Delhi High Court on Delayed IGST Refund: Statutory Interest Payable After 60 Days
The Hon’ble Delhi High Court held that where an IGST refund on export of goods is not credited within 60 days from the date of receipt of the refund application, the assessee is entitled to statutory interest under section 56 of the CGST Act, 2017.
In the case of Raghav Ventures v. Commissioner of Delhi GST, W.P.(C) No. 12209 of 2023, order dated March 1, 2024.
Background of the case
The petitioner was an exporter of mobile phones and related accessories. It had exported goods to Dubai, UAE on payment of IGST and thereafter filed refund applications in Form GST-RFD-01 for multiple tax periods, including December 2022, February 2023, March 2023, and May 2023. System-generated acknowledgements in Form GST-RFD-02 were also issued, confirming receipt of the refund applications. The refund amount of INR 2,44,75,410 was eventually sanctioned and credited, but only after the expiry of 60 days from the date of application and without payment of interest.
The assessee thereafter approached the proper officer seeking grant of interest at the rate of 6% from the date of filing of the refund applications until the date the refund amount was actually credited to its bank account.
Legal position under section 56 of the CGST Act
Section 56 of the CGST Act, 2017 provides that where any tax ordered to be refunded under section 54(5) is not refunded within 60 days from the date of receipt of the application, interest becomes payable from the date immediately after expiry of the 60-day period until the date of refund. The statutory framework therefore treats delayed refund interest as a compensatory consequence of delay, not as a discretionary concession.
Delhi High Court ruling
The Delhi High Court held that the petitioner was entitled to statutory interest at the rate of 6% from the date immediately after the expiry of 60 days from receipt of the refund applications till the date on which the refund was actually credited to the assessee’s bank account. The Court directed the department to process and credit the refund of interest accordingly.
The significance of the ruling lies in the court’s recognition that once the statutory conditions are satisfied, interest on delayed refunds follows by operation of law. In that sense, the entitlement is linked to the delay itself and not to any separate discretion of the department.
Why this ruling matters for exporters
For exporters, a delayed refund is not merely a procedural issue. It directly affects working capital and cash-flow efficiency. This judgment reinforces that where refund applications are duly acknowledged but the refund is credited beyond the statutory timeline, the taxpayer may have a valid claim for interest under section 56. Businesses dealing with export-related refund positions should therefore monitor the refund timeline closely and preserve a clear trail of application dates, acknowledgements, and credit dates.
From a broader compliance standpoint, this issue sits naturally within indirect tax advisory and becomes especially relevant where businesses require support on GST refund matters or dispute management under indirect tax litigation.