Order Date – 21 November 2023

Parties: Bansal International Vs Commissioner of DGST and Anr.

Facts –

• The Petitioner, Bansal International, filed an application claiming a refund of Input Tax Credit in respect of goods exported without payment of tax in the month of November, 2019. The refund was partly sanctioned on 10.11.2020. Thereafter on an appeal the remaining was also sanctioned and directed to file a fresh refund application.
• The petitioner on 23.11.2022, filed an application for the same as well as the interest. Then the Adjudicating Authority passed an order dated 28.12.2022 sanctioning a refund of balance amount. Since the refund was processed within the period of sixty days from the date of such application, no interest was payable under Section 56 of the DGST Act.

Issue –

• Whether the period for which the interest is payable commences from the date immediately after expiry of sixty days from the receipt of an application for refund?

Order –

• The Divisional Bench of Hon’ble High Court observed that the provisions of Section 56 of the CGST Act read with the provisions of Sections 54(7) and 54(8) of the CGST Act makes it amply clear that an applicant would be entitled to interest on the amount of refund due for the period commencing from the date immediately after the expiry of sixty days from the date when an application (complete in all respects) has been received and acknowledged by the proper officer.
• Thus, on a plain reading of Section 56 of the CGST Act, the petitioner’s entitlement to interest was required to be reckoned from the date of receipt of the application under Section 54 of the CGST Act. This, obviously, refers to the first application for refund, which is required to be made within a period of two years from the ‘relevant date’ as defined under Explanation (2) of Section 54 of the CGST Act.
• The rate of interest as specified in the main provision of Section 56 of the CGST Act and the proviso to Section 56 of the CGST Act is materially different. Whereas, the main provision of Section 56 of the CGST Act provides for an interest at the rate not exceeding 6% per annum, the proviso to Section 56 of the CGST Act stipulates interest at the rate not exceeding 9% per annum.
• If application for refund filed by the person consequent to succeeding before the Appellate Authority, Appellate Tribunal or court, is not processed within a period of sixty days of filing the application, the applicant would be entitled to a higher rate of 9% per annum commencing from the date immediately after the expiry of sixty days of his application filed pursuant to the appellate orders.
• Once an application for refund under Section 54(1) of the CGST Act has been filed, the same requires to be carried to its logical conclusion. If the said claim is denied by the Adjudicating Authority and the applicant prevails before the Appellate Authority, the order of the Appellate Authority is required to be implemented. However, in one sense, the subsequent application filed by a person pursuant to succeeding before the Appellate Authority, is solely for the purposes of giving a nudge to the process of disbursal of the refund claim and for the proper officer to determine and disburse the interest as payable.
• The petition is, accordingly, allowed. The impugned order is set aside. The Adjudicating Authority is directed to process the petitioner’s application for refund filed on 16.05.2023