Statutory interest under Section 56 of the CGST/DGST Act is automatically payable if the refund is not made within 60 days from the date of receipt of the application, regardless of the petitioner's explicit claim for interest.

Headnote:
Refund - IGST - Statutory Interest - Section 56 of CGST/DGST Act
Fact of the Case:

The petitioner, an exporter of mobile phones, sought direction for the grant of IGST refund for specific tax periods with interest. The petitioner claimed that the refund applications were filed and acknowledged, but the interest on the refunded amount was not granted.
Finding of the Court:

The court found that the petitioner was entitled to statutory interest at the rate of 6% from the date immediately after the expiry of sixty days from the date of receipt of refund applications till the date on which the refund was credited to the bank account of the petitioner. The court directed the respondent to process the refund of interest and credit the same into the petitioner's account within four weeks.
Issues: The main issue was whether the petitioner was entitled to statutory interest on the IGST refund amount, despite not explicitly claiming interest in the refund applications.
Ratio Decidendi: The court held that interest under Section 56 of the Act becomes payable if the refund is not made within 60 days from the date of receipt of the application, and it is mandatory and payable automatically in terms of the provisions of the Act. The payment of interest does not depend on the claim made by the petitioner and cannot be denied on the ground of waiver on the claim of interest in the refund applications.
Final Decision: The petition was disposed of, and the respondent was directed to process the refund of interest and credit the same into the petitioner's account within four weeks.

JUDGEMENT

RAVINDER DUDEJA, J.

1. The present Writ Petition has been filed, seeking direction to the respondent to grant the total IGST refund of Rs. 2,44,75,410/- for the tax period December 2022, February 2023, March 2023 and May 2023 with interest in terms of Section 56 of DGST/CGST Act.

2. Petitioner is an exporter of mobile phones of various brands and accessories. Beginning from April 2022, the petitioner has been exporting the mobile phones and its accessories to M/s AZ Logistic, Dubai, UAE on payment of Integrated Goods & Service Tax [IGST].

Refunds in normal course were claimed through shipping bills, which were released by the Customs through ICEGATE after processing the shipping bills filed from time to time.

3. During the month of December 2022, mobiles worth Rs.

9,06,49,174/- were exported on payment of IGST of Rs. 1,63,16,851/-. For the month of February 2023, exports to the tune of Rs.

2,80,38,271/- were made, on which, IGST of Rs. 50,46,889/- was paid. Likewise, in the month of March 2023, exports worth Rs. 95,90,489/- were made on which IGST of Rs. 17,26,288/- was paid and for the month of May 2023, mobiles and its accessories worth Rs.

76,96,568/- were exported after discharging burden of IGST of Rs.

13,85,382/-.

4. The case of the petitioner is that as per sub Rule (2) of Rule 96 of the CGST/DGST Rules, 2017, details of export invoices in respect of export of goods contained in Form GSTR-I were transmitted electronically by the common portal to the system designed by the Customs. Thereafter, the system electronically transmits to the common portal a confirmation that the goods covered by the said invoices have been exported out of India, where after, refund is processed by the Customs through ICEGATE in terms of Rule 96 (3).

5. Section 54 of CGST/DGST Act, 2017, provides that any person claiming refund of tax and interest, or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. Rule 96 of the CGST/DGST Rules, 2017 stipulates the procedure for filing the application. It provides as under:-

“96.

Refund of integrated tax paid on goods [or services]

exported out of India

the applicant has furnished a valid return in

FORM

GSTR-3

[for

FORM GSTR-3B

];

(2) The details of the [relevant export invoices in respect of export of goods] contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India:

outward supplied in

FORM GSTR-1

for a tax period has been

exports as specified in Table 6A of

FORM GSTR-1

after the return

FORM GSTR-3B

has been furnished and the same shall be

furnished under the first proviso shall be auto-drafted in

FORM

6. Admittedly, petitioner furnished returns in FORM-GSTR-3B and also submitted applications for refund vide FORM-GST-RFD- 01. System generated acknow

Click Here to Read the rest of this document