# UNION OF INDIA & ORS v. M/S. WILLOWOOD CHEMICALS PVT. LTD. & ANR

- **Citation:** [2022] 14 S.C.R. 1138
- **Court:** Supreme Court of India
- **Decided:** 2022-04-19
- **Case number:** Civil Appeal Nos. 2995-2996 of 2022
- **Bench:** Uday Umesh Lalit, S. Ravindra Bhat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-ors-v-m-s-willowood-chemicals-pvt-ltd-anr-35729
- **Pages:** 29

## Headnote

Integrated Goods and Services Tax Act, 2017 - ss. 16 and 20
- Central Goods and Services Act, 2017 - ss. 54 and 56 - Interest
on delayed refunds - Writ petitioners claimed that inaction on part
of appellant leading to inordinate delay in granting refunds under
IGST Act, was per se arbitrary and impacted the working capacity
of the writ petitioners thereby reducing their ability to conduct
business - There was delay ranging from 94 to 290 days in making
refunds - Petitioners before the High Court claimed that appropriate
compensation ought to be awarded to them along with the interest
for delayed refunds - High Court granted simple interest at the rate
of 9 % per annum on the delayed payments - Appeal before the
Supreme Court - Whether in terms of relevant statutory provisions,
the petitioners are entitled to interest on delayed refunds at rate of
6 % and not at the rate of 9 % per annum - Held : Wherever a
statute specifies or regulates the interest, the interest will be payable
in terms of the provisions of the Statute - Wherever a statute, is
silent about the rate of interest and there is no express bar of payment
of interest, any delay in paying the compensation or the amounts
due, would attract award of interest at a reasonable rate on equitable
grounds - In the present case, the relevant provision has prescribed
rate of interest at 6 % where the case for refund is governed by the
principle provision of s. 56 of the CGST Act - Since the delay in the
instant case was in the range of 94 to 290 days, the matter has to be
seen purely in the light of the concerned statutory provision - Present
cases have not arisen from any order passed by an Adjudicating
Authority or Appellate Authority or Appellate Tribunal or Court
and the cases are strictly within the scope of the principal provision
of Section 56 and not under the proviso thereof - Therefore, in
terms of the principle part of s. 56 of the CGST Act, the interest
would be awarded at the rate of 6 % - The award of interest at 9 %
would be granted only if the matter was covered by the proviso to s.
[2022] 14 S.C.R. 1138
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56 - High Court was in error in awarding interest at the rate
exceeding 6 % in the present matters.
Allowing the appeals, the Court
HELD: 1. According to Section 56 of the CGST Act, if an
applicant is not refunded any tax ordered to be refunded by the
Proper Officer under Section 54(5) within 60 days from the receipt
of the application, interest at such rate not exceeding 6 per cent
would become payable after the expiry of 60 days from the date
of receipt of application till the date of refund of such tax. The
proviso to said Section prescribes that where any claim of refund
arises from an order passed by an Adjudicating Authority or
Appellate Authority or Appellate Tribunal or Court and if the same
is not refunded within 60 days from the date of receipt of an
application filed consequent to such an order, the rate of interest
payable would be 9 per cent. [Para 12][1153-E-G]
2. The instant cases have not arisen from any order passed
by an Adjudicating Authority or Appellate Authority or Appellate
Tribunal or Court and the cases are strictly within the scope of
the principal provision of Section 56 and not under the proviso
thereof. [Para 13][1153-G-H]
3. The relevant provision has prescribed rate of interest at
6 per cent where the case for refund is governed by the principal
provision of Section 56 of the CGST Act. Wherever a statute
specifies or regulates the interest, the interest will be payable in
terms of the provisions of the statute. Wherever a statute, on
the other hand, is silent about the rate of interest and there is no
express bar for payment of interest, any delay in paying the
compensation or the amounts due, would attract award of interest
at a reasonable rate on equitable grounds. [Para 18][1165-B-D]
4. Since the delay in the instant case was in the region of 94
to 290 days the matter has to be seen purely in the ligh

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SUPREME COURT REPORTS
[2022] 14 S.C.R.
UNION OF INDIA & ORS.
v.
M/S. WILLOWOOD CHEMICALS PVT. LTD. & ANR.
(Civil Appeal Nos. 2995-2996 of 2022)
APRIL 19, 2022
[UDAY UMESH LALIT AND S. RAVINDRA BHAT, JJ.]
