CGST Section 56: Interest on Delayed Refunds

Provisions under Section 56 of the CGST Act 2017 relating to “Interest on Delayed Refunds”:

Section 56: Interest on Delayed Refunds (CHAPTER XI: REFUNDS) [*1]

If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed [*2]:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

Explanation: For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).

Notes (History of Amendments in Bare Text):

1. CGST Section 56 introduced vide GOI Notification dated 12/04/2017, followed with CBEC Notification 9/2017 on commencement date of 01/07/2017.

2. The text “from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax” substituted with the text “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed” vide Section 147 of the Finance Act, 2023, followed with Notification 28/2023 on commencement date of 01/10/2023.