The petitioner had filed refund applications against the export made which were rejected by
the revenue. The refund was initially rejected by subsequently granted in pursuance of the
Court Order.
The issue before the High Court was the date from which statutory interest under Section 56
of CGST Act would get triggered. The petitioner claims that interest should be triggered from
the date when the initial application for refund was filed and the revenue asserts that in terms
of the proviso appended to Section 56 of the CGST Act, interest will get triggered 60 days after
the date when this court passed an order directing consideration of the application.
The High Court held that the proviso to Section 56, as indicated above, is an exception to the
main part of the Section 56 of the CGST Act. The proviso is triggered only when the facts of a
case do not fall in the main part. The proviso envisages a situation where, while processing an
application for refund, the respondents/revenue are required to deal with a lis and the refund
is a consequence of that lis. Where there is no lis with regard to either the quantum or the
value, then in our view, the proviso will have no application. The wordings of the proviso in that
context are revealing. The proviso begins with the following sentence “Provided that where
any claim of refund arises from an order passed by an adjudicating authority or Appellate
Authority or Appellate Tribunal or court which has attained finality...”
Thus, petitioner was held to be right in its contention that interest should trigger in accordance
with the main part of Section 56 of the CGST Act, i.e., from 18.04.2018, and that interest should
run, both on CGST and DGST, up until the date when the amount was remitted to the
petitioner.