Suraj Pvt Ltd registered in Delhi filed a refund application under section 54 of the CGST Act, 2017 for the refund of unutilised ITC amounting to…

CA Final · Indirect Tax Laws · PYQS · January 2026
Suraj Pvt Ltd registered in Delhi filed a refund application under section 54 of the CGST Act, 2017 for the refund of unutilised ITC amounting to 20,00,000 on 1 st May 2025. On scrutiny of documents, the proper officer found deficiency in documents submitted and issued a deficiency memo on 10 th May 2025. The assessee re-filed fresh refund application on 15 th May 2025. The proper officer rejected the refund claim on 10 th July 2025. The assessee filed an appeal on 1 st September 2025. The Appellate Authority allowed refund and the refund was released on 20 th September 2025. Suraj Pvt Ltd is of view that it is entitled to interest on refund whereas the proper officer's contention is that the refund was granted within specified time from date of application, so the assessee is not entitled to any interest. Is contention of the Suraj Pvt. Ltd. correct? If yes, compute the amount of interest payable to Suraj Pvt Ltd. Reasons should form part of answer.

Suggested Answer and Working Notes:

Answer (a) If an applicant's refund claim is initially denied by the Adjudicating Authority and the Appellate Authority upholds the claim on appeal made to it, the applicant needs to file a second refund application consequent to said order. If refund is not issued within 60 days of filing the second application, interest @ 9% p.a. is payable from the date immediately after the expiry of 60 days (i.e. from 61 st day) from the date of receipt of said application till the date of refund. Thus, in the given case, no interest is payable since refund has been paid before expiry of said 60 days. Additionally, interest @ 6% p.a. is payable for the period commencing from the date immediately after expiry of 60 days from his first application (i.e. 15 th May 2025 being fresh application filed after deficiency memo) till the expiry of 60 days after filing of his second application pursuant to the appellate orders or date of actual refund, whichever is earlier. Therefore, interest payable is as follows: Period of delay from 15.07.2025 to 20.09.2025 (both inclusive) is 68 days: Interest = 20,00,000 × 6% × 68/365 = 22,356.16 or 22,356 (rounded off). The contention of Suraj Pvt Ltd. is correct and the contention of the proper officer is not correct.

Topics: Refunds

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