- 1 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 31364 OF 2025 (T-RES) BETWEEN: 1. SHRI. KASHINATH .R.K S/O LATE R G KRISHNASWAMY AGE ABOUT 63 YEARS R/A A-1202, MANTRI GRENS NO. 1, SAMPIGE ROAD BENGALURU-560003. 2. SHRI. U. UMESH SHENOY S/O U V SHENOY AGE ABOUT 67 YEARS R/A A-1403, MANTRI GREENS NO. 1, SAMPIGE ROAD BENGALURU-560003. 3. CHITRA .P D/O KRISHNAMURTHY AGE ABOUT 47 YEARS R/A AT A-1105, MANTRI GREENS NO. 1, SAMPIGE ROAD BENGALURU-560003. 4. MS. PANKAJA NARAYANA D/O VENKATRARAMAIAH AGE ABOUT 76 YEARS R/A B-1004, MANTRI GREENS NO. 1, SAMPIGE ROAD BENGALULRU-560003. 5. MR. CHANDRABHANU AMBATIPUDI S/O RAGHUNADHAM AMBATIPUDI Digitally signed by CHANDANA B M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 AGE ABOUT 54 YEAS R/AT B-003, MANTRI GREENS NO. 1, SAMPIGE ROAD, BENGALURU-560003. 6. MR. C.S. VANCHINATH S/O C S SWAMINATHAN AGE ABOUT 70 YEARS R/A D-305, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 7. MR. S. MURALIDHARAN S/O A SOLAIMALAI AGE ABOUT 59 YEARS R/A AT A-401, MANTRI GREENS NO.1, SAMPIGE ROAD BENGALURU-560003. 8. MR. T.V. KAILAS S/O LATE SRI T K VISHWANATHAN AGE BOUT 57 YEARS R/A A-1506, MANTRI GREENS, NO. 1 SAMPIGE ROAD, BENGALURU-560003. 9. MR. VIDYASHANKAR AND MRS SUMOHA .K.S S/O LATE SRI K L NARAYANA RAO AGE ABOUT 60 YEARS R/A A-1405, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 10. MR. SETHURAMAN GANESAN S/O M SETHURAMAN AGE ABOUT 65 YEARS R/A A-801, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 11. MR. BHAVANI RAJAGOPALAN W/O K.R. RAJAGOPALAN AGE ABOUT 64 YEARS R/A A-1603, MANTRI GREENS NO. 1, SAMPIGE ROAD BENGALURU-560003. - 3 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 12. MR. KALYANARAMAN KUPPUSWAMY S/O S. KUPPUSWAMY AGE ABOUT 55 YEARS R/A B-201, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 13. MRS. CHITRA .B.V W/O ANIL NAGENDRA AGE ABOUT 57 YEARS R/A C-1303, MANTRI GREENS, NO. 1 SAMPIGE ROAD, BENGALURU-560003. 14. MS. JAYALAKSHMI .A D/O K V VISWANATHAN AGE ABOUT 65 YEARS R/A A-1403, MANTRI GREENS, NO. 1 SAMPIGE ROAD, BENGALURU-560003. 15. MR. A.R. SHANKER S/O RAJAMANI AGE ABOUT 67 YEARS R/A A-1601, MANTRI GREENS, NO. 1 SAMPIGE ROAD, BENGALURU-560003. 16. MRS. BINDU GURURAJ W/O RAVI KUPPANNA AGE ABOUT 53 YEARS R/A A-1402, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 17. MR. DURJOY PATRANABISH S/O RANJIT RANJAN PATRANABISH AGE ABOUT 52 YEARS R/A B-706, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 18. MR. VINAY .K.M S/O K.S. MANJUNATHA AGE ABOUT 51 YEARS R/A B-406, MANTRI GREENS, NO. 1 SAMPIGE ROAD, BENGALURU-560003. - 4 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 19. MRS ARCHANA NANJANAGUD SHARADA PRASAD W/O DR. NARASIMHA PRASAD AGE ABOUT 50 YEARS R/A C-102, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 20. P.G. NAVEEN S/O P E GANGADHAR RAO AGE ABOUT 48 YEARS R/A A-1505, MANTRI GREENS, NO.1 SAMPIGE ROAD, BENGALURU-560003. 21. MR. GURUMURTHY RAMAN S/O S. RAMAN AGE ABOUT 57 YEARS R/A OLETY LANDMARK APARTMENT AIKYA-1102, 9/1 PIPELINE ROAD BASAVESHWAR NAGAR, BENGALURU-560003. 22. MR. H. SHANTILAL S/O LATE SRI S HASTIMAL AGE ABOUT 77 YEARS R/A D-803, MANTRI GREENS APARTMENTS NO. 1, SAMPIGE ROAD, MALLESHWARAM BENGALURU-560003. …PETITIONERS (BY SRI. B.G. CHIDANANDA URS, ADVOCATE) AND: THE ASSISTANT COMMISSIONER OF CENTRAL TAX BENGALURU NORTH COMMISSIONERATE BANGALORE 1ST FLOOR, HMT BHAVAN, NO.59 BELLARY ROAD BENGALURU-560032. …RESPONDENT (BY SRI. UNNIKRISHNAN .M, ADVOCATE) - 5 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE RESPONDENT AUTHORITY TO GRANT INTEREST ON THE AMOUNT FROM THE DATE OF FILING REFUND APPLICATION TILL THE DATE OF REFUND GRANTED, AT THE RATE OF 12%. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In this petition, petitioner seeks for the following reliefs:- “(a) Issue a writ of Mandamus, or such other writ , Order or direction as this Hon’ble Court may deem fit and direct the Respondent Authority to grant interest on the amount from the date of filing refund application till the date of refund granted , at the rate of 12;, (b) Grant such other consequential reliefs as this Hon,ble High Court may think fit including the cost of this Writ petition” . 2. A perusal of the material on record will indicate that on 02.12.2010 and 07.12.2010, the petitioners filed refund applications seeking refund of the service tax paid by them. The said refund applications having been - 6 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 rejected by the original authority vide order dated 29.09.2020 and confirmed by the 1st appellate authority vide order dated 20.09.2022, the petitioners filed an appeal before the CESTAT, which passed an order dated 30.01.2025 directing grant of refund in favour of the petitioners. In pursuance of the said order of CESTAT, the respondent passed an order giving effect to (OGE) dated 11.06.2025 giving effect to the CESTAT order and granting respective refunds in favour of the petitioners. However, since the respondent failed to grant interest on the refund, despite retaining the amounts payable to the petitioners towards the refund, petitioners are before this Court by way of the present petition. 3. Heard learned counsel for the petitioners and learned counsel for the respondent and perused the material on record. 4. Learned counsel for the petitioners submits that the respondent having retained the amounts paid by the petitioners without refunding the same for 15 years - 7 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 without any authority of law and the claim of the petitioners having been ultimately upheld by the CESTAT, pursuant to which, the respondent granted refund by passing OGE, the respondent was liable to pay interest at 12% p.a. to the petitioner. In support of his submissions, learned counsel placed reliance on the following judgments:- (i)Sandvik Asia Ltd v. CIT -2007(8)STR 193(SC); (ii) L M Wind Power Blades (India) Pvt Ltd v. UOI., 2023(71) GSTL 58 (Kar.); (iii) Team HR Services Pvt Ltd v. UOI., - 2020 (38) GSTL 457(Del.); (iv) Union of India and Ors v. Willowood Chemicals Private Limited and Another (2022) 9 SCC 341. 5. Per contra, learned counsel for the respondent submits that there is no merit in the petition and the same is liable to be dismissed. 6. The question as to whether interest would be payable on delayed refund came up for consideration - 8 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 before the Apex court in Sandvik Asia’s case supra, wherein it is held as under:- “ 29. In our view, the Act recognizes the principle that a person should only be taxed in accordance with law and hence where excess amounts of tax are collected from an assessee or any amounts are wrongfully withheld from an assessee without authority of law the revenue must compensate the assessee. 30. At the initial stage of any proceedings under the Act any refund will depend on whether any tax has been paid by an assessee in excess of tax actually payable to him and it is for this reason that Section 237 of the Act is phrased in terms of tax paid in excess of amounts properly chargeable. It is, however, of importance to appreciate that section 240 of the Act, which provides for refund by the Revenue on appeal etc., deals with all subsequent stages of proceedings and therefore is phrased in terms of 'any amount' becoming due to an assessee. 