Union Of INDIA & Ors vs. M/S. Willowood Chemicals PVT. LTD. & Anr.
Held
The Supreme Court held that where a statute specifies or regulates the rate of interest, the interest is payable strictly in terms of the statute. In this case, Section 56 of the CGST Act, 2017, prescribes a rate of interest not exceeding 6% per annum for delayed refunds under the principal provision. The proviso to Section 56 allows for a 9% interest rate only if the refund claim arises from an order passed by an Adjudicating Authority, Appellate Authority, Appellate Tribunal, or Court. Since the present cases did not arise from such orders and were strictly within the scope of the principal provision of Section 56, the interest payable should be at the rate of 6% per annum. The High Court erred in awarding interest at a rate exceeding 6%. The appeals were allowed, directing that the petitioners were entitled to interest at 6% per annum, and as the amounts with this interest had already been paid, no further action was required.
Facts
The writ petitioners, M/s. Willowood Chemicals Pvt. Ltd. and M/s. Saraf Natural Stone, sought refunds under the IGST Act, 2017. The authorities delayed these refunds for periods ranging from 94 to 290 days. The petitioners contended that this inordinate delay was arbitrary and impacted their working capacity. They claimed compensation along with interest for the delayed refunds. The High Court awarded simple interest at the rate of 9% per annum. The Union of India and others appealed this decision to the Supreme Court, challenging the rate of interest awarded.
Key Issues
1. Whether the petitioners are entitled to interest on delayed refunds under the IGST Act, 2017, and CGST Act, 2017, and if so, at what rate? (Section 16 and 20 of IGST Act, 2017, Section 54 and 56 of CGST Act, 2017). Petitioner's contention: The petitioners argued that the inordinate delay in granting refunds was arbitrary and impacted their business operations, entitling them to appropriate compensation and interest. Revenue's contention: The Union of India argued that the rate of interest should be governed by the statutory provisions, specifically Section 56 of the CGST Act, and not the higher rate awarded by the High Court.
Sections Cited
Section 16, Section 20, Section 54, Section 56
AI-generated summary — verify with the full judgment below
A B C D E F G H 1138 SUPREME COURT REPORTS [2022] 14 S.C.R. UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS PVT. LTD. & ANR. (Civil Appeal Nos. 2995-2996 of 2022) APRIL 19, 2022 [UDAY UMESH LALIT AND S. RAVINDRA BHAT, JJ.] Integrated Goods and Services Tax Act, 2017 – ss. 16 and 20 – Central Goods and Services Act, 2017 – ss. 54 and 56 – Interest on delayed refunds – Writ petitioners claimed that inaction on part of appellant leading to inordinate delay in granting refunds under IGST Act, was per se arbitrary and impacted the working capacity of the writ petitioners thereby reducing their ability to conduct business – There was delay ranging from 94 to 290 days in making refunds – Petitioners before the High Court claimed that appropriate compensation ought to be awarded to them along with the interest for delayed refunds – High Court granted simple interest at the rate of 9 % per annum on the delayed payments – Appeal before the Supreme Court – Whether in terms of relevant statutory provisions, the petitioners are entitled to interest on delayed refunds at rate of 6 % and not at the rate of 9 % per annum – Held : Wherever a statute specifies or regulates the interest, the intere
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