Top Stories Inadvertent GST ECL Deposit by ISD Refundable with Interest: Delhi HC orders Refund with 6% Interest, Warns 18% for Delay [Read Order] The Court reiterated that the taxpayer is entitled to interest at 6% if the refund is not issued within 60 days of the application, and perhaps 9% to 18% depending on the stage and nature of the refund claim, citing its previous ruling in Bansal International v. Commissioner of DGST By Navasree A.M – On May 29, 2025 2:27 pm – 2 mins read

The Delhi High Court has held that an Input Service Distributor (ISD) under Goods and Services tax (GST) is entitled to a refund of an inadvertent deposit made into its Electronic Cash Ledger (ECL), along with applicable interest. The Court, while allowing the writ petition filed by Matrix Cellular (International) Services Pvt. Ltd., directed the GST department to refund a sum of ₹3,39,79,974 along with interest at the rate of 6% per annum, and warned that failure to comply by the stipulated deadline would attract an enhanced interest rate of 18% per annum. The UAE Tax Law Is Evolving — Stay Ahead Before Clients Find Someone Who Already Is – Click here

The petitioner, registered as an ISD under GST, had mistakenly deposited the said amount in its ECL between August 2017 and January 2018, believing that cash was required for distribution of ITC. Also read: Major GST Refund and Appeal Rules Announced by CBIC in 2025: Key Takeaways for Businesses Realizing the error, Matrix Cellular filed a refund application on April 12, 2018. However, the refund was neither processed nor credited, leading to several follow-up efforts and representations to the authorities, which yielded no resolution. The department issued a deficiency memo in March 2020 and directed the petitioner to file a fresh refund application. Under the impression that the refund would be processed, the petitioner withdrew its original application.

However, the refund was still not granted, prompting the petitioner to approach the High Court under Article 226 of the Constitution of India. Judges Prathiba M. Singh and Rajneesh Kumar Gupta noted that the CGST Rules’ a refund process required strict compliance to deadlines, specifically examination within 15 days and processing within 60 days after receiving a completed application. Also read: Supreme Court Stays ₹5,712 Crore GST Demand on Paytm’s First Games Amid Industry-Wide Legal Battle [Read Judgement] The Court reiterated that the taxpayer is entitled to interest at 6% if the refund is not issued within 60 days of the application, and perhaps 9% to 18% depending on the stage and nature of the refund claim, citing its previous ruling in Bansal International v. Commissioner of DGST.

Considering the department’s failure to adhere to the prescribed timelines, and the continued retention of funds despite the taxpayer’s bonafide actions, the Court directed that the refund be credited to the petitioner’s account by 30th May 2025, with interest at 6% for two specific periods: from 11th June 2018 to 2nd March 2020, and from 29th August 2023 to 20th May 2025. For the period in between when the refund application had been withdrawn and not pursued due to the pandemic no interest was allowed. Additionally, the Court made it clear that if the refund is not disbursed by 30th May 2025, the interest rate would escalate to 18% per annum from 1st June 2025 until the actual date of payment. Also read: GST Proper Officer Must Pass Reasoned Order u/s 75(6) Even If Assessee Does not Respond to SCN: Allahabad HC [Read Order] To Read the full text of the Order