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

Held

The High Court held that the summary sheet containing the 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 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 certification as required under Rule 89(2)(m) of the CGST Rules, as the claim pertained only to the interest component over the already sanctioned refund. The Court disposed of all writ petitions in this manner, with no order as to costs.

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 approximately 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 core of the dispute lies in the procedural requirements for claiming such interest, specifically concerning 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 (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 unjustified, as the refund claims were for interest on delayed refunds, not for tax, interest, or any other amount where the incidence had been passed on. They argued that certification under Rule 89(2)(m) of the CGST Rules was not applicable to interest claims. They relied on the fact that the principal refund amounts had already been disbursed, and the interest component could not have been passed on to any end consumer. They asserted that the interest should have been computed and paid 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 dated 18.11.2019, adopted by the State Tax Department. They argued that refund applications must conform to specific requirements. The deficiency memos pointed out the non-submission of documents as prescribed in Annexure-A to the circular, 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 certificate under Rule 89(2)(m) of the CGST Rules, depending on the refund amount.