Jurisdiction for Interest on Delayed IGST Refund: High Court Directs GST Appellate Authority to Adjudicate Claim After Petitioner Diligently Pursued Remedy Before Customs Forum

ISSUE

Whether a petitioner, who diligently pursued a claim for interest on delayed IGST refund before the Customs Authorities (along with drawback interest) only to be told at the appellate stage that the forum was incorrect, can be relegated to the GST Appellate Authority without the claim being barred by limitation.

FACTS

The Claim: The petitioner-assessee filed two applications before the Customs Authority claiming:
1. Interest on delayed payment of drawback (under Customs Act).
2. Interest on delayed refund of IGST (Integrated Goods and Services Tax).
The Rejection: The original adjudicating authority (Customs) rejected both applications.
First Appeal: The petitioner appealed to the Customs Appellate Authority.
The Split Decision: The Customs Appellate Authority:
- Allowed the appeal regarding interest on delayed drawback.
- Rejected the appeal regarding interest on IGST refund, ruling that it was not the “appropriate forum” and the appeal should have been filed under the GST Acts before the GST Appellate Authority.
The Writ: The petitioner approached the High Court seeking directions, arguing they had been pursuing the matter diligently and the jurisdictional objection was raised late.

HELD

Diligent Pursuit: The High Court observed that the assessee had been pursuing the issue of interest on IGST refund “quite diligently,” albeit before the authorities under the Customs Act.
Late Objection: The Court noted that the objection regarding jurisdiction (that Customs is not the right forum for IGST interest) was taken for the first time in the impugned order of the Customs Appellate Authority.
Remedy Restored: To prevent the assessee from being rendered remediless due to a procedural/jurisdictional error, the Court directed the assessee to institute an appeal before the GST Appellate Authority against the original order (specifically concerning the IGST interest).
Direction: The GST Appellate Authority was directed to consider and dispose of such appeal on its own merits (implying that the time spent before the wrong forum would be excluded for limitation purposes). [In Favour of Assessee]

KEY TAKEAWAYS

Forum Selection: Interest on Drawback is a Customs matter; Interest on IGST Refund is a GST matter. Even if the refund is processed via the Customs ICEGATE portal (for exports), the legal provision for interest on IGST lies under Section 56 of the CGST/SGST Act, and disputes must go to the GST Appellate Authority.
Section 14 of Limitation Act Principle: Courts often invoke the principle analogous to Section 14 of the Limitation Act (exclusion of time spent in a court without jurisdiction) to protect taxpayers who diligently pursue a remedy before the wrong forum.
Diligent Pursuit is Key: The relief was granted because the petitioner was “diligent.” If a taxpayer sleeps on their rights or delays filing, courts are less likely to condone the delay or transfer the matter to the correct forum.

HIGH COURT OF BOMBAY

Gulabdas International Trading LLP

Union of India^*

M.S. Sonak and Advait M. Sethna, JJ.

WRIT PETITION NO. 320 OF 2024

DECEMBER 10, 2025

Prithwiraj Choudhari, Ms. Kavsar Jahan Sayed, Paresh Revar and Prabhakar Shetty for the Petitioner. Karan Adik and Saket Ketkar for the Respondent.

ORDER

M. S. Sonak J.- Heard the learned Counsel for the parties.

2. Leave to amend the prayer clause. Amendment is to be carried out forthwith.Re-verification is dispensed with.

3. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.

4. The Petitioner challenges the Revisional Authority’s order dated 13 September 2023 in the context of drawback/export refund.

5. The record shows that the Petitioner had filed two applications: –

(i)

One for interest on delayed payment of IGST refund under the IGST Act dated 18 September 2020 (Exhibit “A1” at Pg No.40).

(ii)

One for interest on delayed payment of drawback under the customs Act dated 23 September 2020 (Exhibit “A2” at Pg. No. 44).

6. Both the applications were rejected vide a common order dated 01.12.2020 (Exhibit “B” at Pg No. 48) passed by the Respondent No.5 while acting as the original adjudicating authority.

7. The Petitioner filed an appeal before Respondent No.3 against the aforesaid common order and the said appeal was also rejected by the Respondent No.3 on both counts vide common order dated 31.03.2022 (Exhibit “C” at Pg No. 61).

8. Thereafter, the Petitioner filed an appeal before the Respondent No.2 which was partly allowed vide the Impugned Order dated 13.09.2023 to extent of interest on delayed payment of drawback under the Customs Act. As far as the interest on delayed payment of IGST refund is concerned, the Respondent No.2 held that customs appellate authorities are not the appropriate appellate authorities, and appeal should have been preferred under the GST Acts before the GST appellate authorities.

9. This Petition is restricted to the issue of interest on IGST refund, which was declined on the ground that the Petitioner should have appealed against the original order before the authorities constituted under the GST Acts. The relevant observations in this regard are in paragraph No. 8 of the impugned order which reads as under: –

“8. As regards to the issue of interest on IGST refund, Government notes that present proceedings are in exercise of the powers vested in terms of Section 35EE of the Central Excise Act, 1944 and must be exercised within the framework of the Central Excise Act, 1944. The Provisions of the CGST Act, 2017 are not exercisable in revision proceedings. In the result, the revision applications filed by the Applicant to the extent of the issue of interest on IGST refund are not maintainable under Section 35EE of the Central Excise Act, 1944. “

10. The Petitioner was diligently pursuing the issue of interest on IGST refunds before the Appellate Authorities constituted under the Customs Act. At no stage, it appears, was any objection raised to the Petitioner pursuing such issues before the Appellate Authorities constituted under the Customs Act. This objection finds place for the first time in the impugned order.

11. Be that as it may, the learned Counsel for the Petitioner submits that the Petitioner is still ready to approach the Appellate Authorities under the GST Act, so that even this objection no longer persists. However, he submitted that the period during which the Petitioner was pursuing the remedies before the Appellate Authorities under the Customs Act may be excluded and the Appellate Authorities under the GST Act may be directed to decide the issue of interest on IGST refunds on merits.

12. In the peculiar facts of the present case, we think that the request made on behalf of the Petitioner is quite reasonable. As noted earlier, the Petitioner was pursuing the issue of interest on IGST refund quite diligently, though before the authorities under the Customs Act. The objection before this Court was taken for the first time in the impugned order.

13. The learned Counsel for the Petitioner states that the Petitioner will institute an Appeal against the common order dated 01 December 2020, in so far as it concerns the issue of interest on IGST refunds before the Appellate Authorities constituted under the GST Act within four weeks from the date of uploading of this order. If such Appeal is indeed instituted within four weeks, then, we direct the Appellate Authority under the GST Act to consider and dispose of such Appeal on its own merits and in accordance with law but without adverting to the issue of limitation.

14. Apart from the limitation, all contentions of all parties on merits are however left open to be decided by the Appellate Authority in the first instance.

15. The Rule is disposed of in the above terms. No costs.

16. All concerned must act on an authenticated copy of this order.