The Bombay High Court in Lupin Limited Vs. Union of India & Ors. (W.P. No. 610/2024) has reinforced the principle that interest on delayed GST refunds is compensatory in nature.
Key Takeaways:
Two-tier interest under CGST Act:
6% if refund (u/s 54(5)) is delayed beyond 60 days.
9% if refund directed by appellate authority is delayed beyond 60 days.
An appellate order reversing a refund rejection is deemed an order under Section 54(5).
A fresh refund application post-appellate order is only procedural—it cannot reset statutory timelines.
Authorities cannot deny taxpayers rightful compensation for loss of use of funds due to administrative delay.
In this case, the HC quashed the Revenue’s stance and directed payment of interest on a delayed refund of ₹6.29 crores—
6% post first authority’s order
9% post appellate order
This judgment is a strong reminder: Refunds delayed = Interest payable.