31.The Delhi High Court in Goodyear India Ltd. Case (supra) held that an assessee is entitled to further interest under Section 244 of the Act on interest under Section 214 of the Act which had been withheld by the Revenue. The case of the Revenue - 9 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 was that interest payable to an assessee under Section 214 of the Act was not a refund as defined in Section 237 of the Act and hence no interest could be granted to the assessee under Section 244 of the Act. The Court held that for this purpose Section 240 of the Act was relevant which referred to refund of 'any amount becoming due to an assessee' and that the said phrase would include interest and hence the assessee was entitled to further interest on interest wrongfully withheld. It is also important to appreciate that the Delhi High Court also referred to the Gujarat High Court decision in D.J. Works case (supra) and read it as taking the same view. This supports the view of the appellant on the correct reading of the Gujarat decision. 32. As already noticed in paragraph supra, the Madras High Court in Needle Industries Private Ltd. Case (supra) has also interpreted the phrase 'any amount' in the same manner when considering the provisions of Section 244(1A) of the Act, which also uses the same phrase in the context of interest payable by the Revenue. In express terms the Court held that the expression referred not only to the tax but also to interest. The Court agreed with a similar view taken by the Kerala High Court in the case of Ambat Echukutty Menon (supra). Both these were cases where the Court was called upon to decide - 10 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 whether further interest was payable by the Revenue on interest which had to be repaid to assessee. 33. In our opinion, the appellant is entitled to interest under Section 244 and/or Section 244A of the Act in accordance with the terms and provisions of the said sections. The interest previously granted to it has been computed up to 27.03.1981 and 31.03.1986 (under different sections of the Act) and it's present claim is for compensation for periods of delay after these dates. 34. In the impugned order, the Bombay High Court has rejected the appellant's contention mainly on the ground that the word refund must mean an amount previously paid by an assessee and does not relate to an amount payable by the revenue by way of interest on such sums. The High Court's conclusion is based mainly on the wording of the proviso to Section 240 of the Act. As already discussed by us in paragraph supra the proviso can have no relevance whatsoever as it was not part of the Act during the relevant period. The said proviso was inserted with effect from 01.04.1989. 35. The High Court in its judgment has referred to the provisions of Section 244(1A) and the decision of this Court in Modi Industries Ltd. (supra) extracted two paragraphs from this Court's judgment holding - 11 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 that there can be no question of paying interest under both Section 214(1A) and 244(1A) of the Act simultaneously, and further that there is no right to receive interest except as provided by the statute. The decision in Modi Industries case (supra) has no bearing whatsoever on the issue in hand as the issue in that case was the correct meaning of the phrase "regular assessment" and as a consequence under which provision an assessee was entitled to interest for the period up to the date of regular assessment and thereafter. The matter of what was due to it in terms of the decision in Modi Industries case is over, concluded, no longer in dispute and was agreed/accepted on 27.03.1998 when the 2nd respondent gave effect to the previous order of this Court dated 30.04.1997. The working of the respondents itself conclusively shows, further the interest received is admittedly in accordance with the Act. The decision in Modi Industries case (supra), in our view, has no bearing whatsoever on the matter in hand. The main issue now is whether an assessee is entitled to be compensated by the Revenue for the delay in paying to the assessee's amounts admittedly due to it? 36. The High Court has dissented from the decision of the Delhi High Court in Goodyear's case (supra) on the utterly and ex facie erroneous ground - 12 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 that it proceeded on an assumption as to the meaning of the phrase "any amount". A plain reading of the Delhi High Court judgment will show that this reasoning is utterly erroneous, false and unsustainable. 37. The High Court has not followed the decision of this Court in Narendra Doshi's case (supra) on the ground that this Court did not decide that further interest was payable by interpretation of the Act. What was urged before the High Court was that this Court decided the matter by upholding the Gujarat High Court view which proceeded on the basis that the provisions of the Act did not provide for such further interest. 38. The High Court has merely noted the decision of the Madras High Court in Needle Industries case (supra) without dealing with the same in any manner. 39. The High Court similarly noted and failed to deal with the Kerala High Court's decision in Ambat Echukutty Menon's case (supra) and a previous decision of the Bombay High Court itself in the case of Suresh B. Jain's case (supra). 40. In the present appeal, the respondents have argued that the compensation claimed by the - 13 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 appellant is for delay by the revenue in paying of interest, and this does fall within the meaning of refund as set out in Section 237 of the Act. The relevant provision is Section 240 of the Act which clearly lays down that what is relevant is whether any amount has become due to an assessee, and further the phrase any amount will also encompass interest. This view has been accepted by various High Courts such as the Delhi, Madras, Kerala High Court etc. Whether on general principles the assessee ought to have been compensated for the inordinate delay in receiving monies properly due to it? 41. The learned counsel for the appellant says that it cannot be denied that it has been deprived of the use of it's monies for periods ranging from 12 to 17 years. It also cannot be denied that such deprivation is solely due to the actions of the revenue which have been held by this Court to be contrary to the provisions of the Act, on general principles it ought to be compensated for such deprivation. 