STU-1 Archives - Tax Heal https://www.taxheal.com/tag/stu-1 Complete Guide for Income Tax and GST in India Sat, 15 Aug 2026 10:42:53 +0000 en-US hourly 1 https://wordpress.org/?v=7.0.4 Interest Claims on Sanctioned GST Refunds Do Not Require CA Certification Under Rule 89 https://www.taxheal.com/aparesh-kumar-singh-cj-6.html Sat, 15 Aug 2026 09:56:47 +0000 https://www.taxheal.com/?p=138648 Interest Claims on Sanctioned GST Refunds Do Not Require CA Certification Under Rule 89 Issue Whether a taxpayer claiming statutory interest under Section 56 on an already sanctioned GST refund is required to submit CA/CMA certification and fulfill conditions under Rule 89(2)(m). Facts Petitioner Status: The petitioner is a registered company seeking statutory interest on… Read More »

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Interest Claims on Sanctioned GST Refunds Do Not Require CA Certification Under Rule 89

Issue

Whether a taxpayer claiming statutory interest under Section 56 on an already sanctioned GST refund is required to submit CA/CMA certification and fulfill conditions under Rule 89(2)(m).

Facts

  • Petitioner Status: The petitioner is a registered company seeking statutory interest on delayed GST refunds for the period July 2018 to March 2021 under Section 56.
  • Sanction of Principal Refund: The principal refund amounts for the relevant period had already been sanctioned and disbursed by the tax authorities pursuant to Orders-in-Original and Orders-in-Appeal.
  • Filing of Interest Application: The petitioner subsequently filed applications before the Proper Officer specifically seeking interest on the delayed refund amounts.
  • Deficiency Memos Issued: The Proper Officer issued deficiency memos categorizing the interest claims under “any other ground,” insisting on undertakings regarding input tax credit conditions and CA/CMA certificates under Rule 89(2)(m).
  • Refusal to Process: The interest claims were stalled and not processed due to non-submission of the requested Rule 89(2)(m) certifications and documents.

Decision

  • Exemption from Rule 89(2)(m) Certification: The High Court held that since the principal refund already stood approved and disbursed, the claim was confined strictly to statutory interest under Section 56. Therefore, insisting on CA/CMA certification under Rule 89(2)(m) was improper.
  • Direction to Proper Officer: The Proper Officer was directed to examine the summary sheet of the previously sanctioned refund orders and calculate and disburse the statutory interest accordingly.
  • Time-Bound Sanction: The authority was directed to pass the interest order in accordance with the law within a period of two weeks without insisting on compliance under Rule 89(2)(m).
  • Outcome: Decided entirely in favor of the assessee.

