Bansal International v. Commissioner of DGST and Another

01 · Facts of the case and issues

Arun Bansal exported goods through his proprietorship, Bansal International. On 6 February 2020 he claimed Rs. 53,92,516 of unutilised ITC, comprising Central GST, Delhi GST and cess, for exports without tax payment in November 2019. The application was acknowledged on 30 July 2020. The officer sanctioned Rs. 1,08,293 but rejected Rs. 52,84,223 on 10 November 2020, doubting supplies in the upstream chain.

The Appellate Authority verified railway supplies and allowed the rejected refund, but denied interest. Bansal filed a consequential application on 23 November 2022; the remaining principal was sanctioned on 28 December and credited on 3 January 2023. His 16 May 2023 claim for Rs. 13,12,761 interest at 9% was rejected on 11 July 2023 because payment followed the consequential application within sixty days. The writ was confined to interest for this refund, rather than the other pleaded jurisdictional challenges.

Source: Paragraphs 1–5, physical pp. 1–5; first application and acknowledgement: paragraphs 4.1–4.2, p. 3; actual bank credit and claimed interest: paragraph 4.7, p. 5.

02 · Discussion and reasoning of the Hon’ble Court

The Court read Sections 54 and 56 with Rules 89 and 90. Its entitlement analysis concerns the first refund application complete in the required respects, including supporting documents. It rejected the proposition that an erroneous initial refusal could erase the interest period when the taxpayer later prevailed. Appellate proceedings continue the original proceedings; the Explanation to Section 56 deems an appellate refund order to be an order under Section 54(5).

Treating the consequential filing as a wholly fresh Section 54(1) application would also produce an unacceptable limitation result: time spent pursuing appellate remedies could defeat an originally timely claim. Paragraph 34 explains that the later application implements the appellate result and restarts administrative processing, rather than inviting repeated adjudication of the same entitlement.

The main provision and proviso were read harmoniously. The Court identified 6% interest after sixty days from the first complete application. Where the statutory finality conditions are met, 9% applies only after another sixty days from receipt of the consequential application. The higher rate does not extinguish the earlier 6% period and is not an additional cumulative 9%.

The reasoning draws on statutory-interest principles, merger and construction of provisos, including Tata Chemicals, Willowood Chemicals, Dwarka Prasad and VKC Footsteps. It also found support in SBI Cards. These references do not create an unrestricted equitable rate contrary to Section 56.

Source: Paragraphs 6–17, physical pp. 5–15; first-application reasoning: paragraphs 19–26, pp. 16–19; proviso and rates: paragraphs 27–33, pp. 20–25; implementation and SBI Cards: paragraphs 34–35, pp. 25–27.

03 · Judicial decision and operative relief

The petition was allowed and the impugned interest-rejection order was set aside. The adjudicating authority was directed to process the application dated 16 May 2023 in accordance with the decision. The Court determined the governing interest principles, but did not award the claimed Rs. 13,12,761 outright, prescribe a payment deadline or direct 9% for the entire historical period. The principal refund had already been paid.

Source: Paragraph 36, physical p. 27, read with paragraphs 1, 4.7 and 32–34, pp. 1, 5 and 23–26.

04 · In favour of

This is a substantive determination of the interest dispute followed by implementation, rather than a remand leaving the legal issue open. Payment within sixty days of the post-appeal application did not, by itself, eliminate earlier interest. The distinction between the 6% and 9% periods remains essential: the actual refund here was credited within sixty days of the consequential filing.

Source: Paragraphs 4.6–4.7, physical pp. 4–5; paragraphs 26 and 32–36, pp. 19 and 23–27.