Integrated Goods and Services Tax Act, 2017 - ss. 16 and 20
- Central Goods and Services Act, 2017 - ss. 54 and 56 - Interest
on delayed refunds - Writ petitioners claimed that inaction on part
of appellant leading to inordinate delay in granting refunds under
IGST Act, was per se arbitrary and impacted the working capacity
of the writ petitioners thereby reducing their ability to conduct
business - There was delay ranging from 94 to 290 days in making
refunds - Petitioners before the High Court claimed that appropriate
compensation ought to be awarded to them along with the interest
for delayed refunds - High Court granted simple interest at the rate
of 9 % per annum on the delayed payments - Appeal before the
Supreme Court - Whether in terms of relevant statutory provisions,
the petitioners are entitled to interest on delayed refunds at rate of
6 % and not at the rate of 9 % per annum - Held : Wherever a
statute specifies or regulates the interest, the interest will be payable
in terms of the provisions of the Statute - Wherever a statute, is
silent about the rate of interest and there is no express bar of payment
of interest, any delay in paying the compensation or the amounts
due, would attract award of interest at a reasonable rate on equitable
grounds - In the present case, the relevant provision has prescribed
rate of interest at 6 % where the case for refund is governed by the
principle provision of s. 56 of the CGST Act - Since the delay in the
instant case was in the range of 94 to 290 days, the matter has to be
seen purely in the light of the concerned statutory provision - Present
cases have not arisen from any order passed by an Adjudicating
Authority or Appellate Authority or Appellate Tribunal or Court
and the cases are strictly within the scope of the principal provision
of Section 56 and not under the proviso thereof - Therefore, in
terms of the principle part of s. 56 of the CGST Act, the interest
would be awarded at the rate of 6 % - The award of interest at 9 %
would be granted only if the matter was covered by the proviso to s.
[2022] 14 S.C.R. 1138
1138
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56 - High Court was in error in awarding interest at the rate
exceeding 6 % in the present matters.
Allowing the appeals, the Court
HELD: 1. According to Section 56 of the CGST Act, if an
applicant is not refunded any tax ordered to be refunded by the
Proper Officer under Section 54(5) within 60 days from the receipt
of the application, interest at such rate not exceeding 6 per cent
would become payable after the expiry of 60 days from the date
of receipt of application till the date of refund of such tax. The
proviso to said Section prescribes that where any claim of refund
arises from an order passed by an Adjudicating Authority or
Appellate Authority or Appellate Tribunal or Court and if the same
is not refunded within 60 days from the date of receipt of an
application filed consequent to such an order, the rate of interest
payable would be 9 per cent. [Para 12][1153-E-G]
2. The instant cases have not arisen from any order passed
by an Adjudicating Authority or Appellate Authority or Appellate
Tribunal or Court and the cases are strictly within the scope of
the principal provision of Section 56 and not under the proviso
thereof. [Para 13][1153-G-H]
3. The relevant provision has prescribed rate of interest at
6 per cent where the case for refund is governed by the principal
provision of Section 56 of the CGST Act. Wherever a statute
specifies or regulates the interest, the interest will be payable in
terms of the provisions of the statute. Wherever a statute, on
the other hand, is silent about the rate of interest and there is no
express bar for payment of interest, any delay in paying the
compensation or the amounts due, would attract award of interest
at a reasonable rate on equitable grounds. [Para 18][1165-B-D]
4. Since the delay in the instant case was in the region of 94
to 290 days the matter has to be seen purely in the light of the
concerned statutory provisions. In terms of the principal part of
Section 56 of the CGST Act, the interest would be awarded at the
rate of 6 per cent. The award of interest at 9 per cent would be
attracted only if the matter was covered by the proviso to the
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR.
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SUPREME COURT REPORTS
[2022] 14 S.C.R.
said Section 56. The High Court was in error in awarding interest
at the rate exceeding 6 per cent in the instant matters. [Para
19][1165-G-H]
K. T. Plantation Pvt. Ltd. and Anr. v. State of Karnataka
(2011) 9 SCC 1 : [2011] 13 SCR 636 - distinguished.
Union of India and others v. Orient Enterprises and
Another (1998) 3 SCC 501 : [1998] 2 SCR 143; Modi
Industries Ltd. and another v. Commissioner of Income
Tax and Another (1995) 6 SCC 396 : [1995] 3 Suppl.
SCR 642 - relied on.
Sandvik Asia Ltd. v. Commissioner of Income Tax-I Pune
and Others (2006) 2 SCC 508 : [2006] 1 SCR 811;
Commissioner of Income Tax, Gujarat v. Gujarat Fluoro
Chemicals (2014) 1 SCC 126 : [2013] 10 SCR 191 -
referred to.
Case Law Reference
[2011] 13 SCR 636
distinguished
Para 6
[2006] 1 SCR 811
referred to
Para 6
[2013] 10 SCR 191
referred to
Para 6
[1998] 2 SCR 143
relied on
Para 14
[1995] 3 Suppl. SCR 642
relied on
Para 16A
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 29952996 of 2022.
