Delhi High Court Affirms Assessee’s Right to Interest on GST Refund

Case Name:

Bansal International v. Commissioner of DGST and Anr. [W.P.(C) 11629/2023 dated November 21, 2023]

Key Takeaways:

1. The ruling establishes the entitlement of an assessee to interest on GST refund from the date following the expiration of 60 days from the first application.
2. Section 56 of the CGST Act provides for a six percent interest rate on the amount of refund due, which has not been paid after sixty days from the date of application for refund.
3. The subsequent application filed pursuant to successful orders issued by the Appellate Authority is solely to push the process of disbursal claim and for the proper officer to determine and disburse the interest as payable.
4. The court’s interpretation provides clarity on the applicability of interest rates and emphasizes the rights of taxpayers in the GST refund process.

Synopsis:

The case of Bansal International v. Commissioner of DGST and Anr. [W.P.(C) 11629/2023 dated November 21, 2023] before the Hon’ble Delhi High Court addressed the issue of whether an assessee is entitled to interest on GST refund from the date of expiration of 60 days of the first application filed when the subsequent application for refund is filed as per the Appellate Order. The court’s ruling established a significant precedent regarding the entitlement of an assessee to interest on GST refund and provided clarity on the applicability of interest rates in such cases.

Facts of the Case:

• Arun Bansal, operating under the name and style of proprietorship concern, Bansal International, filed an application for claiming a refund of Input Tax Credit (ITC) in respect of goods exported without the payment of tax in November 2019.

• The Revenue Department acknowledged the application but sanctioned a refund amount of Rs. 1,08,293/- and rejected the remaining refund claim of Rs. 52,84,223/- as not tenable under Section 62(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act).

• The Petitioner filed an appeal before the Respondent Appellate Authority, which allowed the appeal and directed the Petitioner to file a fresh application for a refund. However, the amount of interest was denied by the Respondent.

• Subsequently, the Petitioner filed a fresh application for a refund along with interest, but the interest on the sanctioned refund amount was denied by the Respondent.

• The Petitioner filed a writ petition before the Hon’ble Delhi High Court for claiming interest on the refund amount pertaining to the tax period November 2019.

Issue:

The primary issue before the court was whether the Assessee is entitled to interest on GST refund from the date of expiration of 60 days of the first application filed when the subsequent application for refund is filed as per the Appellate Order.

Court’s Ruling:

The Hon’ble Delhi High Court, in the case of W.P. (C) 11629/2023, held that:

• Section 56 of the CGST Act refers to the rate of six percent interest applicable on the amount of refund due, which has not been paid after sixty days from the date of application for refund. The proviso provides for an increased rate of nine percent interest for the period from the date of application in cases wherein the claim for refund attains finality in appellate proceedings.

• The subsequent application filed pursuant to the successful orders issued by the Appellate Authority is solely to push the process of disbursal claim and for the proper officer to determine and disburse the interest as payable.

• Interest at the rate of six percent would be payable for the period which commences from the date immediately after the expiry of sixty days from the first application till the filing of the second application pursuant to the appellate orders.

• The Impugned Order was set aside, and the writ petition was allowed. The Respondent was directed to process the Petitioner’s application for refund.

Conclusion:

The Bansal International case establishes a crucial precedent, affirming the entitlement of an assessee to interest on GST refund from the date following the expiration of 60 days from the first application. The court’s clear interpretation of Section 56 and the distinction between initial and subsequent applications provides clarity on the applicability of interest rates. This ruling has significant implications for taxpayers, emphasizing their rights in the GST refund process and providing guidance for future refund claims.

This ruling serves as an important reference for taxpayers and tax professionals, highlighting the legal framework and entitlements related to GST refund claims. It underscores the significance of timely and accurate processing of refund applications and the entitlement to interest on delayed refunds.

FAQ:

Q1: What was the primary issue addressed in the Bansal International case?

A1: The primary issue was whether the Assessee is entitled to interest on GST refund from the date of expiration of 60 days of the first application filed when the subsequent application for refund is filed as per the Appellate Order.

Q2: What was the court’s ruling regarding the entitlement to interest on GST refund?

A2: The Hon’ble Delhi High Court ruled in favor of the petitioner, affirming the entitlement of an assessee to interest on GST refund from the date following the expiration of 60 days from the first application.

Q3: What are the implications of this ruling for taxpayers?

A3: The ruling provides clarity on the applicability of interest rates and emphasizes the rights of taxpayers in the GST refund process, highlighting the entitlement to interest on delayed refunds.