M/S. Bhavya Enterprise vs. The Union Of INDIA And 8 Ors

Held

The Court noted that the petitioner had not preferred any separate application seeking payment of interest at 6% on the principal amount before the appropriate authorities. The petitioner's counsel acknowledged this fact and stated that the question of interest was pursued only in the writ petition. Since the principal amount of the refund had already been received by the petitioner, the Court closed the writ petition. However, it granted the petitioner liberty to pursue their claim for interest before the appropriate authorities if they were so advised. Upon filing such an application for interest, the authorities were directed to hear the petitioner and pass appropriate orders as per the provisions of law. The Court explicitly left undecided the substantive claim for interest, allowing the petitioner to pursue it separately.

Facts

The petitioner, M/s. Bhavya Enterprise, a sole proprietorship engaged in exporting goods to Bangladesh and Nepal, paid Integrated Goods and Services Tax (IGST) amounting to Rs. 9,48,645.99 for the period July 2017 to September 2017. The petitioner claimed this amount was refundable under Section 16(3)(b) read with Section 20 of the IGST Act, 2017, and Section 54 of the CGST Act, 2017. The petitioner filed both online and manual applications for refund, but the Department did not entertain these claims. Aggrieved, the petitioner filed a writ petition before the Gauhati High Court. During the pendency of the writ petition, the Department initiated the refund process, and the principal amount was granted on September 23, 2019, and October 29, 2020. The petitioner confirmed receipt of the principal amount but noted that the claim for interest at 6% on the principal amount had not been acted upon by the Department.

Key Issues

1. Whether the petitioner is entitled to interest on the delayed refund of IGST paid on exports, as per the provisions of the GST law? The petitioner argued that they are entitled to a refund of the entire IGST paid on exports and, consequently, to interest on the delayed refund. They contended that the principal amount has been refunded, but the interest component has not been addressed by the Department. The petitioner's counsel fairly submitted that the claim for interest was pursued only in the writ petition and that no separate application for interest was preferred before the statutory authorities. The revenue or State did not record any specific arguments on the entitlement to interest in the judgment. However, the Department's action of granting the principal refund and not the interest suggests a stance that interest was not automatically payable or that a specific claim for it was required.