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 thereon, 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. Crucially, the Court directed the Proper Officer *not* to insist upon certification as required under Rule 89(2)(m) of the CGST Rules, reasoning that the claim related only to the interest component over the refund already sanctioned in favour of the petitioner. 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 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 refund amounts themselves had already been disbursed, either based on original orders or appellate authority orders. The core of the dispute lies in the processing of the interest claim, which the revenue authorities initially rejected.

Key Issues

1. Whether the action of the Respondent No.1 in rejecting the application for payment of interest on delayed refund is illegal, arbitrary, perverse, violative of principles of natural justice, and without jurisdiction, as it was passed without the authority of law, contrary to Section 56 of the CGST Act? 2. Whether the insistence on certification under Rule 89(2)(m) of the CGST Rules is applicable to a claim solely for interest on a refund already sanctioned and disbursed? Petitioner's Arguments: The petitioner contended that the rejection of their interest claim was illegal and arbitrary. They argued that Section 56 of the CGST Act mandates payment of interest on delayed refunds and that the refund of interest itself should not be subject to the same documentary requirements as the principal refund, particularly the certification under Rule 89(2)(m) when the amount exceeds Rs. 2,00,000. They asserted that since the principal refund was already disbursed, the interest component could not have been passed on to any end consumer, making the certification unnecessary. Revenue's Arguments: The revenue, through the Special Government Pleader, referred to Circular No. 25/44/2019-GST, adopted by the State Tax Department. They argued that the refund application must conform to specific requirements, including those outlined in Annexure-A to the circular. For refunds claimed on 'any other ground,' an undertaking related to Section 16(2)(c) and Section 42(2) of the CGST Act, along with supporting documents, is required. Specifically, if the refund exceeds Rs. 2,00,000, certification under Rule 89(2)(m) of the CGST Rules is mandatory. The deficiencies pointed out in the refund application were precisely for these missing documents.