PANILA CHEM LIMITED vs STATE OF GUJARAT
- Court
- Gujarat High Court
C/SCA/4610/2025 CAV JUDGMENT DATED: 23/10/2026
(GJHC240247902025)
Reserved On : 14/10/2026
Pronounced On : 23/10/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.4610 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-.
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-
================================================================
Approved for Reporting Yes No
a
================================================================
PANILA CHEM LIMITED & ANR.
Versus
STATE OF GUJARAT & ORS.
================================================================
Appearance:
KRUTARTH K DESAI(9662) for the Petitioner(s) No. 1,2
MR ABHAY Y DESAI(12861) for the Petitioner(s) No. 1,2
MR RAJ TANNA, AGP for the Respondent(s) No. 1
MR NEEL P LAKHANI(10679) for the Respondent(s) No. 2,3
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CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
(1) By way of the present writ petition, the petitioners seek to
challenge the order dated 10.07.2024 passed by respondent No.2-
Assistant Commissioner of State Tax, Bhavnagar, rejecting their refund
claim, as well as the Order-in-Appeal dated 30.01.2025 passed by
respondent No.3-Deputy Commissioner of State Tax, Bhavnagar,
affirming the rejection of the refund claim. The petitioners further seek a
direction to the respondent authorities to sanction and refund the
amount of Rs.5,41,032/-, together with applicable interest.
BRIEF FACTS OF THE CASE :
(2) Petitioner No.1 is a Public Limited Company engaged in the
business of manufacturing and supplying various types of chemicals,
whereas petitioner No.2 is a Director of petitioner No.1-Company.
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(2.1) Petitioner No.1-Company purchased goods from M/s.Dasaldhan
Chemicals Private Limited, Bharuch, vide Invoice No.19-20/2864 dated
25.11.2019. The goods were dispatched from Bharuch to Bhavnagar in
a transport vehicle bearing registration No.GJ-12-BV-7880. For the
transportation of the said goods, the petitioners duly generated E-way
Bill Nos.6911 5485 7806 on 26.11.2019, which were valid up to
29.11.2019.
(2.2) On 27.11.2019, at approximately 08:00 a.m., the transport vehicle
was intercepted by the State Tax Officer-2, Mobile Squad, Bhavnagar, at
Nari Gam, Bhavnagar. It was alleged that the E-way bill had been
rejected. Accordingly, proceedings under Section 129 of the Central
Goods and Services Tax Act, 2017 (for short, “the CGST Act”) were
initiated, culminating in the issuance of an order in FORM GST MOV-09
dated 29.11.2019, whereby tax and penalty aggregating to Rs.
5,41,032/- were imposed. The petitioners deposited the said amount to
secure the release of the transport vehicle along with the goods.
(2.3) Aggrieved by the aforesaid order, the petitioners preferred an
appeal before the Deputy Commissioner of State Tax, Appeal-9,
Bhavnagar. By an order dated 28.02.2022, the appellate authority
allowed the appeal and set aside the demand, holding that the E-way
bill was active and had not been rejected, contrary to the allegation
forming the basis of the impugned demand. The appellate authority
further found that there was no intention on the part of the petitioners to
evade payment of tax. Consequently, the appellate authority directed
the State Tax Officer to refund the amount of Rs. 5,41,032/- deposited
by the petitioners.
(2.4) In view of the fact that the reference number of the appellate order,
being ZD240624004754K, was generated only on 03.06.2024, the
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petitioners filed an application seeking a refund of the amount deposited
on 04.06.2024.
(2.5) Thereafter, respondent No.2 issued a notice in FORM GST RFD-
08 dated 28.06.2024, calling upon the petitioners to furnish a copy of
the detailed appellate order. The petitioners duly responded by filing a
reply in FORM GST RFD-09 dated 29.06.2024, along with a copy of the
appellate order.
(2.6) By an order dated 10.07.2024 passed in FORM GST RFD-06,
respondent No.2 rejected the petitioners’ refund claim. Aggrieved by the
rejection of the refund claim, the petitioners preferred an appeal under
Section 107(1) of the CGST Act before respondent No. 3.
