petitioner s initial application for refund as the petitioner would thereafter have to file a fresh refund application after rectifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not accepted by the Revenue) and the order of the Adjudicating Authority is carried in appeal to the Appellate Authority or to the Appellate Tribunal/High Court, which finally upholds the claim, the applicant may have to file a second application to secure the refund. If such application for refund filed by the person consequent to succeeding before the Appellate Authority, Appellate Tribunal or court, is not processed within a period of sixty days of filing the application, the applicant would be entitled to a higher rate of 9% per an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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