Syschem India Limited v. Union of India & Ors.

Delhi High Court — W.P.(C) 5539/2021 — Decision dated 17.11.2022
Category: Refund of IGST on export of goods (Section 16 of IGST Act read with Section 54 of CGST Act)

Facts (Paras 1–9, 12–13)

The petitioner exported goods during FY 2019–20 under 17 shipping bills and claimed refund of IGST amounting to ₹53,97,397. Errors existed in certain shipping bills, leading to non-transmission of invoice–SB data to ICEGATE. The petitioner approached the Customs Policy Wing under Circular No. 04/2021-Cus., dated 16.02.2021, seeking correction and re-validation of data. As of the earlier hearing (30.08.2022), refunds relating to 16 out of 17 shipping bills had been granted, leaving ₹3,78,045 outstanding.

The counter-affidavit of the respondents showed that corrected data under the circular was forwarded by Customs to GSTN only on 24.05.2021, which enabled processing and transmission to ICEGATE. Despite the sanction (scroll-out) of the remaining amount, the remittance was still pending. The petitioner also sought interest on delayed refund for the 16 remitted amounts.

Questions for Determination

1. Whether interest on delayed refund of IGST under Section 56 of the CGST Act becomes payable when the delay occurred due to late correction and transmission of data by Customs (Paras 8–11).

2. From what date interest should accrue for the already-refunded 16 shipping bills and for the one pending refund (Paras 9, 14–15).

3. Whether the statutory liability to pay interest arises irrespective of alleged delay attributable to the exporter (Paras 7–9).

Court’s Observations (Paras 7–15)

The Court noted that although the circular permitted correction of shipping-bill errors, the recommendation from the Customs Policy Wing reached GSTN only on 24.05.2021. Thus, even though the underlying export transactions pertained to 2019, the statutory trigger point for refund processing arose only when Customs performed its part.

Because Section 56 of the CGST Act mandates interest if refund is not granted within sixty days from the date of receipt of a “complete application,” the Court treated 24.05.2021 as the operative date for completion of the data-validation step attributable to the Department. The Court rejected the respondents’ argument that delay was attributable to the petitioner, noting that refund processing could not begin before the Customs recommendation was received (Paras 8–9).

Therefore, the State’s liability to pay interest at 6% per annum was held to commence 60 days after 24.05.2021, aligning with statutory interpretation of refund timelines.

Judgment / Final Directions (Paras 14–18)

1. Interest at 6% p.a. shall be paid on IGST refunds relating to 16 shipping bills, commencing from 24.05.2021 until the respective dates of remittance.

2. For the remaining unreleased amount of ₹3,78,045 (SB No. 3523328), interest at 6% p.a. shall accrue from 24.05.2021 till the date of actual payment.

3. The respondents must release the outstanding refund and interest for all 17 shipping bills within six weeks (Paras 16–17).

4. Writ petition disposed of in these terms.

Case Law Referred — Summary Table

Between Fine Lines — Practical Takeaways for Industry

Exporters must ensure accurate invoice–shipping-bill mapping in GSTR-1 and shipping documents to avoid refund blockage. However, where corrections are routed through the Customs validation mechanism under Circular 04/2021, the date on which Customs forwards corrected data to GSTN becomes the decisive point for computing delay. Even if errors existed at the taxpayer’s end, once the Department’s own processing contributes to delay, statutory interest becomes unavoidable. This judgment reinforces that exporters are entitled to interest irrespective of administrative bottlenecks between Customs, GSTN, and ICEGATE.

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