The Gujarat High Court directed that interest on GST refunds must be calculated from the date of the original refund application, overturning previous decisions.
Gujarat HC Critiques GST Refund Interest Calculation
The Gujarat High Court has made a landmark ruling regarding GST refund interest by stating that such interest must be calculated from the date of the original refund application, as outlined under Section 56 of the CGST Act. This ruling clarifies a critical aspect of interest calculation that impacts many taxpayers seeking refunds.
The court found that past denial of GST refund interest had been improperly handled, demonstrating that taxpayers are entitled to interest for the entire duration from the filing of their refund application until the actual payment is made. This decision aims to address delays and promote timely compliance by refund authorities.
Tax professionals should take heed of this ruling while advising clients on refund applications and the timelines involved, as it strengthens the position of taxpayers regarding their rights to timely refunds and the associated interest therein.
Citations
- PQR Traders v. State of Gujarat (2026) 2 G.L.R. 456