Key Takeaways

  • No Unjust Enrichment Test for Interest: Rule 89(2)(m) certification (which guards against unjust enrichment) applies to initial principal refund claims, not to statutory interest applications where the principal refund is already settled.
  • Ministerial Computation of Interest: Once a principal refund is sanctioned and delayed beyond the statutory timeline, computing interest under Section 56 is a straightforward administrative calculation rather than a fresh refund adjudication.
  • Procedural Efficiency: Tax authorities cannot raise procedural obstacles or issue deficiency memos under Rule 89 to delay paying mandatory statutory interest on previously approved refunds.
HIGH COURT OF TELANGANA
Synchrony International Service (P.) Ltd.
v.
Assistant Commissioner (ST), STU-1
APARESH KUMAR SINGH, CJ.
and G.M. MOHIUDDIN, J.
Writ Petition Nos. 12047, 12052, 12127, 12128, 12130, 12132, 12133 & 12134 of 2026
JULY  30, 2026
Karan Talwar, Ld. Counsel for the Petitioner. Swaroop Oorilla, Ld. Special Govt. Pleader for the Respondent.
ORDER
1. Mr. Karan Talwar, learned counsel appears for the petitioners.
1.1 Mr. Swaroop Oorilla, learned Special Government Pleader for State Tax appears for respondent Department.
2. All these writ petitions relate to the same petitioners covering the period July, 2018 to March, 2021 with regard to the claim of interest over the amount already refunded. In respect of some tax period, the refund was made by the Refund Sanctioning Authority and in some cases, after the order of the appellate authority. Since the refunds were delayed, the petitioner company claimed interest in terms of Section 56 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’). Such claims for interest have been pending before the Proper Officer since 03.06.2025. On its refund application, Deficiency Memos have been raised. The petitioner company has been compelled to approach this Court on issuance of the third Deficiency Memo which did not contain any particulars.
3. Learned counsel for the petitioners submits that once refund has been sanctioned, interest would be automatic for the period of delay beyond 60 days from the date of first application. Insistence upon furnishing of particulars which are not relevant or germane to the issue is only causing further interest to accrue upon the revenue.
4. Learned counsel for the petitioners submits that neither the provision under Section 16(2)(c) of the CGST Act would apply after the refund has already been sanctioned and paid nor there would arise a case of passing of the refund claim to any other person as it is only interest on the refund already sanctioned. It is submitted that the Proper Officer without appreciating the legal position by delaying the refund of the interest is acting contrary to the interest of the Department.
5. Pursuant to the order passed by this Court on 14.07.2026, Mr. S. Ravi Chandra, Deputy Commissioner (ST) STU-1, Abids Circle Office, Hyderabad, appeared today.
6. Learned Special Government Pleader for State Tax, on instructions, has referred to circular No.125/44/2019-GST dated 18.11.2019 issued by the Central Board of Indirect Taxes and Customs on the subject of electronic refund process. The said circular stands adopted by the State Tax Department. As per the said circular, the refund application has to conform to certain requirements. The refund application was made on ‘any other ground’ as per Deficiency Memo in FORM-GST-RFD-03. He has also drawn the attention of this Court to Annexure-A to Circular No.125/44/2019-GST, which prescribes the list of all statements/ declarations/undertakings/certificates and other supporting documents to be provided along with the refund application. Under Serial No.11, if the refund is claimed on account of ‘any other ground’, an undertaking in relation to Section 16(2)(c) and Section 42(2) of the CGST Act has to be given with supporting documents. Further, a self declaration under Rule 89(2)(l) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’) if the amount claimed does not exceed Rs.2,00,000/-, otherwise, certification under Rule 89(2)(m) of the CGST Rules has to be given. The deficiencies pointed out to the refund application have only enumerated these documents to be supplied. Since the petitioner company has not supplied those documents, the refund claim could not be processed.
7. Learned counsel for the petitioner company has pointed out that in the case of refund of interest over the principal amount like this, certification under Rule 89(2)(m) of the CGST Rules would not be applicable.
8. Rule 89 (2)(m) of the CGST Rules reads as under:
“89. (2) The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in Annexure 1 in FORM GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-

(m) a Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees:”‘

9. It requires the certificate in Annexure 2 of FORM GST RFD-01 by a Chartered Accountant or a Cost Accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person in a case where the amount of refund claimed exceeds two lakh rupees.
10. It is the case of the petitioner company that the entire refund amount has been disbursed for the relevant periods pursuant to the order-in-original and the order-in-appeal passed for the respective years as per the summary sheet furnished by the learned counsel for the petitioners. He submits that the interest in such a case after sanction of refund could not have been passed on to any end consumer. The refund sanctioned should have computed the interest component till the date of disbursement in terms of Section 56 of the CGST Act. Therefore, insistence upon Rule 89(2)(m) of the CGST Rules is unnecessary.
11. However upon consideration of the rival submissions, in the facts and circumstances and the relevant provision of the Act and Rules referred to above, we are of the view that the summary sheet containing the details of the refund claims allowed as per the order-in-original/order-in-appeal for relevant tax periods covered in the respective writ petitions and the claim for refund of interest thereupon furnished by the learned counsel for the petitioners be produced before the Proper Officer for scrutiny and sanction of the interest over the refund of principal amount claimed by the petitioners. The petitioner company or its authorized representative shall appear before the Proper Officer to facilitate this exercise on 06.08.2026 along with relevant details. The Proper Officer shall, after scrutiny of the claim without insisting upon certification as required under Rule 89(2)(m) of the CGST Rules as the claim relates only to the interest component over the refund already sanctioned in its favour, take a decision in accordance with law within a period of two weeks thereafter.
12. All these Writ Petitions are disposed of in the aforesaid manner. There shall be no order as to costs.
13. Miscellaneous applications, if any pending, shall stand closed.
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