Payment of interest on refund can't be denied on the ground that the interest is not claimed in refund application

Facts of the Case:- In this case, the Petitioner is an exporter of mobile phones of various brands and accessories. 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. 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).

Further, IGST refund for the tax period December 2022, February 2023, March 2023 and May 2023 has been sanctioned, but without interest. 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.

The department objected for grant of interest, on the ground that the petitioner has only claimed the integrated tax and not the interest on the same and therefore he is not entitled for the grant of interest on the tax amount.

Held:- The Court referred to the provisions of Section 56 of the CGST Act, 2017 and observed that, the 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. Moreover, the question of payment of grant of interest arises only if the refund is not granted within 60 days from the date of receipt of application. 

Thus,  even though, the petitioner may not have claimed interest in his refund applications, his claim of interest cannot be denied under Section 56 of the Act as the same is mandatory and payable automatically in terms of the provisions of the Act. The petitioner is entitled to statutory interest at the rate of 6% starting 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 is credited to the bank account of the petitioner. 

The Court directed the department to process the refund of interest and credit the same into the account of the petitioner.  

To read the complete judgment 2024 Taxo.online 427