Interest is payable even if not asked by TP-HC

In a recent decision the Delhi high court has held that the TP is eligible for interest on refund. In GST the rate of interest on refund is 6%. It is mandatory even if the TP has not asked for it specifically for it.

This was the case of a mobile exporter who filed an application for refund in GST. When the refund was granted interest was not paid. They filed an application for refund which was rejected. They approached the court. Let us have a look at this case.

Comment

The TP filed for the refund. He was granted the refund but interest was not paid. The petitioner said that the interest is also payable by the department

The department had a plea that the interest was not asked by the TP in his refund application. Thus they are  not liable to pay interest.

The court said that he is eligible for interest on refund even if they havn’t asked for it. Interest under section 54 is automatic and mandatory.

Pleading

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.

Facts

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].

Admittedly, petitioner furnished returns in FORM-GSTR-3B and also submitted applications for refund vide FORM-GST-RFD01. System generated acknowledgements were issued vide FORMGST-RFD-02, acknowledging the receipt of refund applications. 

Petitioner claims that the said refund was credited into his account on 04.12.2023. He gave an application dated 06.12.2023 to the proper officer (Special Commissioner), Department of Trade & Taxes, praying for the grant of interest at the rate of 6% from the date of filing of refund applications till 03.12.2023.

Observation

It is manifest that interest under Section 56 of the Act becomes payable, if on the expiry of the period of 60 days from the date of receipt of the application for refund, the amount claimed is still not refunded. Payment of interest under Section 56 of the Act being statutory is automatically payable without any claim, in case the refund is not made within 60 days from the date of receipt of the application. Payment of interest does not depend on the claim made by petitioner and therefore cannot be denied on the ground of waiver on the claim of interest in FORM GST-RFD-01. 

Thus the TP is eligible for interest.

Read/download the copy of judgment-