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GST – Interest on delayed payment of tax refund – Section 56 of CGST Act

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The petitioner is the exporter and supplier of Ethyl Alcohol Liquid Packaging Film, Iodized salt, etc.  The petitioner claims refund of IGST on shipping bills.

The petitioner filed shipping bills for refund of IGST of Rs.3.21 crores paid during the period of August 2018 to July 2019.

Section 54 of the CGST Act provides for refund of GST in 60 days.

In August, 2020, the refund was granted after constant follow-up with the Respondents.

HELD that it is important to note that the refund plays a very role in the working capital of an exporter and therefore, any delay in refund would affect the day to day running of the business.  The objective of the Circular No.16 of 2019 and 131/1/2020 is to ensure that the investigation in suspicious refund is completed within time frame and to make Indian businesses internationally competitive.   Therefore, working capital management is very important and for ease of doing business.

The delay is squarely attributable to the inaction of the Respondents in not completing the investigation within time frame.

Section 56 of GST Act does not provide exclusion of period during which the Respondents are investigating the grant of refund.

Having used the money of the Petitioner, we do not see any justification for denying interest more so when delay as observed by us above is attributable to the Respondents.

Judgment dated 14.11.2024 of the High Court of Bombay (DB) (AS) in Writ Petition No.1474 of 2023 of Ms.  Anita Agarwal  Vs. Union of India and others

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