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

Citation: [2022] 14 S.C.R. 1138 · Decided: 19-04-2022 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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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

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