The Gujarat High Court on 2 July 2026 said that GST authorities cannot refuse interest on refunds by considering a refund application submitted as per the Court order as a fresh application, ruling that where the original denial of refund claim is quashed as illegal, interest u/s 56 of the Central Goods and Services Tax (CGST) Act (which provides for interest on delayed refunds) should be calculated from the date of the original refund application.
A Division Bench of Justices A.S. Supehia and Vaibhavi D. Nanavati permitted a batch of writ petitions led by Kuehne Nagel Pvt. Ltd.. They quashed orders refusing interest on GST refunds. It said that:
“The respondent authority was required to consider the date of initial refund application filed by the petitioner for calculating the interest instead of the subsequent application, which was filed after the order passed by this Court.”
On 14 October 2023, the applicants submitted a refund application, which was rejected by the GST authorities. Afterwards, they approached the High Court, which, by an order dated 6 November 2025, quashed the rejection orders and asked the authorities to process the refund claims.
After the direction of the court, the authorities sanctioned the refund amount but refused interest, considering the application submitted after the HC order as the pertinent application for calculating interest u/s 56 of the CGST Act. Concerning the lead matter, the authorities sanctioned a refund of Rs. 2.29 crore; they refused interest of Rs. 29.51 lakh.
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The applicants claimed that once the earlier rejection of the refund claim was declared unlawful, the application filed as per the direction of the HC could not be considered as a fresh application for computing interest. They said that the period for interest payment needs to be calculated from the original refund application date filed in October 2023.
As per the claim, the court observed that its earlier ruling had stated that the refund application must have been processed as per the Chartered Accountant’s certificate filed by the applicants. It observed that once the rejection order was quashed, the original application continued to remain the basis for evaluating the interest liability, and the subsequent application was merely a procedural step arising from the Court’s directions.
The Bench said that “upon setting aside the former action of denial of refund, the fresh application filed for refund satisfies the provisions of Section 56 of the Act and the claim of interest has to be processed by considering the date of earlier application.”
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Therefore, the HC quashed the orders refusing the interest and asked the authorities to reconsider the claims of the applicants by computing interest from the date of the original refund applications. It directed them to finish the exercise within 12 weeks.
| Case Title | Kuehne Nagel Pvt. Ltd. & Anr. V/S Union of India & Ors |
| Case No. | R/Special Civil Application No. 4373 of 2026 |
| Counsel For Appellant | Mr. Dhruv Toliya, Advocate |
| Counsel For Respondent | Mr. Ankit Shah, Senior Standing Counsel; Mr. Raj Tanna, AGP and Ms. Nimisha J. Parekh, AGP |
| Gujarat High Court | Read Order |