From the Judgment and Order dated 13.03.2020 of the High Court
of Gujarat at Ahmedabad in Misc. Civil Application(for Review) No. 1
of 2020 in R/Special Civil Application No.18591 of 2018 and Order dated
10.07.2019 in R/Special Civil Application No. 18591 of 2018.
With
Civil Appeal Nos. 2997-2998 of 2022.
N. Venkataraman, ASG, Akshay Amritanshu, Merusagar
Samantray, Ms. Indira Bhakar, Manish, M. K. Maroria, Advs. for the
Appellants.
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Vinay Shraff, Ravi Bharuka, Ankit Agarwal, Advs. for the
Respondent.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, J.
1. Delay condoned. Leave granted.
2. Appeal arising out of Special Leave Petition (C) Diary No.27099
of 2020 is directed against the judgment and order dated 10.07.2019
passed by the High Court1 in Special Civil Application No.18591 of 2018
and against the order dated 13.03.2020 passed in Review Petition arising
therefrom being Misc. Civil Application No.1 of 2019. (For facility,
hereinafter referred to as, "the first case")
Appeal arising out of Special Leave Petition (C) Diary No.28455
of 2020 is directed against the judgment and order dated 10.07.2019
passed by the High Court1 in Special Civil Application No.15925 of 2018
and against the order dated 13.03.2020 passed in Review Petition arising
therefrom being Misc. Civil Application No.1 of 2019. (For facility,
hereinafter referred to as, "the second case")
3. The second case arises out of a Writ Petition, being Special
Civil Application No.15925 of 2018 filed by M/s. Saraf Natural Stone
submitting inter alia that:
"2.5
The Petitioner states that in terms of Section 16 of the IGST
Act2, 2017, a registered person making exports of goods
outside India, shall be eligible to claim, refund of either
unutilized input tax credit on export of goods under bond or
letter of undertaking or refund of Integrated tax paid on
export of goods.
2.6
The Petitioner further states that Section 16(3) of the IGST
Act, provides that refund should be claimed in accordance
with the provisions of Section 54 of the CGST Act3 or the
rules made thereunder. Section 20 of the IGST Act further
provides that provisions of CGST Act relating to refunds
shall, mutatis mutandis, apply, so far as may be, in relation
1 High Court of Gujarat at Ahmedabad.
2 The Integrated Goods and Services Tax Act, 2017
3 The Central Goods and Services Tax Act, 2017
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR.
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to Integrated tax as they apply in relation to central tax as if
they are enacted under this Act.
2.7.
The Petitioners further states that Rule 2 of the Integrated
Goods and Services Tax Rules, 2017 provides that the
Central Goods and Services Tax Rules, 2017, for carrying
out the provisions specified in Section 20 of the Integrated
Goods and Services Tax Act, 2017 shall, so far as may be,
apply in relation to Integrated tax as they apply in relation
to Central tax.
***
***
***
2.15
The petitioner further states that the Central Government
vide Notification No.13/2017- Central Tax, dated 28.06.2017
and Notification No.6/2017 - integrated tax dated 28.06.2017
has fixed the rate of interest from the 1st day of July, 2017
at 6% p.a. and 9% p.a. for the purposes of Section 56 and
proviso to Section 56 of CGST Act, 2017 respectively.
Copies of the aforesaid notifications are enclosed herewith
marked at Annexure & and Annexure B respectively.
***
***
***
2.19
The petitioner states further that it received the refund of
integrated tax paid on export of goods after substantial period
of delay. Details of refund claimed, date of application of
refund and actual date of grant of refund for the month of
July is enclosed herewith and marked as Annexure-D"
3.1 Details of 15 (Fifteen) refunds made to said writ petitioner
showed that there was delay ranging from 94 to 290 days.
3.2 In the circumstances it was prayed inter alia:-
"a)
to issue writ of mandamus and/ or any other appropriate
writ(s) for directions is the Respondents for providing
appropriate compensation as well as interest, for delay in
the granting of refund;"
4. The first case arises out of Special Civil Application No.18591
of 2018 filed by M/s. Willowood Chemicals Pvt. Ltd. submitting that
said Writ Petitioner was entitled on the basis of Section 16 of the IGST
Act read with Section 54 of the CGST Act for compensation in receipt
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of delayed payment as detailed in Annexure D of the petition, which in
turn dealt with 12 refunds with delay ranging between 94 to 290 days.
The special civil application had thus prayed for appropriate compensation.
