M/S Synchrony International Services PVT. LTD. vs. Assistant Commissioner (St)

Held

The Court held that the summary sheet containing details of refund claims allowed as per orders-in-original/appeal for the relevant tax periods, and the claim for refund of interest thereon, should be produced before the Proper Officer for scrutiny and sanction. The petitioner company or its authorized representative was directed to appear before the Proper Officer on August 6, 2026, with relevant details. The Proper Officer was instructed to scrutinize the claim and take a decision in accordance with the law within two weeks thereafter. Crucially, the Court directed the Proper Officer to proceed without insisting upon the certification as required under Rule 89(2)(m) of the CGST Rules, given that the claim pertained solely to the interest component on an already sanctioned refund. The reasoning was that the interest component, in this context, would not have been passed on to any end consumer, making the stringent certification requirement unnecessary for this specific type of claim.

Facts

The petitioners, M/s Synchrony International Services Pvt. Ltd. and its director, filed multiple writ petitions challenging the rejection of their applications for interest on delayed refunds. The Assistant Commissioner (ST), STU-1 Abids Circle Office, rejected these applications via Deficiency Memos dated November 12, 2025. The petitioners sought interest on delayed refunds totaling significant amounts, calculated from 60 days after the first refund application date until the final refund payment date, at rates of 6% and 9% as applicable, citing Section 56 of the CGST Act. The core of the dispute lies in the procedural requirements for claiming such interest, specifically the applicability of Rule 89(2)(m) of the CGST Rules.

Key Issues

1. Whether the rejection of the petitioner's application for interest on delayed refund by the Assistant Commissioner was illegal, arbitrary, perverse, violative of principles of natural justice, and without jurisdiction, as it was passed without the authority of law, under Section 56 of the CGST Act? Petitioner's Arguments: The petitioner contended that the rejection was unlawful and that they were entitled to interest on delayed refunds as per Section 56 of the CGST Act. They argued that certification under Rule 89(2)(m) of the CGST Rules, which requires a Chartered Accountant or Cost Accountant's certificate for refunds exceeding Rs. 2,00,000/- to attest that the tax incidence was not passed on, was not applicable to claims solely for interest on a principal refund already sanctioned. They asserted that the interest component, in this scenario, could not have been passed on to any end consumer. Revenue's Arguments: The revenue, through the Special Government Pleader, referred to Circular No. 25/44/2019-GST dated 18.11.2019, adopted by the State Tax Department. This circular mandates that refund applications must conform to certain requirements. The deficiency memo highlighted that the petitioner failed to supply required documents, including an undertaking related to Section 16(2)(c) and Section 42(2) of the CGST Act, and either a self-declaration under Rule 89(2)(l) or a certification under Rule 89(2)(m) of the CGST Rules, depending on the refund amount.