(2.7) By an Order-in-Appeal dated 30.01.2025, respondent No.3
rejected the appeal, holding that the appellate order had been
communicated to the petitioners on 08.03.2022. Accordingly,
respondent No.3 held that the refund application, having been filed
beyond the period of two years from the date of communication of the
appellate order, was barred by limitation under Section 54(1) of the
CGST Act.
SUBMISSIONS ON BEHALF OF THE PETITIONERS :
(3) Learned advocate Mr.Abhay Desai appearing for the petitioners
has submitted that Article 265 of the Constitution of India mandates that
no tax shall be levied or collected except by authority of law. It was
contended that the State cannot retain an amount collected without the
authority of law. In the present case, the appellate authority, by its order
dated 28.02.2022, had set aside the demand after holding that the E-
way bill was active and that there was no intention to evade payment of
tax. The appellate authority had also expressly directed the State Tax
Officer to refund the amount of Rs.5,41,032/- deposited by the
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petitioners. It was, therefore, submitted that, once the demand had been
set aside and a specific direction for refund had been issued, the
respondent authorities were duty-bound to refund the amount, even in
the absence of a separate application by the petitioners. It was further
contended that the continued retention of the amount by the State,
despite the setting aside of the demand, amounted to collection or
retention without the authority of law and was, therefore, violative of
Article 265 of the Constitution of India.
(3.1) Without prejudice to the aforesaid submissions, learned advocate
for the petitioners submitted that, in terms of Section 54(1) of the CGST
Act, a refund application may be filed within two years from the relevant
date. Explanation 2(d) to the said provision stipulates that, where tax
becomes refundable as a consequence of a judgment, decree, order or
direction of the Appellate Authority, Appellate Tribunal or any court, the
relevant date shall be the date of communication of such judgment,
decree, order or direction.
(3.2) It was submitted that, in the present case, the appellate order
dated 28.02.2022, along with its summary in FORM GST APL-04, as
contemplated under Section 107(11) of the CGST Act read with Rule
113(1) of the CGST Rules, was communicated through the GST portal
only on 03.06.2024. Accordingly, the limitation period for filing the refund
application commenced from the said date and that the application filed
on 04.06.2024 was well within the prescribed period of limitation.
(3.3) It is further submitted by learned advocate Mr.Desai that the
communication of the appellate order could be regarded as complete
only upon the issuance of its summary in FORM GST APL-04. Reliance
was placed upon Circular No.125/44/2019-GST dated 18.11.2019,
issued by the Central Board of Indirect taxes and Customs (CBIC),
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which, according to the petitioners, requires a refund application arising
out of an appellate order to be filed on the GSTN portal by reference to
the order reference number generated on the portal, as the system
processes the refund claim on the basis of such reference number.
(3.4) It was, therefore, contended that, even having regard to Section
169(1)(d) of the CGST Act, the appellate order could be treated as
having been communicated only on 03.06.2024. Consequently, the
refund application filed on 04.06.2024 could not have been rejected as
time-barred under Section 54(1) of the CGST Act.
(3.5) It was further submitted that the respondent authorities could not
be permitted to take advantage of their own delay in uploading the
summary of the appellate order in FORM GST APL-04 on 03.06.2024.
According to the petitioners, the authorities, having failed to upload the
summary at the relevant time, could not subsequently disregard the
date of its communication while determining the relevant date under
Explanation 2(d) to Section 54 of the CGST Act. It was, therefore,
submitted that the refund application filed on 04.06.2024 deserved to be
treated as having been filed within the statutory period of limitation.
(3.6) For claiming interest on refund amount, learned advocate
Mr.Desai has submitted that though the petitioners are entitled to 9%
interest on refund claim, however, they would restrict to 6%.
(3.7) In support of his submissions, learned advocate Mr.Desai placed
reliance on the judgment of this Court in the case of COMSOL Energy
Pvt. Ltd. vs. State of Gujarat 2021 (55) GSTL 390.
SUBMISSIONS ON BEHALF OF THE RESPONDENT :
(4) Opposing the present petition, learned AGP Mr.Tanna submitted
that the relevant date for determining the limitation period is governed
by Section 54 of the CGST Act, particularly Explanation 2(d) thereto.