42. In the impugned order, the Bombay High Court has held that no compensation is required to be paid since " . there was a serious dispute between the parties, which was ultimately ordered to - 14 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 be paid pursuant to the order passed by this Court on 30.04.1997. Undisputedly, the amount pursuant thereto was paid on 27.03.1998 ". The Court further held that since the amount was paid once the controversy was resolved there was no wrongful retention of monies. No authority can ever accept an obligation to make payment and simply refuse to pay. In each and every case an authority must at least claim to act in accordance with law and hence claim it has no obligation to pay for some reason or another. When the claims of the authority are found to be unsustainable or erroneous by the Courts it follows that the authority has acted wrongfully in the sense of not in accordance with law and compensation to the party deprived must follow. If the decision of the High Court is upheld it would mean that there can never be any wrongful retention by an authority until this Court holds that their stand is not in accordance with law. Therefore, that on this issue as well, the impugned judgment cannot be sustained and ought to be reversed. 43. In the present context, it is pertinent to refer to the Circular on Trade Notice issued by the Central Excise Department on the subject of refund of deposits made in terms of Section 35F of the Central Excise Act, 1944 and 129E of the Customs Act, 1962. The Circular is reproduced hereunder:- - 15 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 "Refund/Return of deposits made under Section 35F of CEA, 1944 and Section 129E of Customs Act, 1962 - Clarifications The issue relating to refund of pre-deposit made during the pendency of appeal was discussed in the Board Meeting. It was decided that since the practice in the Department had all along been to consider such deposits as other than duty, such deposits should be returned in the event the appellant succeeds in appeal or the matter is remanded for fresh adjudication. 2. It would be pertinent to mention that the Revenue had recently filed a Special Leave Petition against Mumbai High Court's order in the matter of NELCO LTD, challenging the grant of interest on delayed refund of pre- deposit as to whether : (i) the High Court is right in granting interest to the depositor since the law contained in Section 35F of the Act does in no way provide for any type of compensation in the event of an appellant finally succeeding in the appeal, and, (ii) the refunds so claimed are covered under the provisions of Section 11B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under Section 35F of the Central Excise Act, 1944. The Hon'ble Supreme Court vide its order dated 26-11-2001 dismissed the appeal. Even though the Apex Court did not spell out the reasons for dismissal, it can well be construed in the light of its earlier judgment in the case of Suvidhe Ltd. and Mahavir Aluminium that the law relating to refund of pre-deposit has become final. 3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11B(1) of the Central Excise Act, 1944 or under Section - 16 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 27(1) of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested Xerox copy of the order-in- appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested Xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose. All pending refund applications already made under the relevant provisions of the Indirect Tax Enactments for return of such deposits and which are pending with the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees executed in lieu of cash deposits shall also be returned. 4. The above instructions may be brought to the notice of the field formations with a request to comply with the directions and settle all the claims without any further delay. Any deviation and resultant liability to interest on delayed refunds shall be viewed strictly. 5. All the trade associations may be requested to bring the contents of this circular to the knowledge of their members and the trade in general. 6. Kindly acknowledge receipt. [Source : M.F.(D.R.) F.No. 275/37/2K-CX.8A, dated 2-1-2002]" 44. A close scrutiny of the contents of the Circular dated 2.1.2002 would disclose as to the modalities for return of pre-deposits. It again - 17 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 reiterated that in terms of the Supreme Court order such pre-deposit must be returned within 3 months from the date of the order passed by the Tribunal, Court or other fiscal authority unless there is a stay on the order of the fiscal authority, tribunal, court by a superior court. The Department has very clearly stated in the above circular that the delay beyond the period of 3 months in such cases will be viewed adversely and appropriate disciplinary action will be initiated against the concerned defaulting officers, a direction was also issued to all concerned to note that defaulter will entail a interest liability if such liability accrue by reason of any orders of the Tribunal/Court such orders will have to be complied with and it may be recoverable from the concerned officers. All the Commissioners were advised implementation of these instructions and ensure their implementation through a suitable monitoring mechanism. It is also specifically mentioned that the Commissioners under respective jurisdiction should be advised that similar matters pending in the High Courts must be withdrawn and compliance reported and that the Board has also decided to implement the orders passed by the Tribunal already passed for payment of interest and the interest payable shall be paid forthwith. - 18 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while - 19 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of Rs.40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. “ 7. So also, in L.M.Wind Power Blades case supra, this Court held as under:- “10. The material on record discloses that undisputedly, the respondents encashed the bank guarantees of the petitioner on 23-9-2019 and the same was retained and was lying with them from - 20 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 that date onwards up to 5-1-2022 when the said sum of Rs. 4,73,26,512/- was refunded back to the petitioner. In this context, a perusal of the judgment of the Bombay High Court will indicate that the respondents were directed to refund the said amount together with applicable statutory interest thereon, within a period of four weeks. A plain reading of the directions issued by the Bombay High Court will clearly indicate that the petitioner was declared to be entitled to the aforesaid sum of Rs. 4,73,26,512/- together with applicable statutory interest and that the said amount together with interest was liable to be paid by the respondents to the petitioner within a period of four weeks from the date of receipt of a copy of the order. 