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 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 pertained only to the interest component on an already sanctioned refund. The Court found that the insistence on Rule 89(2)(m) was unnecessary in this context. All writ petitions were disposed of 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 interest rates claimed were 6% and 9% as per Section 56 of the CGST Act. The core of the dispute revolved around the requirement of a Chartered Accountant's certificate under Rule 89(2)(m) of the CGST Rules for refund claims exceeding INR 2,00,000.

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, particularly concerning the requirement of a certificate under Rule 89(2)(m) of the CGST Rules for a claim solely for interest on a previously sanctioned refund? (Mixed question of law and fact, concerning Section 56 of the CGST Act and Rule 89(2)(m) of the CGST Rules). Petitioner's arguments: The petitioner contended that the requirement of a Chartered Accountant's certificate under Rule 89(2)(m) of the CGST Rules was inapplicable to a claim for interest on a refund, as the principal amount had already been disbursed and the interest component could not have been passed on to any end consumer. They argued that the refund should have included the interest component 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. 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. Specifically, 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. Annexure-A to the circular prescribes that if the refund claimed exceeds INR 2,00,000, a certification under Rule 89(2)(m) of the CGST Rules is necessary. The deficiencies pointed out in the refund application were based on these requirements.