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The said provision stipulates that, where tax becomes refundable as a
consequence of a judgment, decree, order or direction of the Appellate
Authority, Appellate Tribunal or any court, the relevant date shall be the
date of communication of such judgment, decree, order or direction.
(4.1) It was submitted that, in the present case, the appellate order
dated 28.02.2022 was communicated to the authorized person of the
petitioners on 08.03.2022. Accordingly, the relevant date was
08.03.2022, and the subsequent uploading of the summary of the
appellate order in FORM GST APL-04 on 03.06.2024 would not alter
the date of communication of the appellate order.
(4.2) It is contended by the learned AGP that the petitioners’ contention
that the date of communication of the appellate order, along with its
summary in FORM GST APL-04, i.e., 03.06.2024, should be considered
the relevant date, is misconceived. It was contended that FORM GST
APL-04 is merely a summary of the appellate order and that
Explanation 2(d) to Section 54 of the CGST Act refers to the date of
communication of the order itself, and not the date on which its
summary is uploaded on the portal. The summary is intended only to
facilitate procedural compliance and cannot determine or extend the
statutory period of limitation.
(4.3) In response to the contention that the petitioners could not have
filed the refund application in the absence of the summary in FORM
GST APL-04 on the GST portal, learned AGP submitted that FORM
GST RFD-01 provides separate options for filing a refund application on
the basis of an order received offline or online. Where an order is
received offline, the applicant is required to select the offline option;
where the order is received through the portal, the online option is to be
selected.
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(4.4) It was, therefore, contended that, since the petitioners had
received the appellate order manually, they could have filed the refund
application by selecting the offline option available on the portal. It was
further submitted that there was no interdependence between FORM
GST APL-04 and the filing of a refund application in FORM GST RFD-
01. Even in the absence of the uploading of FORM GST APL-04, the
petitioners could have filed the refund application by selecting the offline
option, entering the order number mentioned in the appellate order and
attaching the order along with the other requisite documents.
Accordingly, it was contended that the petitioners could have filed
the refund application through either of the available options within the
period prescribed under Section 54(1) of the CGST Act but had failed to
do so.
(4.5) Learned AGP further submitted that the proceeding in the present
case has conducted manually and that the final appellate order had
likewise been served manually. The summary in FORM GST APL-04
was subsequently uploaded on the GST portal on 03.06.2024, pursuant
to the administrative directions issued by the Additional Commissioner
(Appeals) vide letter dated 27.05.2024, requiring appellate orders to be
uploaded on the portal and discontinuing the practice of passing orders
manually.
(4.6) It was submitted that the subsequent uploading of the summary
was undertaken to ensure that the appellate orders and related
communications were made available on the GST portal and was not
intended to constitute the date of communication of the appellate order
for the purposes of Section 54 of the CGST Act.
(4.7) It is contended that, in a subsequent meeting held after the
issuance of the aforesaid letter, the Additional Commissioner (Appeals)
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directed that appellate orders passed manually during the earlier period
should also be uploaded on the GST portal. It was, therefore,
contended that the uploading of the summary on 03.06.2024 was
merely a consequence of the administrative directions issued for
uploading earlier manually passed orders and could not be construed
as the date of communication of the original appellate order.
(4.8) It is finally,submitted that, after considering the reply filed by the
petitioners, the competent authority had concluded that the refund
application was barred by limitation under Section 54(1) of the CGST
Act, since it had not been filed within two years from the date on which
the appellate order was received by the petitioners. It was further
submitted that the authority had rightly treated FORM GST APL-04 as
merely a summary of the appellate order and had computed the
limitation period from the date of the original appellate order dated
28.02.2022, communicated on 08.03.2022. Accordingly, respondent No.
2 had rightly rejected the refund claim by the order dated 10.07.2024
passed in FORM GST RFD-06, on the ground that the application was
barred by the statutory period of limitation.
ANALYSIS AND CONCLUSION :
(5) The facts established from the record are as follows:
a) The petitioners preferred a statutory appeal under Section 107 of
the CGST Act, challenging the order dated 29.11.2019, whereby
tax and penalty aggregating to Rs.5,41,032/- were imposed upon
the petitioners.
b) The appeal came to be allowed vide order dated 28.02.2022.