5. In both the petitions it was submitted that inaction leading to
inordinate delay in granting refunds was per se arbitrary and that the
inordinate delay impacted the working capacity of the Writ Petitioners
thereby reducing their ability to conduct business and as such appropriate
compensation ought to be awarded along with interest for delay.
The submissions were opposed by the learned counsel appearing
for the Revenue.
6. The High Court considered the rival submissions in light of the
statutory provisions and relied upon certain decisions including the decision
of this Court in K.T. Plantation Pvt. Ltd. and Anr. v. State of
Karnataka4, Sandvik Asia Ltd. v. Commissioner of Income Tax-I
Pune and others5 and Commissioner of Income Tax, Gujarat v.
Gujarat Fluoro Chemicals6. In its judgment dated 10.7.2019 which is
under challenge in the second case, the High Court concluded:
"22. The position of law appears to be well settled. The provisions
relating to an interest of delated payment of refund have been
consistently held as beneficial and non-discriminatory. It is true
that in the taxing statute the principles of equity may have little
role to play, but at the same time, any statute in taxation matter
should also meet with the test of constitutional provision.
23. The respondents have not explained in any manner the issue
of delay as raised by the writ applicants by filing any reply.
24. The chart indicating the delay referred to above speaks for
itself.
25. In the overall view of the matter, we are inclined to hold the
respondents liable to pay simple interest on the delayed payment
at the rate of 9% per annum. The authority concerned shall nook
into the chart provided by the writ-applicants, which is at Page30, Annexure-D to the writ application and calculate the aggregate
amount of refund. On the aggregate amount of refund, the writ4 (2011) 9 SCC 1
5 (2006) 2 SCC 508
6 (2014) 1 SCC 126
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR. [UDAY UMESH LALIT, J.]
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[2022] 14 S.C.R.
applicants are entitled to 9% per annum interest from the date of
filing of the GSTR-03. The respondents shall undertake this
exercise at the earliest and calculate the requisite amount toward
the interest. Let this exercise be undertaken and completed within
a period of two months from the date of receipt of the writ of this
order. The requisite amount towards the interest shall be paid to
the writ-applicants within a period of two months form the date of
receipt of the writ of this order."
7. The first case was then disposed of on the same day with the
following observations:-
"4. For the reasons assigned in the Special Civil Application
No15925 of 2018, decided on 10/07/2019, this writ application is
allowed to the extent that the writ applicants are entitled to the
interest for the delayed payment at the rate of 9% per annum.
The authority concerned shall look into the chart provided by the
writ applicants, which is at Page 30, Annexure D to the writ
application and calculate the aggregate refund, the writ applicants
are entitled to 9% per annum interest from the date of filing of the
GSTR38. The respondents shall undertake this exercise at the
earliest and calculate the requisite amount towards interest. Let
this exercise be undertaken and completed within a period of two
months from the date of receipt of the writ of this order. The
requisite amount towards the interest shall be paid to the writ
applicants within a period of two months from the date of receipt
of the writ of this order."
8. The appellant being aggrieved, preferred Review Petitions in
both the cases. It was submitted inter alia:
"4. It is respectfully submitted that this Hon'ble Court has directed
the respondent authority to pay simple interest on the delayed
payment at the rate of 9% per annum from the date of filing of
the GSTR-3B.
5. It is respectfully submitted that as per section 56 of the IGST
Net Interest at the rate of not exceeding six percent may be given
whereas by order dated 10.07.2011 this Hon'ble court was pleased
to give interest at the rate of 9%."
By separate orders dated 13.3.2020 passed in both the cases, the
Review Petitions preferred by the appellant were dismissed.
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9. The aforestated judgments and orders passed by the High Court
are under challenge in these appeals. The appellants do not dispute the
eligibility of the respondents for receiving interest for delayed payment
of claims but their submission is that in terms of the relevant statutory
provision, the interest could be awarded at the rate of 6 per cent and not
9 per cent per annum. Considering the stand taken by the appellants, at
the interim stage, this Court directed the appellants to make good payment
of interest at the rate of 6 per cent. Accordingly, the amounts representing
interest at that rate have since then been made over.
10. We have heard Mr. N. Venkataraman, learned Additional
Solicitor General on behalf of the appellants in both the matters while
Mr. Vinay Shraff, learned Advocate appeared for the respondents in
both the cases.
11. Before we deal with the controversy in question, we may
extract the relevant statutory provisions: -
A) Sections 16 and 20 of the IGST Act are as follows:-
"16. Zero rated supply - (1) "zero rated supply" means any of the
following supplies of goods or services or both, namely:--
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic
Zone developer or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of
the Central Goods and Services Tax Act, credit of input tax may
be availed for making zero-rated supplies, notwithstanding that
such supply may be an exempt supply.