11. In other words, the Bombay High Court not only directed refund of the amount of Rs. 4,73,26,512/- covered by the bank guarantee but also directed refund of applicable statutory interest by the respondents in favour of the petitioner. Under these circumstances, the reasoning of the 3rd respondent in the impugned order that the petitioner was not entitled to interest in terms of the judgment of the Bombay High Court is clearly erroneous and the same deserves to be set aside. - 21 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 12. A perusal of the impugned order passed by the 3rd respondent will indicate that the claim for refund of interest has been rejected on the ground that apart from the fact that neither Section 115 nor Sections 54 and 56 of the GST Act were applicable to the petitioner, there is no provision under the Act and Rules providing for payment of interest when the amounts encashed under the bank guarantee are directed to be refunded. In this context, it is significant to note that while deciding the claim of the petitioner for refund of the amounts covered by the bank guarantees, at paragraphs 26 and 27 of its order, the Bombay High Court has expressly referred to statutory provisions relating to filing of appeals, payment of interest etc., including referring to Sections 54, 56 and 115 of the GST Act. It is therefore clear that the Bombay High Court was of the definite opinion that the petitioner was not only entitled to refund of the aforesaid amount of Rs. 4,73,26,512/- covered by the 8 encashed bank guarantees but that the petitioner would also be entitled to interest thereon as can be discerned from the judgment of the Bombay High Court and consequently, the said finding recorded in the impugned order deserves to be set aside. 13. A perusal of the judgment of the Bombay High Court will also indicate that directions were issued to - 22 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 the respondents to pay applicable statutory interest within a period of four weeks from the date of receipt of the said order. In this context also, the 3rd respondent has held that the interest on delayed refund in terms of Section 56 would apply only when refund is not made within 60 days from the date of receipt of refund application, if refund is ordered under Section 54(5) of the GST Act. In the instant case, it is an undisputed fact that the petitioner became entitled to refund of the amounts covered under the bank guarantees not by virtue of any order passed under Section 54 and consequently, neither Section 54 nor Section 56 would be applicable for the purpose of considering the claim for interest on delayed payment. On the other hand, the specific directions issued by the Bombay High Court directing payment of the amounts covered under the bank guarantees together with suitable statutory interest within a period of four weeks is a clear pointer to the fact that the petitioner would be entitled to accrued interest in terms of the judgment of the Bombay High Court and not under either Section 54, 56 or 115 and as such, on this score also, the erroneous findings recorded by the 3rd respondent in the impugned order deserve to be set aside. 14. The 3rd respondent also committed an error in holding that in the absence of any statutory - 23 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 provision, petitioner would not be entitled to any interest on the refund amount. In this context, as held by the Apex Court and other High Courts in the aforesaid judgments, even in the absence of any statutory provision, in the light of the undisputed fact that the respondents illegally retained and withheld the amounts legally belonging to the petitioner during the period from 29-3-2019 when the bank guarantees were encashed up to 5-1-2022 when the amounts covered thereunder were refunded back to the petitioner, even in the absence of any statutory provision, the petitioner would be entitled to interest at a reasonable rate on the said amount for the aforesaid period and viewed from this angle also, the impugned order is unsustainable and deserves to be set aside. 15. The undisputed material on record discloses that the petitioner has been wrongly and without any fault on its part been deprived of the use, utilisation and benefit of the aforesaid amount of Rs. 4,73,26,512/- during the period from 29-3-2019 up to 5-1-2022, during which period, the respondents illegally withheld and retained the said amount as declared by the Bombay High Court. Under these circumstances also, by applying the principles of restitution and by way of compensation for the loss caused to the petitioner on account of illegal and - 24 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 wrongful deprivation of the aforesaid amount by the respondents, the petitioner would be entitled to interest for the aforesaid period and consequently, the impugned order deserves to be set aside on this ground also. 16. The 3rd respondent has committed an error in recording an erroneous finding that the aforesaid amount of Rs. 4,73,26,512/- encashed under the bank guarantees was available with the petitioner during the aforesaid period from 29-3-2019 till 5-1- 2022; this finding recorded by the 3rd respondent in the impugned order is clearly and factually incorrect and contrary to the material on record, which indicates that pursuant to encashment of the 8 bank guarantees, the respondents had appropriated the said amount and prevented the petitioner of its use and benefit till the same was actually refunded only on 5-1-2022 and as such, even this finding recorded by the 3rd respondent in the impugned order deserves to be set aside. 17. The aforesaid facts and circumstances and the material on record clearly indicate that the impugned order passed by the 3rd respondent rejecting the interest refund claim of the petitioner is contrary to law and facts and the same deserves to be quashed. The next question that arises for consideration is the - 25 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 rate of interest to be awarded in favour of the petitioner. In my considered opinion, interest of justice would be met if the respondents are directed to pay interest in favour of the petitioner on the aforesaid amount of Rs. 4,73,26,512/- at the rate of 6% p.a. for the period from 29-3-2019 when the bank guarantees were illegally encashed by the respondents up to 5-1-2022 when the aforesaid amount of Rs. 4,73,26,512/- was refunded back to the petitioner. 18. In the result, I pass the following:— ORDER (i) Petition is hereby partly allowed. (ii) The impugned order at Annexure-A dated 28-7-2022 passed by the 3rd respondent is hereby set aside. (iii) The concerned respondents are directed to pay interest at the rate of 6% p.a. on a sum of Rs. 4,73,26,512/- for the period from 29-3-2019 to 5-1-2022 in favour of the petitioner as expeditiously as possible and at any rate within a period of two months from the date of receipt of a copy of this order.” 8. In Team HR Services case supra, the Delhi High Court held as under:- - 26 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 “17. We are unable to find any justification for the respondents to retain the said amount of Rs. 2, 38, 00, 000/-. We have thus enquired from the Counsel for the respondents, what should be the rate of interest for which the respondents should be held liable. 