Summary
The Union challenged 9% interest awarded on delayed integrated-tax refunds to exporters. The Court held that these claims fell under the principal part of Section 56 CGST Act, attracting 6%, rather than its proviso concerning refunds consequent on final adjudicatory orders. Delays of 94–290 days did not justify importing the exceptional relief in Sandvik Asia. The appeals were allowed to reduce interest to 6%; as that interest and the refunds had already been paid, no further action was required.
Issues
- Whether 9% interest could be awarded on the export-tax refunds governed by the principal part of Section 56.
Provisions considered
- Sections 16 and 20, Integrated Goods and Services Tax Act, 2017The export-refund claims were governed by the CGST refund and interest framework through the statutory incorporation. (¶ 11-12)
- Sections 54 and 56, Central Goods and Services Tax Act, 2017The principal delayed-refund provision governed these claims, with 6% interest after the statutory sixty-day period; the higher-rate proviso did not apply. (¶¶ 11-13, 18-20)
Held
- The CGST refund provisions applied to the integrated-tax claims. Section 56 distinguishes ordinary delayed refunds from claims arising from final adjudicatory or appellate orders and a consequent refund application. These claims fell within the principal provision, not that proviso. (¶ 11-13)
- The Court proceeded to the merits after considering Godavari Sugar Mills and its explanation of writ jurisdiction over monetary relief. It did not reject the proceedings merely because the relief concerned interest. (¶ 14-16)
- Where statute regulates interest, its prescription governs. Sandvik Asia concerned exceptionally prolonged delays and did not establish a general entitlement to a higher equitable rate despite a governing statutory provision. The land-acquisition context of K.T. Plantation likewise did not answer the present refund-rate issue. (¶ 16-18)
- For delays of 94–290 days in these cases, the statutory 6% rate applied. The High Court erred in awarding 9%, and payment already made at 6% fully met the entitlement determined here. (¶ 19-21)
Result
Appeals allowed to the extent of limiting interest to 6% per annum on the tax refunds. Because the refunds and interest at that rate had already been paid, no further payment or action was directed. No order as to costs.