(3) A registered person making zero rated supply shall be eligible
to claim refund under either of the following options, namely:--
(a) he may supply goods or services or both under bond or Letter
of Undertaking, subject to such conditions, safeguards and
procedure as may be prescribed, without payment of integrated
tax and claim refund of unutilized input tax credit; or
(b) he may supply goods or services or both, subject to such
conditions, safeguards and procedure as may be prescribed, on
payment of integrated tax and claim refund of such tax paid on
goods or services or both supplied.
***
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***
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR. [UDAY UMESH LALIT, J.]
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20. Subject to the provisions of this Act and the rules made
thereunder, the provisions of Central Goods and Services Tax Act
relating to,--
(i) scope of supply;
(ii) composite supply and mixed supply;
(iii) time and value of supply;
(iv) input tax credit;
(v) registration;
(vi) tax invoice, credit and debit notes;
(vii) accounts and records;
(viii) returns, other than late fee;
(ix) payment of tax;
(x) tax deduction at source;
(xi) collection of tax at source;
(xii) assessment;
(xiii) refunds;
(xiv) audit;
(xv) inspection, search, seizure and arrest;
(xvi) demands and recovery;
(xvii) liability to pay in certain cases;
(xviii) advance ruling;
(xix) appeals and revision;
(xx) presumption as to documents;
(xxi) offences and penalties;
(xxii) job work;
(xxiii) electronic commerce;
(xxiv) transitional provisions; and
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(xxv) miscellaneous provisions including the provisions relating to
the imposition of interest and penalty,
shall, mutatis mutandis, apply, so far as may be, in relation to
integrated tax as they apply in relation to central tax as if they are
enacted under this Act:
Provided that in the case of tax deducted at source, the
deductor shall deduct tax at the rate of two per cent. from the
payment made or credited to the supplier:
Provided further that in the case of tax collected at source,
the operator shall collect tax at such rate not exceeding two per
cent, as may be notified on the recommendations of the Council,
of the net value of taxable supplies:
Provided also that for the purposes of this Act, the value of
a supply shall include any taxes, duties, cesses, fees and charges
levied under any law for the time being in force other than this
Act, and the Goods and Services Tax (Compensation to States)
Act, if charged separately by the supplier:
Provided also that in cases where the penalty is leviable
under the Central Goods and Services Tax Act and the State Goods
and Services Tax Act or the Union Territory Goods and Services
Tax Act, the penalty leviable under this Act shall be the sum total
of the said penalties.
Provided also that in cases where the appeal is to be filed
before the Appellate Authority or the Appellate Tribunal, the
maximum amount payable shall be fifty crore rupees and one
hundred crore rupees respectively."
(B) Sections 54 and 56 of the CGST Act are as under:-
"54. Refund of tax - (1) Any person claiming refund of any tax
and interest, if any, paid on such tax or any other amount paid by
him, may make an application before the expiry of two years
from the relevant date in such form and manner as may be
prescribed:
Provided that a registered person, claiming refund of any balance
in the electronic cash ledger in accordance with the provisions of
sub-section (6) of section 49, may claim such refund in the return
furnished under section 39 in such manner as may be prescribed.
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR. [UDAY UMESH LALIT, J.]
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(2) A specialised agency of the United Nations Organisation or
any Multilateral Financial Institution and Organisation notified under
the United Nations (Privileges and Immunities) Act, 1947,
Consulate or Embassy of foreign countries or any other person or
class of persons, as notified under section 55, entitled to a refund
of tax paid by it on inward supplies of goods or services or both,
may make an application for such refund, in such form and manner
as may be prescribed, before the expiry of six months from the
last day of the quarter in which such supply was received.
(3) Subject to the provisions of sub-section (10), a registered person
may claim refund of any unutilised input tax credit at the end of
any tax period:
Provided that no refund of unutilised input tax credit shall be allowed
in cases other than--
(i) zero rated supplies made without payment of tax;
(ii) where the credit has accumulated on account of rate of tax on
inputs being higher than the rate of tax on output supplies (other
than nil rated or fully exempt supplies), except supplies of goods
or services or both as may be notified by the Government on the
recommendations of the Council:
Provided further that no refund of unutilised input tax credit shall
be allowed in cases where the goods exported out of India are
subjected to export duty:
Provided also that no refund of input tax credit shall be allowed, if
the supplier of goods or services or both avails of drawback in
respect of central tax or claims refund of the integrated tax paid
on such supplies.