While allowing the appeal, the Appellate Authority directed the
refund of Rs.5,41,032/- deposited by the petitioners-appellants
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under Section 129(3) of the CGST Act, subject to verification of
the tax liability of the petitioners-appellants.
c) A physical copy of the appellate order was handed over to the
authorized person of the petitioners on 08.03.2022.
d) The summary of the appellate order in Form GST APL-04, under
Rule 113 of the CGST Rules, was uploaded on the portal on
03.06.2024.
e) On 04.06.2024, i.e., the day following the upload of Form GST
APL-04, the petitioners filed an application in Form GST RFD-01
seeking a refund of the aforesaid amount.
f) On 10.07.2024, respondent No. 2 rejected the refund claim vide
Form GST RFD-06 on the ground of delay.
g) The petitioners challenged the rejection order before respondent
No. 3. The appeal came to be dismissed vide order dated
30.01.2025, by assigning the reason that the refund application
has been filed beyond the period of limitation of two years
prescribed under Section 54(1) of the CGST Act.
(6) It is the case of the petitioners that the relevant date for
computing the period of limitation is 03.06.2024, i.e. when Form GST
APL-04 was uploaded on the portal, and since the refund application
was filed on 04.06.2024 i.e. on the following day, the application can be
said to have been filed within the prescribed period of limitation and
could not have been rejected on the ground of delay. The revenue, on
the other hand, maintains that the relevant date is 08.03.2022, when the
physical copy of the appellate order was handed over to the petitioners’
authorized person.
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DETERMINATION OF RELEVANT DATE :
(7) In order to examine the controversy arising in the present writ
petition in light of the aforesaid facts and rival submissions, it is
necessary to refer to Section 54 of the CGST Act, particularly
Explanation (2)(d) thereto, which prescribes the relevant date for
claiming a refund arising as a consequence of a judgment, decree,
order or direction of an appellate authority, appellate tribunal or court.
The provisions of Rule 89(1) of the CGST Rules, read with Form GST
RFD-01, are also relevant to the determination of the issue involved in
the present case. Section 54(1) of the CGST Act reads as under :
“54. (1) Any person claiming refund of any tax and interest, if any, paid on
such tax or any other amount paid by him, may make an application
before the expiry of two years from the relevant date in such form and
manner as may be prescribed.”
(8) Explanation (2)(d) to Section 54 of the CGST Act is relevant for
determining the relevant date. The said provision reads as under:
(2). “relevant date” means-
“
(d) In case where the tax becomes refundable as a consequence of
judgment, decree, order or direction of the Appellate Authority, Appellate
Tribunal or any court, the date of communication of such judgment, decree,
order or direction."
Thus, under Explanation (2)(d), the relevant date is the date on
which the judgment, decree, order or direction of the competent
authority, tribunal or court is communicated. In the present case, it is not
disputed by the petitioners that the appellate order dated 28.02.2022
was communicated to them in physically through its authorized person
on 08.03.2022. Accordingly, the date of communication of the appellate
order, i.e., 08.03.2022, would ordinarily constitute the relevant date for
the purposes of the said provision.
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(9) The petitioners however, contend that the appellate order, along
with its summary in Form GST APL-04, was communicated only on
03.06.2024 and that the said date should, therefore, be treated as the
relevant date. We are unable to accept this contention as a correct
interpretation of the statutory provisions. Form GST APL-04 is issued
under Rule 113 of the CGST Rules, which reads as under:
“113.(1) The Appellate Authority shall, along with its order under sub-
section (11) of section 107, issue a summary of the order in FORM GST
APL-04 clearly indicating the final amount of demand confirmed.
(2) The jurisdictional officer shall issue a statement in FORM GST APL-04
clearly indicating the final amount of demand confirmed by the Appellate
Tribunal.”
