ANITA AGARWAL (SOLE PROPRIETOR OF M/S. SHANKER INTERNATIONAL)
v.
UNION OF INDIA & ORS.
WRIT PETITION NO. 1474 OF 2023
HIGH COURT – BOMBAY
Facts: The Petitioner, an exporter of various goods including Ethyl Alcohol Liquid Packaging Film and iodized salt, paid IGST on export shipments and claimed refunds based on shipping bills as per Section 16(3) of the IGST Act read with Section 54 of the CGST Act, and Rule 96 of the CGST Rules. Between August 2018 and July 2019, the Petitioner filed claims for a refund totalling ₹3.21 crores. However, the refund was granted only in August 2020 after significant follow-up. The delay was attributed to the Petitioner being flagged as a “risky exporter,”, which was removed in August 2020 after NOC was issued by the Risk Management Centre for Customs.
The Petitioner argued that the delay was solely due to the Respondent’s inaction and sought interest on the delayed refund under Section 56 of the CGST Act.
Issues: Whether the Petitioner is entitled to interest under Section 56 of the CGST Act for the delayed refund of IGST, where Petitioner’s name was flagged on the “risky exporters list”?
Judgment: The Hon’ble Bombay High Court held that the Petitioner is entitled to interest under Section 56 of the CGST Act for the delay in granting the refund of IGST paid on exports. It ruled that the delay was attributable to the Respondent’s inaction and failure to complete the investigation within the stipulated timeframe under applicable circulars.
Clarified that, Section 56 mandates the payment of interest starting 60 days after the filing of the refund application, and no exclusion for investigation periods is permissible unless expressly provided by the statute.
Observed that refund plays a very important role in the working capital of an exporter, and therefore, any delay in the grant of the refund would affect the day-to-day running of the business.
Noted that the delay is squarely attributable to the inaction of the Respondents in not completing the investigation within the time frame specified in the Circular, nor any explanation has been given as to why the time limit specified in the Circular could not be complied with or same attributable to the Petitioner, for which the Petitioner cannot be made to suffer.
Directed the Respondents to calculate and pay the interest calculated interest within eight weeks, for the delay, excluding a reasonable period of 30 days as provided in Circular No. 16/2019-Customs dated 17 June 2019 for completing the investigation.
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