(4) The application shall be accompanied by-
(a) such documentary evidence as may be prescribed to establish
that a refund is due to the applicant; and
(b) such documentary or other evidence (including the documents
referred to in section 33) as the applicant may furnish to establish
that the amount of tax and interest, if any, paid on such tax or any
other amount paid in relation to which such refund is claimed was
collected from, or paid by, him and the incidence of such tax and
interest had not been passed on to any other person:
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Provided that where the amount claimed as refund is less than
two lakh rupees, it shall not be necessary for the applicant to
furnish any documentary and other evidences but he may file a
declaration, based on the documentary or other evidences available
with him, certifying that the incidence of such tax and interest had
not been passed on to any other person.
(5) If, on receipt of any such application, the proper officer is
satisfied that the whole or part of the amount claimed as refund is
refundable, he may make an order accordingly and the amount so
determined shall be credited to the Fund referred to in section 57.
(6) Notwithstanding anything contained in sub-section (5), the
proper officer may, in the case of any claim for refund on account
of zero-rated supply of goods or services or both made by
registered persons, other than such category of registered persons
as may be notified by the Government on the recommendations
of the Council, refund on a provisional basis, ninety per cent. of
the total amount so claimed, excluding the amount of input tax
credit provisionally accepted, in such manner and subject to such
conditions, limitations and safeguards as may be prescribed and
thereafter make an order under sub-section (5) for final settlement
of the refund claim after due verification of documents furnished
by the applicant.
(7) The proper officer shall issue the order under sub-section (5)
within sixty days from the date of receipt of application complete
in all respects.
(8) Notwithstanding anything contained in sub-section (5), the
refundable amount shall, instead of being credited to the Fund, be
paid to the applicant, if such amount is relatable to-
(a) refund of tax paid on export of goods or services or both or on
inputs or input services used in making such exports;
(b) refund of unutilized input tax credit under sub-section (3);
(c) refund of tax paid on a supply which is not provided, either
wholly or partially, and for which invoice has not been issued, or
where a refund voucher has been issued;
(d) refund of tax in pursuance of section 77;
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
PVT. LTD. & ANR. [UDAY UMESH LALIT, J.]
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(e) the tax and interest, if any, or any other amount paid by the
applicant, if he had not passed on the incidence of such tax and
interest to any other person; or
(f) the tax or interest borne by such other class of applicants as
the Government may, on the recommendations of the Council, by
notification, specify.
(8A) The Government may disburse the refund of the State tax in
such manner as may be prescribed.
(9) Notwithstanding anything to the contrary contained in any
judgment, decree, order or direction of the Appellate Tribunal or
any court or in any other provisions of this Act or the rules made
thereunder or in any other law for the time being in force, no
refund shall be made except in accordance with the provisions of
sub-section (8).
(10) Where any refund is due under sub-section (3) to a registered
person who has defaulted in furnishing any return or who is
required to pay any tax, interest or penalty, which has not been
stayed by any court, Tribunal or Appellate Authority by the
specified date, the proper officer may-
(a) withhold payment of refund due until the said person has
furnished the return or paid the tax, interest or penalty, as the
case may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or
any other amount which the taxable person is liable to pay but
which remains unpaid under this Act or under the existing
law. Explanation.--For the purposes of this sub-section, the
expression "specified date" shall mean the last date for filing an
appeal under this Act.
(11) Where an order giving rise to a refund is the subject matter
of an appeal or further proceedings or where any other proceedings
under this Act is pending and the Commissioner is of the opinion
that grant of such refund is likely to adversely affect the revenue
in the said appeal or other proceedings on account of malfeasance
or fraud committed, he may, after giving the taxable person an
opportunity of being heard, withhold the refund till such time as he
may determine.
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(12) Where a refund is withheld under sub-section (11), the taxable
person shall, notwithstanding anything contained in section 56, be
entitled to interest at such rate not exceeding six per cent. as may
be notified on the recommendations of the Council, if as a result
of the appeal or further proceedings he becomes entitled to refund.
(13) Notwithstanding anything to the contrary contained in this
section, the amount of advance tax deposited by a casual taxable
person or a non-resident taxable person under sub-section (2)
of section 27, shall not be refunded unless such person has, in
respect of the entire period for which the certificate of registration
granted to him had remained in force, furnished all the returns
required under section 39.
(14) Notwithstanding anything contained in this section, no refund
under sub-section (5) or sub-section (6) shall be paid to an
applicant, if the amount is less than one thousand rupees.
Explanation.-For the purposes of this section,--
(1) "refund" includes refund of tax paid on zero-rated supplies of
goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply of
goods regarded as deemed exports, or refund of unutilised input
tax credit as provided under sub-section (3).
