The Hon'ble Allahabad High Court in Tata Aldesa (J.V.) vs. State of UP (judgment dated 2nd December 2024) has ruled that taxpayers are entitled to interest on delayed GST refunds under Section 56 of the CGST Act, 2017. This judgment reinforces the importance of timely refund disbursements and holds tax authorities accountable for non-compliance with statutory timelines.
Key Issue
The taxpayer filed for a refund under GST, but despite instructions to the authorities, the refund was not credited within the statutory 60-day period. The taxpayer sought relief in the form of interest for the delay.
Court's Decision
The High Court held:
- Under Section 56 of the CGST Act, 2017, refunds must be processed and credited within 60 days of receiving a complete application.
- If delayed, the taxpayer is entitled to interest, calculated from the expiry of the 60-day period to the actual date of refund disbursement.
- The court directed the tax authorities to pay both the refund and applicable interest, treating interest on delayed refunds as a statutory obligation.
Impact of the Ruling
This decision strengthens taxpayer protection under GST law, ensuring timely refunds and reinforcing accountability among tax authorities. Refund delays, which can strain working capital for businesses, particularly exporters and high-refund claimants, must now be compensated with interest, reducing the financial burden on taxpayers.
Taxpayers should monitor refund applications closely and assert their rights to interest in case of delays while maintaining thorough records of all related communications and filings.