18. The Counsel for the respondents states that as per the statute, the respondents are liable for interest @ 6% per annum only. 19. Per contra, the Counsel for the petitioner has drawn attention to: (A) Sandvik Asia Ltd. v. Commissioner of Income Tax-I, Pune, (2006) 2 SCC 508 = (2006) 196 ELT 257 ( S.C. ) where interest @ 9% per annum was awarded; (B) Surinder Singh v. Union of India, 2006 SCC OnLine Del 1863 (DB) = (2006) 204 ELT 534 (Del. ) where interest @ 12% per annum was granted on delayed refund; (C) Hello Minerals Water (P) Ltd. v. Union of India, 2004 SCC OnLine All 2187 (DB) = (2004) 174 ELT 422 (All. ) where interest @ 10% per annum was granted; (D) Hindustan Coca-Cola Beverages Pvt. Ltd. v. Union of India, 2013 SCC OnLine Guj 1487 (DB) = (2015) 324 ELT 299 (Guj. ) where interest @ 9% per annum and future interest @ 6% per annum was granted; and, (E) Ebiz. com Pvt. Ltd. v. Commissioner of Central Excise, Customs & S.T., 2017 (49) - 27 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 S.T.R. 389 (All. ) where costs of Rs. 50, 000/- were imposed on the Department. 20. In the present case, as aforesaid, the amount of Rs. 2, 38, 00, 000/- was deposited by the petitioner of its own volition, during the audit/investigation, though under protest and the petitioner has not chosen to detail the circumstances in which the petitioner felt compelled to make the deposit. The petitioner for the first time sought refund of the said amount vide letter dated 2nd May, 2018. 21. Considering the said facts, we do not find the petitioner entitled to interest at any higher rate than @ 6% per annum from the date of deposit i. e. 27th October, 2006 till the end of May, 2018 i. e. 31st May, 2018. However, we do not find any justification for the respondents retaining the said amount thereafter and find the respondents liable for interest with effect from 1st June, 2018 onwards and till date @ 7.5% per annum. While so enhancing the rate of interest, we have also taken into consideration the non-compliance by the respondents of the orders of this Court as detailed above, leading to a contempt notice being issued to the respondents and in response whereto Ms. Niharika Gupta, Assistant Commissioner in the Office of Division- Nehru Place, Central GST, Delhi East Commissionerate is present in the Court.” - 28 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 9. In Willowood Chemical’s case supra, the Apex Court held as under:- “12. Before we deal with the controversy in question, we may extract the relevant statutory provisions: 12.1. Sections 16 and 20 of the IGST Act are as follows: “16. Zero rated supply.—(1) “zero rated supply” means any of the following supplies of goods or services or both, namely: (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of Section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. (3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or - 29 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied…. *** 20. *** 20. Application of provisions of Central Goods and Services Tax Act.—Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act relating to,— (i) scope of supply; (ii) composite supply and mixed supply; (iii) time and value of supply; (iv) input tax credit; (v) registration; (vi) tax invoice, credit and debit notes; (vii) accounts and records; (viii) returns, other than late fee; (ix) payment of tax; (x) tax deduction at source; (xi) collection of tax at source; (xii) assessment; (xiii) refunds; (xiv) audit; (xv) inspection, search, seizure and arrest; - 30 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (xvi) demands and recovery; (xvii) liability to pay in certain cases; (xviii) advance ruling; (xix) appeals and revision; (xx) presumption as to documents; (xxi) offences and penalties; (xxii) job work; (xxiii) electronic commerce; (xxiv) transitional provisions; and (xxv) miscellaneous provisions including the provisions relating to the imposition of interest and penalty, shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to Central tax as if they are enacted under this Act: Provided that in the case of tax deducted at source, the deductor shall deduct tax at the rate of two per cent from the payment made or credited to the supplier: Provided further that in the case of tax collected at source, the operator shall collect tax at such rate not exceeding two per cent, as may be notified on the recommendations of the Council, of the net value of taxable supplies: Provided also that for the purposes of this Act, the value of a supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, and the Goods and - 31 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 Services Tax (Compensation to States) Act, if charged separately by the supplier: Provided also that in cases where the penalty is leviable under the Central Goods and Services Tax Act and the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, the penalty leviable under this Act shall be the sum total of the said penalties: Provided also that in cases where the appeal is to be filed before the appellate authority or the Appellate Tribunal, the maximum amount payable shall be fifty crore rupees and one hundred crore rupees respectively.” 12.2. Sections 54 and 56 of the CGST Act are as under: “54. Refund of tax.—(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of Section 49, may claim such refund in the return furnished under Section 39 in such manner as may be prescribed. (2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as - 32 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 notified under Section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than— (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of Central tax or claims refund of the integrated tax paid on such supplies. (4) The application shall be accompanied by— (a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and - 33 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (b) such documentary or other evidence (including the documents referred to in Section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. (5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in Section 57. (6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant. - 34 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (7) The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects. (8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to— (a) refund of tax paid on export of goods or services or both or on inputs or input services used in making such exports; (b) refund of unutilised input tax credit under sub-section (3); (c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued; (d) refund of tax in pursuance of Section 77; (e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or (f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify. (8-A) The Government may disburse the refund of the State tax in such manner as may be prescribed. (9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund - 35 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 shall be made except in accordance with the provisions of sub-section (8). (10) Where any refund is due under sub- section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or appellate authority by the specified date, the proper officer may— (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. Explanation.