The Bombay High Court has directed the Goods and Services Tax Council to inquire into a refund dispute that resulted in interest liability of ₹3,15,240, while permitting recovery of the amount from the officer responsible if the inquiry establishes lapses.

The Bench of Justice Anil L. Pansare and Justice Nivedita P. Mehta also directed the Council to address restrictions in operating the GST portal that prevent officers from recording detailed reasons for accepting or rejecting refund requests.

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The court observed that the interest liability would otherwise be met from public money.

The petitioner/assessee filed its refund application on January 13, 2025. The application was rejected by an order dated January 23, 2025.

The High Court set aside that rejection on November 2, 2026. In its subsequent order, the Bench noted that the reasons for setting aside the rejection indicated apparent lapses by the officer who had refused the refund.

The November 5 order does not reproduce the detailed grounds on which the earlier rejection was invalidated. It addresses the release of the refund, the resulting interest liability and accountability for the administrative lapses.

Responding to the court’s November 2 order, the Assistant Government Pleader submitted that the necessary steps had been taken to credit the refund to the petitioner’s account. An email communicating this development had also been sent to the petitioner.

The State’s counsel assured the court that the amount would be credited within three working days. The Bench accepted this statement as an undertaking to the court.

Recording the petitioner’s satisfaction, the court disposed of the petition insofar as its refund purpose had been served. However, it continued consideration of the interest and accountability issues and directed the matter to be listed for examination of the inquiry report.

The Bench examined Section 56 of the Central Goods and Services Tax Act, 2017, and the corresponding provision of the Maharashtra Goods and Services Tax Act, 2017.

Explaining the provision, the court stated that where an order directs a refund under Section 54(5), and the amount is not refunded within 60 days from receipt of the application, interest becomes payable at the notified rate, which the Bench identified as 6%.

The statutory provision reproduced in the order provides for interest from the day immediately following the expiry of the 60-day period until the date of refund.

The court also reproduced the proviso concerning refund claims arising from an adjudicatory, appellate, tribunal or court order that has attained finality. That proviso contemplates interest at a notified rate not exceeding 9% where the refund is not made within 60 days of receipt of the application filed consequent to such an order. The Bench’s discussion of the liability in this case referred to the 6% rate.

The High Court emphasised that receipt of a refund application places an obligation on the officer concerned to pass an order expeditiously and, in any event, well within 60 days.

The Bench explained that delayed decision-making can increase the interest payable to the applicant, thereby increasing the financial burden.

In this case, the initial rejection had been issued within ten days of the application. The court’s concern also extended to the apparent lapses underlying that rejection, which was subsequently set aside, and the resulting interest liability.

The court recorded that ₹3,15,240 in interest was payable to the petitioner, observing that the amount would naturally be paid out of public money.

The Bench directed the GST Council to inquire into the matter and address delays in passing orders.

It separately required the Council to examine limitations or restrictions in operating the GST portal that prevent officers from assigning detailed reasons when accepting or rejecting refund requests.

The direction places both the administrative handling of refund applications and the portal’s ability to accommodate reasoned decisions within the scope of the court-ordered exercise.

The High Court granted liberty to the State Government or the GST Council, as applicable, to recover the amount from the officer responsible for the delay.

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