Statutory Interest Mandatory for Delayed GST Refunds Beyond 60 Days
The article reports a judicial ruling that affirms the mandatory nature of paying statutory interest under Section 56 of the CGST Act on any undisputed refund amount that is delayed beyond the statutory limit of 60 days.
Key Points of the Judicial Ruling
- Interest is Mandatory and Compensatory: The court ruled that the interest provided under Section 56 is mandatory and compensatory in nature. This means the interest is payable automatically once the 60-day deadline from the date of the refund application expires, regardless of administrative or technical reasons for the delay.
- Deadline for Interest Accrual: The 60-day clock for the mandatory 6% interest begins ticking from the date the refund application is successfully filed.
- No Fault on Taxpayer’s Part: The ruling typically arises in cases where the Revenue attempts to avoid paying interest by blaming procedural issues or technical glitches (like system transmission errors or reconciliation issues). The court rejected these defenses, maintaining that the taxpayer is entitled to compensation for the undue delay, as the fault lies with the administrative process after the application was deemed complete.
- Higher Interest Rate for Appellate Delay: If the refund is granted only after an order is passed by an Appellate Authority, the interest rate increases to 9% per annum, further underscoring the Revenue’s obligation to ensure timely disbursement.
Source:- Judgement