HC Directs Disbursement of GST Refund Interest; Assessee Not to Suffer Due to Centre-State Dispute

Messrs Meghmani Organics Ltd. & Anr. filed a writ petition before the High Court of Gujarat seeking payment of interest on a GST refund. During earlier hearings, the Court noted an inter se dispute between the State GST and Central GST authorities regarding which authority was liable to pay interest.

The respondents relied on Rule 94 of the CGST Rules and the definition of “proper officer” under Section 2(91) of the CGST Act to contend that liability lay with the State authorities. The Court directed respondent No. 3 to deposit the entire interest amount with the Registry. The amount was duly deposited, and it was undisputed that the petitioner was entitled to interest.

Issue Before HC: Whether entitlement to interest on GST refund can be denied or delayed due to an internal dispute between Central and State GST authorities regarding liability.

HC’s Ruling: The Court held that the petitioner could not be made to suffer on account of an internal dispute between authorities. The Court clarified that it was not concerned with how liability was to be apportioned between the Centre and the State.

As the petitioner’s entitlement to interest was undisputed, payment could not be withheld merely because the authorities were shifting responsibility between themselves. Thus, the Registry was directed to disburse the deposited interest amount to the petitioner after due verification.

The writ petition was disposed of, leaving the inter se dispute between the authorities open to be resolved independently.

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