The Gujarat High Court has ruled that when businesses request a refund for Goods and Services Tax (GST), any interest on that refund should be calculated starting from the date they originally submitted their application. This means that if a court order requires a new filing, the interest won’t begin from that later date but rather from the initial request for the refund.
The bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati has said that the tax department cannot refuse interest by considering a fresh refund application submitted as per the court order as the relevant date for computing interest. Authorities should calculate interest from the original refund application when the first rejection was deemed unlawful.
On October 14, 2023, the lead applicant submitted a GST refund application asking for a tax refund. The tax authorities did not process the application, forcing the company to approach the Gujarat High Court through an earlier writ petition.
The HC in November 2025 ruled in favour of the taxpayer and asked the authorities to process the refund claim as per the law. After the court’s direction, the taxpayer filed a fresh refund application on November 11, 2025.
The department sanctioned the refund of Rs 2.29 crore; it did not accept the claim for the interest of nearly Rs 29.51 lakh u/s 56 of the Central Goods and Services Tax Act, 2017.
The authorities said that interest was not subject to be levied because of incomplete statutory conditions u/s 56, considering the later application filed after the High Court’s order as the operative refund application.
The issue for the Court was how to calculate interest on late GST refunds: from the original rejected application or the date of the fresh application filed after the High Court directed reconsideration of the refund.
The court overturned the department’s argument, ruling that invalidating the initial refund denial meant authorities couldn’t use a later application to deny the taxpayer statutory interest.
The Bench noted that it had previously ruled that the original refund applicant should have been processed, especially given that the applicant had provided the necessary Chartered Accountant’s Certificate substantiating the refund.
Therefore, the court considered that the right of the taxpayer to interest should be associated with the initial refund application dated October 14, 2023, instead of the application filed after the court’s intervention.
The court said that considering the interpretation of the department shall permit the authorities to provide benefits from their own illegal denial to process a valid refund application, denying the object of section 56.
The HC quashed the impugned orders to the extent they refused interest and asked the GST authorities to reconsider and process the applicant’s claim for interest by considering the date of the original refund application.
Read Also: How to File GST Refund Claims Manually? Step-by-Step Guide
The Court then asked the respondents to pass fresh orders on the interest claims within 12 weeks from the receipt of the judgment.
| Case Title | Kuehne Nagel Pvt. Ltd. & Anr. vs. The Union Of India & Ors. |
| Case No. | R/Special Civil Application No. 4373 of 2026 |
| For Petitioner | Dhruv Toliya |
| For Respondent | MR Ankit Shah |
| Gujarat High Court | Read Order |