—For the purposes of this sub- section, the expression “specified date” shall mean the last date for filing an appeal under this Act. (11) Where an order giving rise to a refund is the subject-matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. (12) Where a refund is withheld under sub- section (11), the taxable person shall, notwithstanding anything contained in Section 56, be entitled to interest at such rate not exceeding six per cent as may be - 36 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. (13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of Section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under Section 39. (14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees. Explanation.—For the purposes of this section,— (1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3). (2) “relevant date” means— (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,— (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or - 37 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (ii) if the goods are exported by land, the date on which such goods pass the frontier; or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished; (c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of— (i) receipt of payment in convertible foreign exchange [ Ins. by Act 31 of 2018, S. 23(b)(i) (w.e.f. 1-2-2019).] [or in Indian rupees wherever permitted by the Reserve Bank of India], where the supply of services had been completed prior to the receipt of such payment; or (ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice; (d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction; (e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under Section 39 for the period in which such claim for refund arises; - 38 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; (g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and (h) in any other case, the date of payment of tax. *** 56. Interest on delayed refunds.—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 sub-section (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 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: 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. - 39 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 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).” 13. These provisions show that a registered person making export of goods outside India, is entitled in terms of Section 16 of the IGST Act to claim refund of either unutilised input tax credit of export of goods under bond or letter of undertaking or refund of integrated tax paid on export of goods. In terms of Section 20 of the IGST Act, any claim for refund is to be governed by the provisions of the CGST Act which would apply mutatis mutandis as if they were enacted in the IGST Act. The application for refund, therefore, is required to be preferred in accordance with Section 54 of the CGST Act. According to Section 56 of the CGST Act, if an applicant is not refunded any tax ordered to be refunded by the Proper Officer under Section 54(5) within 60 days from the receipt of the application, interest at such rate not exceeding 6% would become payable after the expiry of 60 days from the date of receipt of application till the date of refund of such tax. The proviso to said section prescribes that where any claim of refund arises from an order - 40 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 passed by an adjudicating authority or appellate authority or Appellate Tribunal or court and if the same is not refunded within 60 days from the date of receipt of an application filed consequent to such an order, the rate of interest payable would be 9%. 14. The instant cases have not arisen from any order passed by an adjudicating authority or appellate authority or Appellate Tribunal or court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. In light of these provisions, the question which arises for consideration is whether the High Court was justified in awarding interest @ 9% p.a. 15. Before we deal with the question, it must be stated that initially a Bench of two Judges of this Court in Union of India v. Orient Enterprises [Union of India v. Orient Enterprises, (1998) 3 SCC 501] had observed that a writ petition under Article 226 of the Constitution filed solely for relief for payment of interest on delayed refund would not be maintainable. For facility, the relevant portion from the said decision is quoted here : (SCC pp. 503-504, paras 6-8) “6. In Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] this Court has laid down that a writ petition under Article 226 of the - 41 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 Constitution solely praying for the issue of a writ of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as a tax. This Court has made a distinction between a direction for refund given by way of consequential order in a case where the legality of the assessment is questioned and a case where the petition is only for the purpose of seeking refund. It has been observed : (AIR p. 1742, para 6) ‘6. … We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realised, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment orders on the ground of their illegality or unconstitutionality and, therefore, could take action under Article 226 for the protection of their fundamental right, and the courts, on setting aside the assessment orders exercised their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realised. We do not find any good reason to extend this principle and, therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right.’ 7. The Court has emphasised that there was no legal right in the appellant who had filed the writ petition to claim the refund under the relevant statute. - 42 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 8. In the present case also till the insertion of Section 27-A in the Act by Act 22 of 1995 there was no right entitling payment of interest on delayed refund under the Act. Such a right was conferred for the first time by the said provision. Act 22 of 1995 also inserted Section 28-AA which provides for payment of interest on delayed payment of duty by a person who is liable to pay the duty. Thus at the relevant time there was no statutory right entitling the respondents to payment of interest on delayed refund and the writ petition filed by them was not for the enforcement of a legal right available to them under any statute. The claim for interest was in the nature of compensation for wrongful retention by the appellants of money that was collected from the respondents by way of customs duty, redemption fine and penalty. In view of the law laid down by this Court in Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] a writ petition seeking the relief of payment of interest on delayed refund of the amount so collected could not, in our opinion, be maintained. The decisions on which reliance has been placed by Shri Rawal were cases where the legality of the orders requiring payment of tax or duty were challenged and the High Court in exercise of its jurisdiction under Article 226 of the Constitution, while setting aside the said orders, has directed the refund of the amount so collected with interest. The direction for payment of interest in these cases was by way of consequential relief along with the main relief of setting aside the order imposing the tax or duty. Those cases stand on a different footing and have no application to the present case. The appeal is, therefore, allowed, the impugned judgment [Elephanta Oil & Vanaspati Industries Ltd. v. Union of India, 1991 SCC OnLine Del 592] of the High Court is set - 43 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 aside and the writ petition filed by the respondents before the High Court is dismissed. No order as to costs.” 