Case law: M/s. Saraf Natural Stone Vs Union Of India
Facts of the case:
- The company produces 15 invoices on which it had claimed refund of over Rs. 13 lakh in August, 2017.
- Representations have been made by the company to authorities for IGST refund and there is no response by the authorities.
- At last, the company had filed a petition to HC in October 2018 seeking compensation and interest towards the substantial delay in making payment of refund of IGST on export of goods.
Issue involved: The Company claimed that export refund has not been made by the authorities for nearly a year, which is to be refunded within 7 days is not yet received.
It also contended that that much of delay in refund impacted the working capital of the company and diminished its ability to continue its business.
Provisions and Interpretation of the Law:
- As per Section 16 of IGST Act, 2017, a registered person making exports of goods outside India shall be eligible to claim refund of either unutilized input tax credit on export of goods under bond or letter of undertaking, or refund of integrated tax paid on export of goods.
- Section 54 of the CGST Act states that such a refund should be made in a time-bound manner.
- Further, Rule 91 of the CGST rules, 2017 states that 90% of export refunds should be paid upfront and the rest 10% amount is to be paid in next seven days.
- Section 56 of the CGST Act, 2017 deals with the interest on delay, where the refund is not made within 60 days, Interest o delay shall be provided @9%.
- HC said that the “provisions related to interest of delayed payment of refund have been consistently held as beneficial and non- discriminatory”.
- It held “It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision”
- The Gujrat high court has passed the judgment that Department will have to pay IGST refund amount along with simple interest at the rate of 9% per annum on the delayed payment of IGSTto the exporter.
- The interest must be paid from the actual due date of filing of GSTR – 3B return to the date of receipt of refund.
- Further, such payment is to be made within two months from the date of the order.