The Delhi High Court has directed GST authorities to process a delayed export refund with interest within six weeks, after the department failed to either acknowledge the refund application or issue a deficiency memo within the time prescribed under the refund rules.

Facts of the Case

Mitra Food Products ("the petitioner") sought a refund of Rs. 33,70,851/- for the month of November 2019, along with interest, on account of export of goods as zero-rated supplies. The petitioner's refund application dated 04.11.2020 had not been processed as of the date of filing this writ petition. The petitioner submitted that neither an acknowledgment in FORM GST RFD-02 nor a deficiency memo in FORM GST RFD-03 had been issued within the stipulated fifteen-day period prescribed under the refund rules.

Issues Involved

  1. Whether the department's failure to process the refund application or issue an acknowledgment/deficiency memo within the prescribed time entitled the petitioner to a mandamus for expeditious processing.
  2. Whether interest was payable on the delayed refund.

Petitioner's Arguments

  • The refund application filed on 04.11.2020 for export-linked zero-rated supplies had remained unprocessed for over a year.
  • Neither a FORM GST RFD-02 acknowledgment nor a FORM GST RFD-03 deficiency memo was issued within the statutory fifteen-day window.
  • Sought a direction for processing of the refund together with interest for the delay.

Respondent's Arguments

  • On notice being accepted, counsel for the GNCTD stated that the petitioner's refund application would be processed and an order passed within six weeks.
  • Raised no objection to payment of interest on the delayed refund.

Court Order / Findings

  • With the consent of both parties, the Court disposed of the writ petition directing the respondents to process the petitioner's refund application for November 2019, along with interest accrued thereon, within six weeks.
  • No adjudication of contested facts was required, as relief was granted on the basis of the department's own statement.

Important Clarification

  • Failure by GST authorities to issue either an acknowledgment (RFD-02) or a deficiency memo (RFD-03) within fifteen days of a refund application, as mandated under the refund rules, is by itself sufficient ground for a writ court to direct time-bound processing along with interest, without requiring an adversarial trial of the underlying claim.

Sections Involved

  • Section 54, CGST/DGST Act, 2017 — refund of tax, including on zero-rated exports.
  • Section 56, CGST Act, 2017 — interest on delayed refunds.
  • Rule 90, CGST Rules, 2017 — acknowledgment (RFD-02) and deficiency memo (RFD-03) for refund applications.

Decision – In Favour of

In favour of the Assessee, disposed of on consent with a direction to process the refund, with interest, within six weeks.

Related Case Laws

This order is usefully read alongside other case notes on this site concerning delayed processing of zero-rated export refunds under Section 54 read with Rule 90 of the CGST Rules, and the consequential entitlement to interest under Section 56.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 3637/2022 & C.M. No.10776/2022
  • Coram: Hon'ble Mr. Justice Manmohan and Hon'ble Mr. Justice Sudhir Kumar Jain
  • Order Date: 03.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787075968_4621compressed.pdf

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