Facts of the Case: In this case, the petitioner sought the processing of multiple GST refund applications filed for various periods spanning from September 2019 to March 2024. However, the refund sanction orders were passed on various dates, mostly in March 2025, significantly delayed relative to the filing of the refund applications.
Despite issuance of refund sanction orders and credit of the refund amounts, the petitioner raised the grievance that no interest was paid on the delayed refunds. The petitioner relied on Section 56 of the CGST Act, 2017, which mandates payment of interest on delayed refunds if the refund is not processed within 60 days of receipt of the refund application.
The petitioner further cited a precedent decision by the Delhi High Court in Raghav Ventures v. Commissioner of Delhi GST (2024), where it was held that Interest on delayed refunds under Section 56 is automatic and statutory. Interest payment does not depend on whether interest is explicitly claimed in the refund application (FORM GST RFD-01).
The Court had earlier issued notice to the respondents, directing a status report. The status report confirmed that refund sanction orders were issued, but the interest was not granted.
Issue: Whether the petitioner is entitled to statutory interest under Section 56 of the CGST Act, 2017 on the delayed refunds, even though no separate claim for interest was made in the original refund applications
Held that: The Court held that Section 56 of the CGST Act clearly mandates payment of interest on delayed refunds if refunds are not granted within 60 days of the date of receipt of the refund application. The interest under Section 56 is automatic and statutory; it does not depend upon the taxpayer’s explicit claim for interest in the refund application.
The refund orders in the present case were passed well beyond the prescribed 60-day period, which entitles the petitioner to interest on the refund amount for the delay.
The Court directed the respondents to calculate and pay interest at the statutory rate of 6% per annum from the day immediately after expiry of the 60-day period from the refund application date until the date the refund amount was credited to the petitioner’s bank account. The respondents were directed to calculate and pay interest at the rate of 6% per annum within a period of two months.
Case Name: Xilinx India Technology Services (P.) Ltd. v. Assistant Commissioner State Tax
To read the complete judgment 2025 Taxo.online 1732