16. However, subsequently another Bench of two Judges of this Court in Godavari Sugar Mills Ltd. [Godavari Sugar Mills Ltd. v. State of Maharashtra, (2011) 2 SCC 439 : (2011) 1 SCC (Civ) 467] in more or less identical circumstances settled the issue and found the writ petition to be maintainable. The observations of this Court were : (SCC pp. 442-44, paras 7-8) “7. The High Court relying upon the decision of this Court in Suganmal v. State of M.P. [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] has held that the prayer in the writ petition being one for payment of interest, it should be considered to be a writ petition filed to enforce a money claim and therefore, not maintainable. 8. The observations in Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] related to a claim for refund of tax and have to be understood with reference to the nature of the claim made therein. The decision in Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] has been explained and distinguished in several subsequent cases, including in U.P. Pollution Control Board v. Kanoria Industrial Ltd. [U.P. Pollution Control Board v. Kanoria Industrial Ltd., (2001) 2 SCC 549] and ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC - 44 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 553] The legal position becomes clear when the decision in Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] is read with the other decisions of this Court on the issue, referred to below: (i) Normally, a petition under Article 226 of the Constitution of India will not be entertained to enforce a civil liability arising out of a breach of a contract or a tort to pay an amount of money due to the claimants. The aggrieved party will have to agitate the question in a civil suit. But an order for payment of money may be made in a writ proceeding, in enforcement of statutory functions of the State or its officers. (Vide Burmah Construction Co. v. State of Orissa [Burmah Construction Co. v. State of Orissa, AIR 1962 SC 1320 :1962 Supp (1) SCR 242] .) (ii) If a right has been infringed—whether a fundamental right or a statutory right—and the aggrieved party comes to the Court for enforcement of the right, it will not be giving complete relief if the Court merely declares the existence of such right or the fact that existing right has been infringed. The High Court, while enforcing fundamental or statutory rights, has the power to give consequential relief by ordering payment of money realised by the Government without the authority of law. (Vide State of M.P. v. Bhailal Bhai [State of M.P. v. Bhailal Bhai, AIR 1964 SC 1006] .) (iii) A petition for issue of writ of mandamus will not normally be entertained for the purpose of merely ordering a refund of money, to the return of which the petitioner claims a right. The aggrieved party seeking refund has to approach the civil court for claiming the amount, though the High Courts have the power to pass appropriate orders in - 45 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 the exercise of the power conferred under Article 226 for payment of money. (Vide Suganmal v. State of M.P. [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] ) (iv) There is a distinction between cases where a claimant approaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment, etc. While a petition praying for mere issue of a writ of mandamus to the State to refund the money alleged to have been illegally collected is not ordinarily maintainable, if the allegation is that the assessment was without a jurisdiction and the taxes collected were without authority of law and therefore the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition. (Vide Salonah Tea Co. Ltd. v. Supt. of Taxes [Salonah Tea Co. Ltd. v. Supt. of Taxes, (1988) 1 SCC 401 : 1988 SCC (Tax) 99 (2)] .) (v) It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, where the facts are not in dispute, where the collection of money was without the authority of law and there was no case of undue enrichment, there is no good reason to deny a relief of refund to the citizens. But even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case. (Vide U.P. - 46 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 Pollution Control Board v. Kanoria Industrial Ltd. [U.P. Pollution Control Board v. Kanoria Industrial Ltd., (2001) 2 SCC 549] ) (vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the State or its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. (Vide Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. [Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd., (2005) 8 SCC 242] ) We are therefore of the view that reliance upon Suganmal [Suganmal v. State of M.P., AIR 1965 SC 1740 : (1965) 56 ITR 84 : (1965) 16 STC 398] was misplaced to hold that the writ petition filed by the appellant was not maintainable.” 17. We, therefore, proceed to consider the merits. Turning to the basic question it must be noted that in the following cases, this Court dealt with the question as to payment of interest on the amount due by way of refund: 17.1. In Modi Industries Ltd. v. CIT [Modi Industries Ltd. v. CIT, (1995) 6 SCC 396] a Bench of three Judges of this Court was called upon to consider the effect of Section 214 of the Income Tax Act, 1961, and the questions which arose were set out as under : (SCC p. 403, para 8) “8. We shall now indicate how the controversy relating to the meaning of the expression “regular assessment” arises : an assessee pays advance tax according to his - 47 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 estimate of his income during the financial year relevant to the particular assessment year. He then files a return and an assessment is made under Section 143. It is found that he has paid more amount by way of advance tax than the amount of tax assessed. He will be refunded the extra amount with interest calculated from the first day of April of that assessment year to the date of assessment. No difficulty arises in such a case. The difficulty arises in the following situation : indeed it is one of the many situations—not satisfied with the order of assessment, the assessee files an appeal. The appeal is allowed as a consequence of which, the assessment order is revised. As a result of such revised assessment made pursuant to the appellate order, the tax refundable to the assessee becomes larger— say whereas, according to the original assessment he was entitled to refund of Rs 10,000, he becomes entitled to a total refund of Rs 15,000 as a result of revised assessment made pursuant to the appellate order. The question is—on what amount and up to which date is the interest payable? On being elaborated, the question yields the following sub-questions: (a) Is the interest payable only on Rs 10,000 and if so, whether the interest is payable till the date of first/original assessment or till the date of the revised assessment? (b) Is the interest payable on Rs 15,000 and if payable, is it payable only till the date of first/original assessment or till the date of the revised assessment?” 