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

Held

The High Court held that the summary sheet containing details of refund claims allowed as per the order-in-original/order-in-appeal for the relevant tax periods, and the claim for refund of interest thereupon, should be produced before the Proper Officer for scrutiny and sanction. The Court directed the petitioner company or its authorized representative to appear before the Proper Officer on August 6, 2026, with the relevant details. The Proper Officer was instructed to scrutinize the claim and take a decision in accordance with the law within two weeks thereafter, specifically without insisting upon the certification as required under Rule 89(2)(m) of the CGST Rules, given that the claim solely relates to the interest component over the already sanctioned refund. The Court disposed of all writ petitions in this manner.

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) rejected these applications via Deficiency Memos dated November 12, 2025. The petitioners sought interest on delayed refunds amounting to INR 2,13,76,711 (in WP No. 12047/2026) and INR 41,04,049 (in WP No. 12052/2026), calculated from 60 days after the initial refund application dates (July 14, 2021, and July 9, 2021, respectively) until the final refund payment. The amounts refunded were based on original applications and subsequent appellate authority orders. The core of the dispute lies in the proper officer's insistence on specific documentation under Rule 89(2)(m) of the CGST Rules, which the petitioners argue is not applicable to interest claims.

Key Issues

1. Whether the rejection of the petitioner's application for interest on delayed refunds by the Assistant Commissioner (ST) 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 illegal as the claim pertains to interest on delayed refunds, not the principal refund amount. They argued that the incidence of tax, interest, or any other amount claimed as refund cannot be passed on to any other person in this scenario, making the certification under Rule 89(2)(m) of the CGST Rules unnecessary. They submitted that the refund of interest should have been computed by the proper officer till the date of disbursement as per Section 56 of the CGST Act. Revenue's arguments: The revenue, through the Special Government Pleader, referred to Circular No. 125/44/2019-GST, adopted by the State Tax Department, which mandates that refund applications must conform to certain requirements. They highlighted that the deficiency memo pointed out the non-submission of documents as per Annexure-A to the circular, specifically 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 certification under Rule 89(2)(m) of the CGST Rules, depending on the refund amount.