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 orders-in-original/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 the certification as required under Rule 89(2)(m) of the CGST Rules, given that the claim pertained only to the interest component on already sanctioned refunds. 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 rejection was communicated via Deficiency Memos dated November 12, 2025, by the Assistant Commissioner (ST). The petitioners sought interest on delayed refunds amounting to significant sums, calculated from 60 days after the initial refund application date until the final payment date, at rates of 6% and 9% as applicable. 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, which mandates a certificate from a Chartered Accountant or Cost Accountant for refund claims exceeding Rs. 2,00,000. The petitioners argued that this certification was unnecessary for interest claims on already sanctioned refunds.

Key Issues

1. Whether the action of the Assistant Commissioner (ST) in rejecting the application for payment of interest on delayed refund, vide Deficiency Memo No. 2D361125038663F dated 12th November 2025, was illegal, arbitrary, perverse, violative of principles of natural justice, and without jurisdiction, as it was passed without the authority of law? Petitioner's contention: The petitioners argued that the rejection was illegal and arbitrary, as the requirement of a certificate under Rule 89(2)(m) of the CGST Rules was not applicable to claims for interest on delayed refunds, especially when the principal refund amount had already been disbursed. They contended that the interest component could not have been passed on to any end consumer, and the refund should have included interest calculated up to the disbursement date as per Section 56 of the CGST Act. Revenue's contention: 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 the refund application must conform to certain requirements, and the deficiency memo pointed out the non-supply of documents as per 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 certification under Rule 89(2)(m) of the CGST Rules, depending on the refund amount.