08.08.2022: Statutory Interest On Refund Cannot Be Withheld On Account Of Supreme Court’s Order Of Extension Of Limitation – Delhi High Court

The Hon’ble High Court of Delhi vide its order dated 21.07.2022 in the matter of M/s Ankush Auto Deals Vs. Commissioner of DGST & Anr. in W.P. (C) 12233/2021 & C.M. Appl. 4315/2022, held that Hon’ble Supreme Court’s order of extension of limitation is not applicable to the grant of interest beyond the period of limitation prescribed under the Act.

Facts:

The grievance of the petitioner is that it has not been granted interest, however the principal amount of refund has already been remitted. Further, the position is affirmed by the counsel for the respondents.

  • That on perusal of order dated 22.03.2022, passed by the Goods and Service Tax Officer (GSTO), Ward -72, Department of Trade & Taxes, it can be seen that amount of Rs. 14,22,482/- out of total amount of refund of 25,29,944/- has been allowed and the remaining refund which is further to be allowed is Rs. 11,07,462/-, however the petitioner’s grievance with respect to the payment of statutory interest has not been addressed.

Petitioner’s Submissions: –

  • It was submitted on the behalf of the petitioner that the principle enunciated in the Hon’ble Supreme Court’s extension order and Madras High Court order, relied upon by the respondents/revenue, would not be applicable to the present case.
  • It was submitted that the refund application was filed on 20.07.2021 and thereafter, the refund was remitted to the petitioner in instalments. That the respondents/revenue processed the application of refund in stages, the first instalment was Rs. 14,22,482/- was remitted to the petitioner on 04.01.2022 and the second instalment amounting to Rs. 11,07,462/- was remitted to the petitioner on 22.03.2022.
  • Thus, it was contended that respondents while doing so, should have also granted interest in accordance with provisions of Section 56 of the Central Goods and Service Tax Act, 2017.

Respondent’s Submissions:

  • That on the behalf of the respondents/revenue, reliance was placed on the Supreme Court in Suo Motu W.P (C.) 3/2020 & Madras High Court dated 28.09.2022, passed in W.P (C) 18165/2021, titled M/s GNC Infra LLP v. Assistant, to submit that the period for processing refund claims stood extended.

Held:

  • The Hon’ble Court after considering the submissions made, facts of the case and the interim order dated 12.05.2022 (in the present matter), disagreed with the contentions advanced on the behalf of the respondents/revenue and on perusal of the counter-affidavit filed by the respondents found that it is clear that the only reason the respondents/revenue have denied the statutory interest is because COVID-19 is raging and there was a delay in processing the petitioner’s refund.
  • The Hon’ble Court considering the judgments referred by the respondents/revenue in the Supreme Court in Suo Motu W.P (C.) 3/2020 & Madras High Court dated 28.09.2022, passed in W.P (C) 18165/2021, titled M/s GNC Infra LLP v. Assistant, found that these judgments are not applicable to the issue in the present case.
  • It was held that the statutory interest provided under Section 56 of the Act is a compensation for use of money and the respondents could not have retained the money beyond the period stipulated under Section 56 of the Act.

The Hon’ble Court with the above findings disposed of the writ petition laying down that the interest is payable to the petitioner and the respondents will take steps in that behalf.

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