A plain reading of Rule 113 indicates that Form GST APL-04
contains a summary of the order, clearly indicating the final amount of
demand confirmed. In the present case, the document uploaded on the
portal on 03.06.2024 was the summary of the original appellate order
dated 28.02.2022, a physical copy of which had already been handed
over to the authorized person of the petitioners on 08.03.2022
At this stage, it would be apposite to refer to Form GST RFD-01,
prescribed under Rule 89(1) of the CGST Rules, for claiming a refund.
Rule 89, which falls under Chapter X of the CGST Rules dealing with
refunds of tax, interest, penalty, fees or any other amount, provides for
the filing of an application electronically in Form GST RFD-01 through
the common portal, either directly or through a facilitation center notified
by the Commissioner.
(10) A perusal of Form GST RFD-01 indicates the particulars required
to be furnished by a taxpayer while seeking a refund. Item 7 of the form
requires the applicant to specify the grounds for claiming the refund.
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Column (d) under Item 7, relating to the “Grounds of refund claim”,
provides for a refund claim “On account of order”, and sub-clause (iii)
thereof refers to an appeal under the heading “Type of order”. The form
also provides for the selection of “Any other (specify)” as a ground for
claiming a refund.
(11) Thus, Rule 89 of the CGST Rules, read with Form GST RFD-01,
enables a taxpayer to seek a refund on account of an order of
assessment, finalization of provisional assessment, an appellate order
or any other specified order. Neither Rule 89 nor Form GST RFD-01
stipulates that a taxpayer must await the uploading of the summary of
an appellate order in Form GST APL-04 before filing a refund
application. Consequently, a taxpayer who has received a physical copy
of an appellate order or any other order falling within the relevant
category specified in Form GST RFD-01 may file an application for
refund without waiting for the summary of such order to be uploaded on
the portal.
(12) In view of the provisions of Section 54 of the CGST Act, read with
Rule 89 of the CGST Rules and Form GST RFD-01, the relevant date
for filing the refund application in the present case would be 08.03.2022,
when the appellate order was communicated to the authorized person
of the petitioners. Accordingly, the refund application was required to be
filed within two years from the relevant date, as prescribed under
Section 54(1) of the CGST Act.
(13) In the present case, the petitioners filed the refund application in
Form GST RFD-01 on 04.06.2024. If the period of two years is
computed from 08.03.2022, the prescribed period would have expired
on 08.03.2024. The refund application was, therefore, filed beyond the
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said period, albeit on the day immediately following the uploading of the
summary of the appellate order in Form GST APL-04 on 03.06.2024,
the petitioners have filed the refund application.
(13.1) The petitioners’ contention that 03.06.2024 should be treated as
the relevant date merely because the summary of the appellate order
was uploaded on that date cannot ordinarily be accepted, particularly
when the appellate order itself had been communicated to the
petitioners on 08.03.2022. The issue nevertheless arises is whether, in
the peculiar facts and circumstances of the present case, the petitioners
should be denied the refund directed by the Appellate Authority solely
on the ground that the refund application was filed beyond the
prescribed period of limitation.
WHETHER THE REFUND CAN BE DENIED MERELY BECAUSE THE
APPLICATION WAS FILED BEYOND THE PRESCRIBED PERIOD :
(14) Having held that the relevant date for filing the refund application
in Form GST RFD-01 would be 08.03.2022, the further question that
arises for consideration is whether the direction issued by the Appellate
Authority vide order dated 28.02.2022 to refund the amount of
Rs.5,41,032/- can remain unimplemented, thereby resulting in the
denial of the refund, together with consequential interest, to the
petitioners.
(14.1) Once the Appellate Authority has set aside the demand and
directed the refund of the amount deposited by the petitioners, the
continued retention of the said amount, subject to the applicable
statutory procedure, raises a serious question of legality. The right to
property is constitutionally protected under Article 300A of the
Constitution of India, which provides that no person shall be deprived of
his property save by authority of law. Indubitably, the amount of refund
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qualifies as “property”. Article 265 further mandates that no tax shall be
levied or collected except by authority of law. Article 19(1)(g) guarantees
the right to practice any profession, or to carry on any occupation, trade
or business. The denial of refund will affect his fundamental right also.
