Entitlement to Interest on Delayed Tax Refund under CGST Act: A Judicial Decision.
The petitioner, an exporter, sought interest on a delayed refund of Integrated Goods and Services Tax (IGST) under Section 56 of the Central Goods and Services Tax (CGST) Act. The petitioner had filed for a refund during the period from August 2018 to July 2019, amounting to Rs. 3.21 crore, but the refund was granted only in August 2020 after constant follow-ups. The delay was attributed to the petitioner’s name being flagged on the "risky exporters list." Despite this, the petitioner claimed that the delay was not their fault and that the investigation should have been completed within 30 days as per the guidelines in Circulars 16/2019 and 131/1/2020.
The respondents, however, argued that the delay occurred due to procedural checks and the flagging of the petitioner’s name, and thus, they opposed the claim for interest. The court found that the delay in processing the refund was due to the respondents' inaction in completing the necessary investigation within the specified time frames and not the petitioner’s fault. Consequently, the court ruled that the petitioner is entitled to interest for the period from the expiration of 60 days from the shipping bill date until the refund was granted, excluding the 30-day investigation period. The respondents were directed to pay the interest within eight weeks.
CENTRAL GOODS AND SERVICES TAX ACT, 2017