The court affirmed the mandatory obligation under Section 56 of the GST Act for authorities to grant interest on delayed refunds, emphasizing that such interest is compensatory and should not be denied without clear evidence of fault by the petitioner.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Ms. Himanshi Patwa for learned advocate Mr. Anandodaya Mishra for the petitioner, learned advocate Mr. Parth Mehta for learned Senior Standing Counsel Mr. Ankit Shah for respondent No.1, learned Senior Standing Counsel Mr. C.B.Gupta for respondent Nos. 2 and 3 and learned Assistant Government Pleader Ms. Shrunjal Shah for respondent Nos. 4 and 5.

2. Rule returnable forthwith. Learned advocates for the respondents waive service of notice of rule.

3. Learned advocate Ms. Himanshi Patwa for the petitioner, at the outset, submitted that after filing of the petition before this Court, the respondent-authorities have sanctioned the refund pursuant to the refund claim made by the petitioner, however, no interest is awarded to the petitioner as per the provision of section 56 of the Central/State Goods and Service Tax Act, 2017 (for short ‘the GST Act’). It was prayed by learned advocate for the petitioner to direct the respondent- authority to pay interest as per the provisions of the Act.

4. Brief facts of the case are as under:

4.1 The petitioner filed 05 Shipping Bills of Polyester draw texturised yarn at Hazira Port, details of which are as under:

4.2 The petitioner paid IGST amount of Rs. 7,53,469/- for which, no refund was sanctioned by the system on filing of the Shipping Bills. The reason for not granting the refund by the system was that the GSTN Integration status report of ICES System was showing the response code as SB000 which was normally a success code in IGST integration and no window was provided to rectify the error code SB000 at Hazira Port. As the petitioner was entitled to the refund of the IGST paid on the export, in view of the incorrect code, the scroll amount pertaining to the petitioner was showing ‘NIL’ which was transmited from GSTIN and therefore, such data transmitted from GSTIN was not reflected properly.

4.3 It is the case of the respondents that several efforts were made to resolve the issue by writing letters to the DG Systems and Saksham Seva Help Desk but no fruitful result was received and written request of the petitioner was rejected by the concerned State GST Authority citing the reason that as per ICE-GATE Help Desk the petitioner had to contact the local customs and proceed for scroll generation as GST scroll status was ready. It is also case of the Department that efforts were made to give supplementary IGST for the Shipping Bills however, the system did not permit the same.

4.5 The petitioner therefore, filed Special Civil Application Nos. 20200/2022 and 17726/2024 before this Court for refund of the IGST amount of Rs. 7,53,469/-.

5. This petition was heard on 18.06.2025 and on showing our displeasure on inaction of the department in granting refund to the petitioner though the petitioner is eligible for such refund, learned counsel Mr.Gupta requested the respondent-Department to resolve the issue at the earliest.

6. As a result of such a request made by learned advocate Mr. Gupta, the Principal Commissioner, Ahmedabad approved for manual processing of IGST refund on 23.06.2025 as all the possible efforts to process the refund online had failed.

7. We appreciate the efforts made by learned advocate Mr. C.B.Gupta requesting the respondent-Department to resolve such issue as there was no fault on part of the petitioner to claim the refund.

8. However, it also appears that the respondent-authority did not grant the interest on the delay