In the present case, the demand of tax and penalty, pursuant to which
the amount was deposited, came to be set aside by the Appellate
Authority, which expressly directed the refund of the amount. The
continued retention of the amount, despite such direction, therefore,
requires consideration in the light of the aforesaid constitutional
safeguards. At the same time, it must be acknowledged that the
processing of a refund claim is governed by the applicable statutory
provisions, including the limitation prescribed under Section 54(1) of the
CGST Act. The question is whether, in the peculiar circumstances of the
present case, a procedural requirement relating to the computation of
the relevant date should defeat the petitioners’ claim for refund despite
an existing appellate order directing such refund.
(14.2) In this regard, it would be apposite to refer to the observations of
the Supreme Court in the case of Sambhaji vs Gangabai , 2008 (17)
SCC 117, wherein the Apex Court has held thus:
“Procedural law is not to be a tyrant but a servant, not an obstruction but an
aid to justice. A Procedural prescription is the handmaid and not the mistress,
a lubricant, not a resistant in the administration of justice.”
The aforesaid principle emphasises that procedural requirements
should ordinarily facilitate the administration of justice rather than
frustrate substantive rights. In the present case, the Appellate Authority
had directed the refund of Rs.5,41,032/- on 28.02.2022, whereas the
summary of the appellate order in Form GST APL-04 was uploaded on
the portal only on 03.06.2024. The petitioners filed the refund
application on the very next day i.e. 04.06.2024.
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(15) In these peculiar circumstances, and with a view to ensuring that
the petitioners’ claim is not defeated solely on account of the delay in
uploading the summary of the appellate order, we are of the view that
the date of uploading Form GST APL-04, i.e., 03.06.2024, may be
treated as the relevant date for the limited purpose of considering the
petitioners’ refund application in the present case. Accordingly, the
refund application filed on 04.06.2024 would fall within the period of two
years computed from the said date, which would be subject to
constitutional safe guards.
(16) We may also observe that Section 54(1) of the CGST Act uses the
expression “may make an application before the expiry of two years
from the relevant date”. The use of the word “may” must, however, be
interpreted in the context of the provision as a whole and cannot, by
itself, be construed as rendering the prescribed limitation period
optional, but at the same time such rigid interpretation cannot be used
or invoked for validating an illegal action.
(17) In the present case, the petitioners are armed with an appellate
order directing the refund of the amount deposited pursuant to the
demand of tax and penalty, which was subsequently set aside. The
continued retention of the amount despite the appellate direction raises
a concern that the substantive relief granted by the Appellate Authority
may be rendered ineffective on account of a procedural delay. Such a
consequence warrants careful consideration, particularly where the
petitioners approached the authorities for a refund on the very next day
after the summary of the appellate order was uploaded on the portal.
(18) The State, which collects revenue from taxpayers, is under a
constitutional obligation to act fairly, transparently and in accordance
with law. Its actions in matters of taxation must conform to the principles
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of fairness, predictability and the rule of law, and must not result in
arbitrary or oppressive retention of amounts that are no longer
supported by a subsisting demand. These principles assume particular
significance where an appellate authority has already set aside the
demand and directed a refund. In order to see that the amount is not
illegally retained, the concerned authorities are expected to take
appropriate steps to ensure timely implementation of appellate orders,
which may include intimation to the tax payer for resorting to the
statutory process for claiming refund. Where the filing of a refund
application is necessary to give effect to such an order, the authorities
should endeavour to facilitate the process and avoid procedural
impediments that may frustrate the relief already granted. The retention
of the amount ordered to be refunded would indirectly amount to
reviving the order dated 29.11.2019, whereby tax and penalty
amounting to Rs.5,41,032/- were imposed. Thus, the statutory
provisions cannot be permitted to operate in a manner that would result
in the revival of an illegal action. In the present case, although the
physical copy of the appellate order was handed over to the petitioners’
authorized person on 08.03.2022, the summary of the order in Form
GST APL-04 was uploaded on the portal only on 03.06.2024. The
record indicates that the uploading took place following departmental
instructions issued on 27.05.2024 and 10.07.2024; the precise
sequence and effect of those instructions would need to be considered
in the context of the record.
