Facts of the Case:

In this case, the petitioners filed multiple writ petitions seeking interest under Section 56 of the CGST Act on GST refunds that had already been sanctioned and disbursed for the tax periods from July 2018 to March 2021. In some cases, refunds were granted by the Refund Sanctioning Authority, while in others, refunds were issued pursuant to appellate orders. Since the refunds were released beyond the statutory period of 60 days, the petitioners claimed interest on the delayed refund amount.

The interest claims were pending before the Proper Officer since 03.06.2025 and were met with repeated Deficiency Memos. The dispute arose when a third Deficiency Memo was issued without specifying any meaningful particulars, compelling the petitioners to approach the High Court. The department relied upon Circular No. 125/44/2019-GST and insisted on submission of various declarations and certifications, including a certificate under Rule 89(2)(m) of the CGST Rules, 2017.

Issue:

Whether the department can insist upon furnishing a Chartered Accountant/Cost Accountant certificate under Rule 89(2)(m) of the CGST Rules and other documentary requirements while processing a claim for interest on delayed refund, when the principal refund amount has already been sanctioned and disbursed.

Held that:

The High Court observed that the petitioners’ claim related exclusively to interest on refund amounts that had already been sanctioned and paid. The Court noted that Rule 89(2)(m) requires a certificate to establish that the incidence of tax, interest, or other amounts claimed as refund has not been passed on to any other person. However, in the present case, the principal refund had already been granted and the claim was confined to statutory interest arising from delayed disbursement of that refund.

The Court accepted the petitioners’ contention that interest payable under Section 56 of the CGST Act is a consequence of delayed refund and, once the principal refund has been sanctioned, such interest cannot ordinarily be passed on to any end consumer. Therefore, insistence upon certification under Rule 89(2)(m) was unnecessary in the peculiar facts of the case.

Accordingly, the Court directed the petitioners to furnish a summary statement containing details of refund claims already sanctioned and the corresponding interest claimed. The Proper Officer was directed to scrutinize the claim and decide the matter in accordance with law within two weeks, without insisting upon the certificate prescribed under Rule 89(2)(m) of the CGST Rules, since the claim related solely to interest on refunds already sanctioned.

Case name: M/s. Synchrony International Service Private limited and another Versus Assistant Commissioner (ST), STU-1, Hyderabad and four others. dated 30.07.2026

Citation No. 2026 Taxo.online 2272