Para 1-2:

• Rule Made Returnable Immediately:
  The court made the rule returnable immediately with consent from all parties.
• Relief Sought:
  The petitioner sought interest on delayed IGST refund under Section 56 of the CGST Act, 2017.

2. Case Background and Exporter Details

Para 3-5:

• Petitioner’s Business and Refund Claim:
  The petitioner, an exporter of Ethyl Alcohol and related products, filed for IGST refunds worth ₹3.21 crore for exports made between August 2018 and July 2019.
• Delay in Refund Due to Red-Flagging:
  Refunds were granted only in August 2020 after the petitioner’s name was removed from the “risky exporters list.” Investigation delays were not communicated to the petitioner.

3. Legal Framework on Refund and Interest

Para 6-10:

• Respondents' Argument:
  Refunds were processed promptly after obtaining the NOC, and interest was denied.
• Section 56 - Interest on Delayed Refunds:
  Provides for 6% interest if refunds are not processed within 60 days of application. No exclusion for investigative delays is mentioned in the statute.
• Relevant Circulars Discussed:
  Circular No.16/2019 mandates investigation completion within 30 days. Circular No.131/2020 shortens the verification process to 14 days.

4. Court’s Observations and Reasoning

Para 11-15:

• Impact of Refund Delays:
  Delays adversely affect exporters' working capital and competitiveness. The petitioner complied with all requirements, and delays were solely due to respondents' inaction.
• No Statutory Exclusion for Investigation:
  Section 56 does not allow for excluding the investigation period from interest computation. Any delay beyond 30 days violates guidelines and adds to the respondents' liability.
• Respondents' Conduct Criticized:
  Failure to adhere to prescribed timeframes for investigations is unjustifiable, especially when the petitioner had no role in the delay.

5. Final Decision and Directions

Para 16-17:

• Interest Entitlement Declared:
  The petitioner is entitled to interest under Section 56 from the 61st day after filing the shipping bill until the refund date, excluding 30 days allowed for investigation under Circular No.16/2019.
• Compliance Timeline:
  Respondents must calculate and pay the interest within eight weeks of the order.

Acts and Sections Discussed:

1. Central Goods and Services Tax Act, 2017
   • Section 56: Interest on Delayed Refunds.
   • Section 54: Refund of Tax.
2. Integrated Goods and Services Tax Act, 2017
   • Section 16(3): Zero-rated Supply with Refund of Tax Paid.
3. Circulars
   • Circular No.16/2019: 30-Day Limit for Verification of Risky Exporters.
   • Circular No.131/2020: 14-Day Limit for Verification Process.

Ratio Decidendi:

• Interest on delayed refunds under Section 56 of the CGST Act cannot exclude investigation delays unless explicitly provided by statute.
• Adherence to timelines in Circulars is essential for exporter refunds to ensure smooth business operations.

Subjects:

GST Law, Export Refunds, Delayed Refund Interest

#Section56 #ExporterRights #TaxInterest