Interest is payable on a tax refund when the tax was collected unlawfully, dating from payment until refund, emphasizing equity and restitution principles.

JUDGMENT :

MURAHARI SRI RAMAN, J.

1. Non-consideration of claim for interest on the amount refunded to the petitioner from the date of deposit till date of payment is the subject matter in the present writ petition.

1.1. The petitioner by filing this writ petition craves to invoke extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India for grant of following relief(s):

“Under the aforesaid circumstances it is prayed therefore that this Hon'ble Court may be graciously pleased to:

(a) Admit the writ application;

(b) Issue rule nisi calling upon the opposite parties as to why the Order dated 15.01.2024 vide Annexure-10 rejecting the appeal shall not be quashed being illegal, arbitrary and in violation of principle of natural justice and contrary to judgment of Hon'ble Apex Court as well as various High Courts and contrary to Order dated 01.12.2022 passed by this Hon'ble Court in W.P.(C) No.31896 of 2022;

(c) Issue writ in the nature of mandamus or any other appropriate writ directing the opposite parties to make payment of interest @ 6% on the amount refunded to the petitioner from the date of deposit till the date of payment of retained amount in the interest of justice;

(d) If the opposite parties do not show cause or shows insufficient cause make the rule absolute;

(e) To pass such order/orders, direction/directions, writ/writs as may be deemed fit and proper in the circumstances of the case;

(f) To allow the writ petition;

And for this act of kindness, the petitioner shall as in duty bound and ever pray.”

Case of the petitioner:

2. The petitioner, a company registered under the Companies Act, 1956, being manufacturer of Fertilizer, imports raw materials like Anhydrous Ammonia, Phosphoric Acid, Sulphur, Sulphuric Acid, Rock Phosphates, Murriate of Potash etc. from the foreign suppliers. During the period April, 2018 to May, 2018, the petitioner imported raw materials on Cost, Insurance Freight (“CIF”, abbreviated) basis and paid the Customs Duty on the assessable value of such raw materials as required under the Customs Act, 1962 and the Customs Tariff Act, 1975. Being a registered taxable person under the provisions of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (collectively, “GST Act”) it paid the Integrated Goods and Services Tax under the Integrated Goods and Services Tax Act, 2017 (for short, “the IGST Act”) on such value which included therein the “ocean freight” incurred for such import on the basis of reverse charge mechanism at the rate of 5% in terms of Entry 9(ii) under Heading 9965 (Goods Transport Services) of Notification No.8/2017-Integrated Tax (Rate) dated 28.06.2017 [The relevant portion of the Notification No.8/2017-Integrated Tax (Rate), dated 28.06.2017, reads thus:

“In exercise of the powers conferred by sub-section (1) of Section 5, sub-section (1) of Section 6 and clause (iii) and clause (iv) of Section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read with sub-section (5) of Section 15 and sub-section (1) of Section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the integrated tax, on the inter-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be le