Apar Industries Limited vs. Union Of INDIA Through The Secretary And Ors.

Held

The Court noted that the Respondents' assertion of an invoice mismatch, leading to the delay in refund, was disputed by the Petitioner. While Circulars and FAQs were cited regarding granting refunds in cases of invoice mismatch (SB005), they did not address the issue of granting interest for the period of such mismatch. Therefore, the Court found that the issue of interest entitlement required deeper consideration and factual determination. This determination would involve ascertaining the nature of the invoice mismatch, responsibility for it, and how it was rectified. The Court concluded that this factual exercise was best undertaken by the adjudicating authorities under the Act after hearing both parties. Consequently, the Court did not entertain the writ petition directly but directed the Petitioner to file a representation with the Adjudicating Authority. The Court also directed that a different Assistant Commissioner of Customs, specifically Mr. Jaiswal, be assigned to adjudicate the Petitioner's claim for interest on the already granted refund and the pending refund application, ensuring principles of natural justice were followed and the adjudication was independent of the previous affidavit.

Facts

The Petitioner, Apar Industries Limited, filed a writ petition seeking a refund of Rs. 52.97 Crores with interest under Section 56 of the Central Goods & Service Tax Act, 2017, and interest on a previously granted refund of Rs. 1.90 Crores. These refunds related to tax paid on exported goods under the IGST Act, 2017. During the pendency of the petition, Rs. 52.52 Crores was refunded. The Petitioner's remaining grievance was the non-payment of interest on the Rs. 52.52 Crores refund and the refund of the balance Rs. 2.35 Crores with interest. The Respondents contended that an invoice mismatch/error caused the delay in refunding Rs. 52.52 Crores, thus negating any entitlement to interest.

Key Issues

1. Whether the Petitioner is entitled to interest on the refund of Rs. 52.52 Crores, considering the alleged invoice mismatch/error, under Section 56 of the Central Goods & Service Tax Act, 2017 and Section 16 of the IGST Act, 2017? Petitioner's arguments: The Petitioner disputed the existence of any invoice mismatch. They relied on a Frequently Asked Questions (FAQ) issued by the Madras Commissionerate and a Circular dated 23rd February, 2018, from the Central Board of Indirect Taxes and Customs, which dealt with granting refunds despite invoice mismatches and directed refunds to be granted. Therefore, the Petitioner argued they were entitled to the interest sought. Respondents' arguments: The Respondents, through an affidavit, asserted that an invoice mismatch/error occurred, which led to the delay in refunding Rs. 52.52 Crores. They contended that due to this Petitioner-caused delay, no interest was payable by the Revenue.