Facts of the Case

  • The petitioner, M/s Ankush Auto Deals, filed a refund application on 20.07.2021.
  • The refund amount totaling ₹25,29,944 was processed in two tranches:
    • ₹14,22,482 on 04.01.2022
    • ₹11,07,462 on 22.03.2022
  • While the principal refund amount was paid, statutory interest was not granted.
  • The respondent justified the delay citing COVID-19 pandemic disruptions and reliance on limitation extension orders of the Supreme Court.

Issues Involved

  1. Whether the petitioner is entitled to statutory interest on delayed GST refund under Section 56 of the CGST Act.
  2. Whether COVID-19 related extensions of limitation apply to delay in processing GST refunds.

Petitioner’s Arguments

  • Refund processing occurred in stages, indicating active handling by authorities.
  • Despite processing, statutory interest was not granted, violating Section 56.
  • Interest becomes payable after 60 days from the date of refund application.
  • COVID-related extensions do not apply to refund interest obligations.

Respondent’s Arguments

  • Delay occurred due to COVID-19 pandemic conditions.
  • Relied upon:
    • Suo Motu Writ Petition (Civil) No. 3/2020
    • M/s GNC Infra LLP v. Assistant Commissioner (Circle)
  • Argued that time limits stood extended, thus no interest liability arises.

Court’s Findings / Judgment

  • The Court rejected the respondent’s arguments.
  • Held that:
    • Refund application was filed on 20.07.2021, and payments were delayed beyond statutory limits.
    • Under Section 56, interest at 6% is mandatory after 60 days.
    • COVID-related limitation extensions do not apply to statutory interest on refunds.
  • The Court emphasized:

Interest is a compensation for use of money wrongfully retained.

Final Order

  • Respondents directed to:
    • Pay statutory interest @ 6% per annum
    • Calculate from expiry of 60 days from refund application date
  • Writ petition disposed in favor of the petitioner.

Important Clarification by Court

  • Limitation extension orders (COVID-19):
    • Apply to filing of cases, not to statutory obligations like refund interest
  • Authorities cannot retain taxpayer money beyond statutory period without compensation

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2910-DB/RAS21072022CW122332021_074807.pdf

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