Ajay Kumar Maheswari vs. Union Of INDIA And Ors.

Facts

The appellant, Ajay Kumar Maheswari, had applied for and received a refund of GST. Subsequently, the revenue authorities determined that the refund was not permissible under the law and directed the appellant to repay the amount. The appellant accepted this order and, pursuant to interim directions from the High Court, repaid the amount, which was then re-credited. The dispute centers on whether the appellant is liable to pay interest and penalty on the refunded amount, which has since been repaid and re-credited.

Held

The Court held that the appellant cannot be burdened with the payment of interest on the amount that was refunded to him. The reasoning was that the initial order of refund was passed by the authority, and there was no allegation of misrepresentation or incorrect statement made by the appellant to secure the refund. Consequently, the claim for interest and penalty made by the department was found to be not tenable and was set aside. The Court also held that the appellant cannot be penalized by imposing a penalty, as he was not charged with any fault or misrepresentation. The appeal was allowed with these directions.

Key Issues

1. Whether the appellant can be directed to pay interest on the amount which was initially refunded to him, subsequently found to be not liable for refund, and then repaid by the appellant and re-credited. This issue turns on the interpretation of the appellant's liability for interest in a situation where a refund was granted by the authority, later deemed impermissible, and then repaid without any allegation of misrepresentation. The appellant argued that since the refund was granted by the authority and there was no misrepresentation on his part, he should not be burdened with interest. The revenue authorities (CGST Authorities and the State) argued for the imposition of interest and penalty.