2026-VIL-335-GSTAT-VJY
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SGST Tribunal

GST – Eligibility to Interest on delayed refund under Section 56 of CGST Act, 2017 - Appellant filed refund applications of unutilised input tax credit under the inverted duty structure, which were rejected by the original authority - FAA set aside the rejection orders, and the Appellant-assessee filed consequential applications to implement the appellate orders. The refunds were sanctioned within sixty days of the consequential applications, but interest was rejected on that ground - Appellant contended that interest under the main provision of Section 56 runs from the expiry of sixty days from the original applications - Whether the Appellant whose original refund claims were rejected but later allowed by the FAA is entitled to interest under Section 56 from the expiry of sixty days from the original applications, notwithstanding that the refunds were sanctioned within sixty days of the consequential applications - HELD - The main provision, the proviso and the Explanation to Section 56 must be read together. The main provision links the commencement of ordinary interest to the original application under Section 54(1), the proviso provides for an enhanced rate where the refund arising from an order that has attained finality is not paid within sixty days of the application filed consequent to such order, and the Explanation gives the appellate order the character of an order under Section 54(5). The proviso does not replace or dilute the main provision, and it only enhances the rate for the subsequent period - The consequential application is a procedural step to implement the appellate order and it does not constitute a fresh starting point for the entire interest calculation - The Explanation to Rule 93 treats a refund as rejected only when the appeal is finally rejected, which shows that the original claim retains legal significance during the appellate process - Interest is linked to the date of the refund application and not to the date of the order granting the refund. The entitlement to interest cannot be defeated merely because the original authority passed an order that was reversed in appeal. Payment within sixty days of the consequential application does not extinguish the ordinary interest accrued under the main provision, although the enhanced rate under the proviso may not become payable in such a case - The appellant is entitled to interest at the ordinary notified rate under the main provision, from the day immediately following the expiry of sixty days from receipt of each original application until actual disbursement - The impugned orders are set aside and the appeals are allowed
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