(2) "relevant date" means-
(a) in the case of goods exported out of India where a refund of
tax paid is available in respect of goods themselves or, as the case
may be, the inputs or input services used in such goods,--
(i) if the goods are exported by sea or air, the date on which the
ship or the aircraft in which such goods are loaded, leaves India;
or
(ii) if the goods are exported by land, the date on which such
goods pass the frontier; or
(iii) if the goods are exported by post, the date of despatch of
goods by the Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports
where a refund of tax paid is available in respect of the goods, the
date on which the return relating to such deemed exports is
furnished;
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
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(c) in the case of services exported out of India where a refund
of tax paid is available in respect of services themselves or, as the
case may be, the inputs or input services used in such services,
the date of--
(i) receipt of payment in convertible foreign exchange 3 "or in
Indian rupees wherever permitted by the Reserve Bank of India",
where the supply of services had been completed prior to the
receipt of such payment; or
(ii) issue of invoice, where payment for the services had been
received in advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence
of judgment, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court, the date of communication of
such judgment, decree, order or direction;
(e) in the case of refund of unutilised input tax credit under clause
(ii) of the first proviso to sub-section (3), the due date for furnishing
of return under section 39 for the period in which such claim for
refund arises;
(f) in the case where tax is paid provisionally under this Act or the
rules made thereunder, the date of adjustment of tax after the
final assessment thereof;
(g) in the case of a person, other than the supplier, the date of
receipt of goods or services or both by such person; and
(h) in any other case, the date of payment of tax. Refund in certain
cases.
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56. Interest on delayed refunds - If any tax ordered to be refunded
under sub-section (5) of section 54 to any applicant is not refunded
within sixty days from the date of receipt of application under
subsection (1) of that section, interest at such rate not exceeding
six per cent. as may be specified in the notification issued by the
Government on the recommendations of the Council shall be
payable in respect of such refund from the date immediately after
the expiry of sixty days from the date of receipt of application
under the said sub-section till the date of refund of such tax:
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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 and the
same is not refunded within sixty days from the date of receipt of
application filed consequent to such order, interest at such rate
not exceeding nine per cent. as may be notified by the Government
on the recommendations of the Council shall be payable in respect
of such refund from the date immediately after the expiry of sixty
days from the date of receipt of application till the date of refund.
Explanation.--For the purposes of this section, where any order
of refund is made by an Appellate Authority, Appellate Tribunal or
any court against an order of the proper officer under sub-section
(5) of section 54, the order passed by the Appellate Authority,
Appellate Tribunal or by the court shall be deemed to be an order
passed under the said sub-section (5)"
12. These provisions show that a registered person making export
of goods outside India, is entitled in terms of Section 16 of the IGST Act
to claim refund of either unutilized input tax credit of export of goods
under bond or letter of undertaking or refund of integrated tax paid on
export of goods. In terms of Section 20 of the IGST Act, any claim for
refund is to be governed by the provisions of the CGST Act which would
apply mutatis mutandis as if they were enacted in the IGST Act. The
application for refund, therefore, is required to be preferred in accordance
with Section 54 of the CGST Act. According to Section 56 of the CGST
Act, if an applicant is not refunded any tax ordered to be refunded by
the Proper Officer under Section 54(5) within 60 days from the receipt
of the application, interest at such rate not exceeding 6 per cent would
become payable after the expiry of 60 days from the date of receipt of
application till the date of refund of such tax. The proviso to said Section
prescribes that where any claim of refund arises from an order passed
by an Adjudicating Authority or Appellate Authority or Appellate Tribunal
or Court and if the same is not refunded within 60 days from the date of
receipt of an application filed consequent to such an order, the rate of
interest payable would be 9 per cent.
13. The instant cases have not arisen from any order passed by
an Adjudicating Authority or Appellate Authority or Appellate Tribunal
or Court and the cases are strictly within the scope of the principal
provision of Section 56 and not under the proviso thereof. In light of
UNION OF INDIA & ORS. v. M/S. WILLOWOOD CHEMICALS
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these provisions, the question which arises for consideration is whether
the High Court was justified in awarding interest at the rate of 9 per cent
per annum.
14. Before we deal with the question, it must be stated that initially
a bench of two Judges of this Court in Union of India and others v.
