Integrated Goods and Services Tax Act, 2017 – ss. 16 and 20 – Central Goods and Services Act, 2017 – ss. 54 and 56 – Interest on delayed refunds – Writ petitioners claimed that inaction on part of appellant leading to inordinate delay in granting refunds under IGST Act, was per se arbitrary and impacted the working capacity of the writ petitioners thereby reducing their ability to conduct business – There was delay ranging from 94 to 290 days in making refunds – Petitioners before the High Court claimed that appropriate compensation ought to be awarded to them along with the interest for delayed refunds – High Court granted simple interest at the rate of 9 % per annum on the delayed payments – Appeal before the Supreme Court – Whether in terms of relevant statutory provisions, the petitioners are entitled to interest on delayed refunds at rate of
6 % and not at the rate of 9 % per annum – Held : Wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the Statute – Wherever a statute, is silent about the rate of interest and there is no express bar of 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 – In the present case, the relevant provision has prescribed rate of interest at 6 % where the case for refund is governed by the principle provision of s. 56 of the CGST Act – Since the delay in the instant case was in the range of 94 to 290 days, the matter has to be seen purely in the light of the concerned statutory provision – Present cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof – Therefore, in terms of the principle part of s. 56 of the CGST Act, the interest would be awarded at the rate of 6 % – The award of interest at 9 % would be granted only if the matter was covered by the proviso to s.
56 – High Court was in error in awarding interest at the rate exceeding 6 % in the present matters.
Allowing the appeals, the Court
HELD: 1. According to Section 56 of the CGST Act, if an applicant is not refunded any tax ordered to be refunded by the Proper Officer under Section 54(5) within 60 days from the receipt of the application, interest at such rate not exceeding 6 per cent would become payable after the expiry of 60 days from the date of receipt of application till the date of refund of such tax. The proviso to said Section prescribes that where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and if the same is not refunded within 60 days from the date of receipt of an application filed consequent to such an order, the rate of interest payable would be 9 per cent. [Para 12][1153-E-G]
2. The instant cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. [Para 13][1153-G-H]
3. 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. 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. [Para 18][1165-B-D]
4. Since the delay in the instant case was in the region of 94 to 290 days the matter has to be seen purely in the light of the concerned statutory provisions. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at the rate of 6 per cent. The award of interest at 9 per cent would be attracted only if the matter was covered by the proviso to the said Section 56. The High Court was in error in awarding interest at the rate exceeding 6 per cent in the instant matters. [Para 19][1165-G-H]
K. T. Plantation Pvt. Ltd. and Anr. v. State of Karnataka (2011) 9 SCC 1 : [2011] 13 SCR 636 – distinguished.
Union of India and others v. Orient Enterprises and Another (1998) 3 SCC 501 : [1998] 2 SCR 143; Modi Industries Ltd. and another v. Commissioner of Income Tax and Another (1995) 6 SCC 396 : [1995] 3 Suppl. SCR 642 – relied on.
Sandvik Asia Ltd. v. Commissioner of Income Tax-I Pune and Others (2006) 2 SCC 508 : [2006] 1 SCR 811; Commissioner of Income Tax, Gujarat v. Gujarat Fluoro Chemicals (2014) 1 SCC 126 : [2013] 10 SCR 191 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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