HC Sets Aside IGST Refund Interest Reduction

Case Details: Jindal Drugs (P.) Ltd. vs. Union of India - [2026] 184 taxmann.com 350 (Bombay)

Judiciary and Counsel Details

• G. S. Kulkarni & Aarti Sathe, JJ.
• Jas Sanghavi for the Petitioner.
• Jitendra B. Mishra, Abhishek Mishra, Rupesh Dubey, Ms Raju R. Thalekar & Priyanshu Doshi for the Respondent.

Facts of the Case

The petitioner filed a writ petition challenging the determination of interest on delayed refund of IGST. It was submitted that the authorities were directed to sanction IGST refund along with statutory interest. The petitioner contended that although interest was initially sanctioned, it was subsequently reduced by a corrigendum without assigning any reasons. It was submitted that such reduction and computation of interest were contrary to the statutory mandate, which prescribes the rate and period of interest on delayed refunds. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned orders determining interest were unsustainable as they failed to provide any reasons or basis for reduction and did not adhere to the mandate of Section 56 read with Section 54 of the CGST Act. It was observed that Section 56 specifically governs the liability to pay interest on delayed refunds while Section 54 lays down the statutory framework for claiming refunds. It analysed the actions of the jurisdictional officer under CGST and found that the reduction of interest through a corrigendum and the grant of nominal interest lacked legal justification. It declined to undertake the computation of interest itself and instead emphasised adherence to the statutory provisions. Accordingly, the orders were set aside to the extent of the interest component, and the designated officer was directed to re-determine the interest.

List of Cases Referred to

• Jindal Drugs (P.) Ltd. v. UOI [WP No. 4445 of 2021, dated 2-5-2022] (para 4)
• Altisource Business Solutions India (P.) Ltd. v. UOI [2025] 179 taxmann.com 313/112 GST 254/103 GSTL 274 (Bombay) (para 7)
• Lupin Ltd. v. UOI [2025] 177 taxmann.com 335/102 GSTL 151 (Bombay) (para 7).