(19) In view of the aforesaid peculiar circumstances, and to ensure
that the refund directed by the Appellate Authority is not defeated
merely because the summary of the order was uploaded belatedly, we
hold that 03.06.2024, being the date on which Form GST APL-04 was
uploaded on the portal, shall be treated as the relevant date for
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considering the petitioners’ refund. Since the petitioners filed the
application on 04.06.2024, the claim was filed within two years of the
said date. The petitioners are therefore, entitled to the refund of
Rs.5,41,032/-, in accordance with the appellate order and subject to the
applicable law governing consequential interest
CLAIM OF INTEREST :
(20) The consequence of non-payment of refund gives rise to claim of
interest under Section 56 of the Act. Section 56 reads as under:
“SECTION 56 : Interest on delayed refunds
If any tax ordered to be refunded under sub-section (5) of section 54 to any
applicant is not refunded within sixty days from the date of receipt of
application under subsection (1) of that section, interest at such rate not
exceeding six per cent. as may be specified in the notification issued by the
Government on the recommendations of the Council shall be payable in
respect of such refund from the date immediately after the expiry of sixty days
from the date of receipt of application under the said sub-section till the date
of refund of such tax:
Provided that where any claim of refund arises from an order passed by an
adjudicating authority or Appellate Authority or Appellate Tribunal or court
which has attained finality and the same is not refunded within sixty days from
the date of receipt of application filed consequent to such order, interest at
such rate not exceeding nine per cent. as may be notified by the Government
on the recommendations of the Council shall be payable in respect of such
refund from the date immediately after the expiry of sixty days from the date
of receipt of application till the date of refund.
Explanation.--For the purposes of this section, where any order of refund is
made by an Appellate Authority, Appellate Tribunal or any court against an
order of the proper officer under sub-section (5) of section 54, the order
passed by the Appellate Authority, Appellate Tribunal or by the court shall be
deemed to be an order passed under the said sub-section (5).”
(21) The first part of Section 56 mentions about grant of interest at the
rate of 6% in case the amount is not refunded within sixty days as
ordered by the proper officer under Section 54(5) on the application filed
for refund. The Proviso deals with the situation akin to the case of the
petitioners. The Proviso directs the payment of interest not exceeding
9% in case the amount is not paid within 60 days as ordered by the
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Appellate authority or by the Tribunal or Court, in case such order has
attained finality. However, the Proviso also mentions about filing of an
application consequent to such order. Thus, if any application for
refund, as a consequence of any order, is made within a period of two
years, and on the receipt such application, if the amount is not refunded
it gives rise to claim of interest. As per the statement made before us by
learned advocate Mr.Desai, the petitioners will be satisfied, if the
amount of refund is paid at the rate of 6% instead of 9 %. In the prayers
made in the writ petition, the petitioners have neither claimed particular
rate of interest nor any date is specified. Since the petitioners were
supposed to file the application for refund on receipt of the physical
copy of the Appellate order and they did not do so, they would not be
entitled to interest from the date of such order. Since, alternatively, we
have determined the date of application as 04.06.2024, the amount of
refund will carry interest at the rate of 9% after 60 days as per the
Proviso to Section 56, the period would end on 03.08.2024. In order to
balance the equities, and since the petitioners are not asserting for 9%
interest, we direct that the petitioners shall be entitled to interest at the
rate of 6% on the amount of Rs.5,41,032/- w.e.f 15.08.2024 till it is
actually paid.
: FINAL ORDER :
22. Hence, the writ petition stands allowed . The impugned order
dated 10.07.2024 and 30.01.2025 are quashed and set aside.
The respondents are directed to process the refund
application dated 04.06.2024. We further clarify that in case the portal
does not allow the filing and processing of the refund application, it will
be open for the petitioners to file a fresh off-line application. On receipt
of such application, the respondents are directed to process the same
and pay the amount of refund along with interest which shall be
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calculated at the rate of 6% from 15.08.2024. The present directions
shall be implemented within a period of 12 weeks, failing which the
petitioners will be entitled to 9% interest per annum on the amount of
refund after 12 (twelve) weeks. RULE is made absolute accordingly.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(VAIBHAVI D. NANAVATI,J)
*
Bhavesh-[PPS] (pradhyuman)*
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