IMPORTANT POINT
The main legal point established in the judgment is that the applicant is entitled to interest from the date immediately after the expiry of sixty days from the date of the first application for refund, and the proviso to Section 56 of the CGST Act provides for an increased rate of interest for the period commencing from the date immediately after the expiry of sixty days from the receipt of an application filed pursuant to the claim for refund attaining finality in appellate proceedings.

JUDGMENT

Vibhu Bakhru, J. - The petitioner has filed the present petition, inter alia, impugning an order dated 11.07.2023 (hereafter the impugned order) passed by the Additional Commissioner, Department of Trade and Taxes (hereafter the Adjudicating Authority), whereby the petitioners claim for interest of Rs. 13,12,761/- calculated at the rate of 9% per annum, on the refund of GST already granted, was rejected. The Adjudicating Authority referred to Section 56 of the Delhi Goods and Services Tax Act, 2017 (hereafter DGST Act) and had held that in terms of the proviso to Section 56 of the DGST Act, interest was payable only if the refund was not made within sixty days from the receipt of the application filed pursuant to the order passed by the Appellate Authority. Since in the present case, the refund was processed within the period of sixty days from the date of such application, no interest was payable under Section 56 of the DGST Act.

2. According to the petitioner, the Adjudicating Authority has misinterpreted the provisions of Section 56 of the DGST Act. The petitioner claims that he is entitled to interest for the period immediately after the expiry of sixty days from the date of the first application for a refund and not after sixty days from the application filed after succeeding in his claim for refund before the Appellate Authority.

3. In view of the above, the principal controversy to be addressed is whether the period for which the interest is payable under Section 56 of the DGST Act - which is similarly worded as Section 56 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) -commences from the date immediately after expiry of sixty days from the receipt of an application for refund or from a later date, in case the refund is initially denied but subsequently allowed by the Appellate Authority, Appellate Tribunal, or a court.

4. Briefly stated, the context in which the aforesaid controversy arises is as under:

4.1. The petitioner (Arun Bansal) carries on business of export of goods in the name of its proprietorship concern, Bansal International. On 06.02.2020, the petitioner filed an application claiming a refund of Input Tax Credit (hereafter ITC) of Rs. 53,92,516/- (Rs. 8,62,883/- Central GST, Rs. 8,62,883/- Delhi GST and Rs. 36,66,750/- Cess) in respect of goods exported without payment of tax in the month of November, 2019.

4.2. The petitioners application for the refund was acknowledged on 30.07.2020 and on the same date, the concerned officer issued a Show Cause Notice (in form RFD-08) proposing to reject the petitioners application for a refund on the ground that his claim was wrongful. Thereafter, the concerned officer passed an order dated 10.11.2020 sanctioning a refund of Rs. 1,08,293/- but rejecting the remaining refund claim of Rs. 52,84,223/- as not tenable under Section 62(2)(c) of the DGST Act.

4.3. The Adjudicating Authority found that there was no inward supply to M/s Suvidha Enterprises, which was the supplier from whom the petitioner claims to have received the supplies. This was on account of the non-generation of E-way Bills. According to the petitioner, the finding that no supplies had been received by M/s Suvidha Enterprises was incorrect as one M/s U.K. Traders of West Bengal had supplied goods to M/s Suvidha Enterprises through Railways. The petitioner also contended that its claim could not be denied on account of any doubt as to the supplies received by M/s Suvidha Enterprises. The petitioner contended that since there was no dispute that it had paid taxes on input supplies received from its supplier (M/s Suvidha Enterprises), it was entitled for a refund of the same.

4.4. The petitioner filed an appeal before the Appellate Authority assailing the order dated 10.11.2020 to the extent that the petitioners claim for refund was rejected.

4.5. The Appellate Authority fou