The Supreme Court has observed that in case of delay in granting Integrated GST refund cannot exceed 6% as per the principal provisions of section 50 of the Central GST Act, 2017, especially when the delay was not inordinate.
A Bench comprising Justices U.U. Lalit and S. Ravindra Bhat allowed appeals filed by the Union of India to reduce the interest granted by the Gujarat High Court for the delay in refunds of integrated tax paid on export of goods from 9% to 6%.
Section 16 of the Integrated Goods and Service Tax Act, 2017 contemplates that a registered person making exports of goods outside India, shall be eligible to claim, refund of either unutilised input tax credit on export of goods under bond or letter of undertaking or refund of Integrated tax paid on export of goods. The said refund is claimed in accordance with Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act) and rules thereunder. Two Companies (original petitioners), which had received the said refund after inordinate delay approached the Gujarat High Court seeking compensation as the inaction on the part of the Union Government was per se arbitrary and the delay adversely impacted their working capacity. The High Court granted relief by stating that the original petitioners are entitled to simple interest of 9% p.a. The Union Government filed review petitions seeking reduction in the interest rate from 9% to 6% as prescribed by the statute. The High Court dismissed the review petitions.
On appeal, the Apex Court observed that “the relevant provision has prescribed rate of interest at 6 per cent where the case for refund is governed by the principal provision of Section 56 of the CGST Act. As has been clarified by this Court in Modi Industries Ltd.9 and Godavari Sugar Mills Ltd. 7 wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the statute. Wherever a statute, on the other hand, is silent about the rate of interest and there is no express bar for payment of interest, any delay in paying the compensation or the amounts due, would attract award of interest at a reasonable rate on equitable grounds.”
Commentaires