Facts of the Case

The Petitioner, Gameloft Software Private Limited, sought expeditious disposal of its refund applications for excess Integrated Goods and Services Tax (IGST) of Rs. 1,87,84,018/- paid during April 2019 to June 2020. Refund applications filed in April 2022 were rejected on 6th and 7th July 2022 citing deficiencies. Revised applications were filed on 30th/31st March 2023, but no deficiency memo was issued within the 15-day window prescribed under Rule 90(2) of the CGST Rules, 2017. A deficiency memo was eventually issued only on 11th April 2023, merely stating that supporting documents were incomplete, after which the Petitioner's representations went unanswered and the applications remained pending.

Issues Involved

  1. Whether the Petitioner is entitled to interest under Section 56 of the CGST Act for the period during which the deficiency memo was not issued within the statutory timeline.
  2. Whether the Department could be directed to decide the pending refund applications within a fixed timeframe.

Petitioner's Arguments

  • Since the deficiency memo was not issued within 15 days as required under Rule 90 of the CGST Rules, interest under Section 56 of the CGST Act is payable for the entire period of delay.
  • Continued pendency of the refund applications was causing a cascading adverse impact on the Petitioner's business.

Respondent's Arguments

  • The Department did not seriously dispute the timeline lapse and the matter proceeded on the basis of the Court's own settled scheme for computing interest on delayed refunds.

Court Order / Findings

  • Relying on its own earlier decision in MS G S Industries v. Commissioner of Central Tax and GST Delhi West (which extracted Sections 54 and 56 of the CGST Act and the ruling in Bansal International v. Commissioner of DGST), the Court reiterated the two-tier interest scheme — 6% per annum from expiry of 60 days of the first refund application, and 9% per annum from expiry of 60 days of a second application filed pursuant to an appellate order that has attained finality.
  • The Court held that delay by the Department in processing refunds has a cascading adverse effect on taxpayers' businesses and directed expeditious disposal.
  • The Petitioner was directed to appear before the Department on 10th November 2025, clear any pointed-out deficiencies, and the refund order was directed to be passed within one month, in accordance with law. All rights and remedies were left open.

Important Clarification

  • Where a deficiency memo under Rule 90(2) of the CGST Rules is not issued within the prescribed 15-day period, the delay attributable to the Department is liable to be compensated by interest under Section 56 of the CGST Act, computed as per the statutorily prescribed scheme.
  • The interest rate escalates from 6% to 9% per annum once a second refund application is filed pursuant to an appellate order attaining finality and remains unprocessed beyond 60 days.

Sections Involved

  • Section 54 of the CGST Act, 2017 — refund of tax; timelines for the proper officer to pass a refund order.
  • Section 56 of the CGST Act, 2017 — interest on delayed refunds, prescribing 6% and (under the proviso) 9% per annum rates.
  • Rule 90 of the CGST Rules, 2017 — procedure for acknowledgment and scrutiny of refund applications, including the 15-day timeline for a deficiency memo.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — the Department was directed to clear deficiencies and pass the refund order within one month, with all rights and remedies (including on interest) left open.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 16315/2025 & CM APPL. 66751/2025
Coram: Hon'ble Justice Prathiba M. Singh and Hon'ble Justice Shail Jain
Date of Order: 28th October, 2025

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