Orient Enterprises and Another7 had observed that a Writ Petition
under Article 226 of the Constitution filed solely for relief for payment of
interest on delayed refund would not be maintainable. For facility, the
relevant portion from the said decision is quoted here:
"6. In Suganmal [AIR 1965 SC 1740 : 56 ITR 84 : 16 STC 398]
this Court has laid down that a writ petition under Article 226 of
the Constitution solely praying for the issue of a writ of mandamus
directing the State to refund the money is not ordinarily
maintainable for the simple reason that a claim for such a refund
can always be made in a suit against the authority which had
illegally collected the money as a tax. This Court has made a
distinction between a direction for refund given by way of
consequential order in a case where the legality of the assessment
is questioned and a case where the petition is only for the purpose
of seeking refund. It has been observed:
"We do not consider it proper to extend the principle
justifying the consequential order directing the refund of amount
illegally realised, when the order under which the amounts had
been collected has been set aside, to cases in which only orders
for the refund of money are sought. The parties had the right
to question the illegal assessment orders on the ground of their
illegality or unconstitutionality and, therefore, could take action
under Article 226 for the protection of their fundamental right,
and the courts, on setting aside the assessment orders, exercised
their jurisdiction in proper circumstances to order the
consequential relief for the refund of the tax illegally realised.
We do not find any good reason to extend this principle and,
therefore, hold that no petition for the issue of a writ of
mandamus will be normally entertained for the purpose of
merely ordering a refund of money to the return of which the
petitioner claims a right."
7 (1998) 3 SCC 501
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7. The Court has emphasised that there was no legal right in the
appellant who had filed the writ petition to claim the refund under
the relevant statute.
8. In the present case also till the insertion of Section 27-A in the
Act by Act 22 of 1995 there was no right entitling payment of
interest on delayed refund under the Act. Such a right was
conferred for the first time by the said provision. Act 22 of 1995
also inserted Section 28-AA which provides for payment of interest
on delayed payment of duty by a person who is liable to pay the
duty. Thus at the relevant time there was no statutory right entitling
the respondents to payment of interest on delayed refund and the
writ petition filed by them was not for the enforcement of a legal
right available to them under any statute. The claim for interest
was in the nature of compensation for wrongful retention by the
appellants of money that was collected from the respondents by
way of customs duty, redemption fine and penalty. In view of the
law laid down by this Court in Suganmal [AIR 1965 SC 1740: 56
ITR 84: 16 STC 398] a writ petition seeking the relief of payment
of interest on delayed refund of the amount so collected could
not, in our opinion, be maintained. The decisions on which reliance
has been placed by Shri Rawal were cases where the legality of
the orders requiring payment of tax or duty were challenged and
the High Court in exercise of its jurisdiction under Article 226 of
the Constitution, while setting aside the said orders, has directed
the refund of the amount so collected with interest. The direction
for payment of interest in these cases was by way of consequential
relief along with the main relief of setting aside the order imposing
the tax or duty. Those cases stand on a different footing and have
no application to the present case. The appeal is, therefore,
allowed, the impugned judgment of the High Court is set aside
and the writ petition filed by the respondents before the High
Court is dismissed. No order as to costs."
15. However, subsequently another bench of two Judges of this
Court in Godavari Sugar Mills Ltd.7 in more or less identical
circumstances settled the issue and found the Writ Petition to be
maintainable. The observations of this Court were:
"7. The High Court relying upon the decision of this Court
in Suganmal v. State of M.P. [AIR 1965 SC 1740] has held that
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the prayer in the writ petition being one for payment of interest, it
should be considered to be a writ petition filed to enforce a money
claim and therefore, not maintainable. The observations
in Suganmal [AIR 1965 SC 1740] related to a claim for refund
of tax and have to be understood with reference to the nature of
the claim made therein. The decision in Suganmal [AIR 1965
SC 1740] has been explained and distinguished in several
subsequent cases, including in U.P. Pollution Control
Board v. Kanoria Industrial Ltd. [(2001) 2 SCC 549] and ABL
International Ltd. v. Export Credit GuaranteeCorpn. of India
Ltd. [(2004) 3 SCC 553] The legal position becomes clear when
the decision in Suganmal [AIR 1965 SC 1740] is read with the
other decisions of this Court on the issue, referred to below:
(i) Normally, a petition under Article 226 of the Constitution
of India will not be entertained to enforce a civil liability arising
out of a breach of a contract or a tort to pay an amount of money
due to the claimants. The aggrieved party will have to agitate the
question in a civil suit. But an order for payment of money may
be made in a writ proceeding, in enforcement of statutory
functions of the State or its officers. (Vide Burmah
Construction Co. v. State of Orissa [AIR 1962 SC 1320 : 1962
Supp (1) SCR 242] .)
(ii) If a right has been infringed-whether a fundamental
right or a statutory right-and the aggrieved party comes to the
Court for enforcement of the right, it will not be giving complete
relief if the Court merely declares the existence of such right or
the fact that existing right has been infringed. The High Court,
while enforcing fundamental or statutory rights, has the power to
give consequential relief by ordering payment of money realised
by the Government without the authority of law. (Vide State of
M.P. v.