Top Stories Interest for Delayed IGST Refunds start after 60 Days of Filing Shipping Bill: Bombay HC [Read Order] The judges highlighted that the law does not provide for any exclusions during this interval, even if delays are due to departmental investigations By Manu Sharma – On November 19, 2024 5:21 pm – 2 mins read In a significant ruling, the Bombay High Court has affirmed that interest on delayed Integrated Goods and Services Tax ( IGST ) refunds under Section 56 of Goods and Services Tax Act must be paid starting 60 days after the date of filing the shipping bill until the refund is disbursed.

The bench reiterated that Section 56 of the CGST Act determines the period for which interest is applicable. This period starts from 60 days after the refund application—represented by the shipping bill—and extends until the date of the refund. Know When to Say No to Cash Transactions, Click Here The petitioner, an exporter dealing in goods such as Ethyl Alcohol Liquid Packaging Film and iodized salt, had claimed IGST refunds totaling ₹3.21 crore for shipping bills filed between August 2018 and July 2019. Despite compliance, the refunds were delayed until August 2020. The delay was attributed to the petitioner being flagged as a “risky exporter” in the respondent’s system, requiring clearance from the Risk Management Centre for Customs.

The petitioner argued that the delay was entirely attributable to the department’s investigation, which failed to adhere to timelines specified in Circular No. 16/2019. The petitioner sought interest for the delayed period, excluding only the 30 days mandated for investigation under the circular. The department claimed that the refund was issued promptly upon clearance from the Risk Management Centre, denying any undue delay warranting interest. The Bench of Justices Jitendra S Jain and M S Sonak noted that the petitioner was not informed about being flagged, leading to unwarranted delays. It was also observed that the respondents failed to complete their investigation within the prescribed 30-day window under Circular No. 16/2019. Know When to Say No to Cash Transactions, Click Here It was held that Refund delays caused by departmental inaction cannot prejudice the taxpayer as Section 56 does not permit exclusions for investigative delays. The Bombay High Court thus ordered that Interest under Section 56 to be granted for the period starting 60 days after the filing of the shipping bill until the issuance of refund, minus the 30 days allowed for investigation under Circular No. 16/2019, with the department to calculate and disburse the interest within eight weeks. To Read the full text of the Order