17.2. After considering various decisions on the point, the conclusion drawn by the Court was : (Modi Industries case [Modi Industries Ltd. v. CIT, (1995) 6 SCC 396] , SCC p. 424, paras 58-59) - 48 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 “58. The argument, which was upheld in some of the cases now under appeal, is that it will be inequitable if the assessee does not get interest on the amount of advance tax paid, when the amount paid in advance is refunded pursuant to an appellate order. This is not a question of equity. There is no right to get interest on refund except as provided by the statute. The interest on excess amount of advance tax under Section 214 is not paid from the date of payment of the tax. Nor is it paid till the date of refund. It is paid only up to the date of the regular assessment. No interest is at all paid on excess amount of tax collected by deduction at source. Before introduction of Section 244(1-A) the assessee was not entitled to get any interest from the date of payment of tax up to the date of the order as a result of which excess realisation of tax became refundable. Interest under Section 243 or Section 244 was payable only when the refund was not made within the stipulated period up to the date of refund. But, if the assessment order was reduced in appeal, no interest was payable from the date of payment of tax pursuant to the assessment order to the date of the appellate order. 59. Therefore, interpretation of Section 214 or any other section of the Act should not be made on the assumption that interest has to be paid whenever an amount which has been retained by the tax authority in exercise of statutory power becomes refundable as a result of any subsequent proceeding.” 17.3. In Godavari Sugar Mills Ltd. [Godavari Sugar Mills Ltd. v. State of Maharashtra, (2011) 2 SCC 439 : (2011) 1 SCC (Civ) 467] , a Bench of two Judges of this Court considered the question whether interest on the compensation amount @ 9% p.a. - 49 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 could be awarded when the terms of Section 6 of the Maharashtra Agriculture Lands (Ceiling of Holdings) Act, 1961 prescribed payment of interest only @ 3% p.a. The discussion on the point was : (SCC pp. 444- 46, paras 11-15) “11. There is considerable force in the submissions of Ms Madhavi Divan, the learned counsel for the respondents that the decisions of the Bombay High Court in Krishnakumar [Krishnakumar Vithalrao Jamdar v. State of Maharashtra, WP No. 83 of 1986, order dated 29-6-1991 (Bom)] and Changdeo [Shree Changdeo Sugar Mills v. State of Maharashtra, WP No. 3805 of 2000, order dated 7-7-2000 (Bom)] are not sound, as they completely ignore Section 26 of the Act, while awarding interest at 9% p.a. on the belated payment of compensation. 12. The question as to when and in what circumstances, interest could be awarded on belated payment of compensation, was considered by this Court in Union of India v. Parmal Singh [Union of India v. Parmal Singh, (2009) 1 SCC 618 : (2009) 1 SCC (Civ) 279] . This Court first referred to the general principle and then the exceptions thereto, as under : (SCC pp. 624-25, paras 12-13) ‘12. When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, the courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property. … - 50 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 13. … The said general principle will not apply in two circumstances. One is where a statute specifies or regulates the interest. In that event, interest will be payable in terms of the provisions of the statute. The second is where a statute or contract dealing with the acquisition specifically bars or prohibits payment of interest on the compensation amount. In that event, interest will not be awarded. Where the statute is silent about interest, and there is no express bar about payment of interest, any delay in paying the compensation or enhanced compensation for acquisition would require award of interest at a reasonable rate on equitable grounds.’ This Court, dealing with an acquisition under the Defence of India Act, 1962 (which did not contain any provision either requiring or prohibiting payment of interest), upheld the award of interest at 6% p.a. 13. Section 24 of the Act requires the Collector, after possession of surplus land was taken over under Section 21(4) of the Act, to cause public notice requiring persons interested to lodge their claims. Section 25 of the Act provides for determination of compensation and apportionment thereof. 14. Section 26 deals with mode of payment of amount of compensation and the same is extracted below: ‘26. Mode of payment of amount of compensation.—(1) The amount of compensation may, subject to the provisions of sub-section (3), be payable in transferable bonds carrying interest at three per cent per annum. (2) The bonds shall be— - 51 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (a) of the following denominations, namely,— Rs 50; Rs 100; Rs 200; Rs 500; Rs 1000; Rs 5000 and Rs 10,000; and (b) of two classes—one being repayable during a period of twenty years from the date of issue by equated annual instalment of principal and interest, and the other being redeemable at par at the end of a period of twenty years from the date of issue. It shall be at the option of the person receiving compensation to choose payment in one or other class of bonds, or partly in one class and partly in another. (3) Where the amount of compensation or any part thereof, cannot be paid in the aforesaid denomination, it may be paid in cash.’ The said section contemplates the payment of compensation with interest at 3% p.a. in annual instalments spread over a period of 20 years or at the end of 20 years. It also contemplates payment being made either by transferable bonds or in cash. Sub-section (3) of Section 26 enabling payment of compensation by cash, in cases where it could not be paid by such bonds, does not disturb the rate of interest, which is 3% p.a. for 20 years, provided in sub-section (1) thereof. We are therefore of the view that whether the payment is made by transferable bonds or by cash, the rate of interest can be only at 3% p.a. for a period of 20 years from the date of taking possession. 15. The next question that requires consideration is about the rate of interest if the payment is not made even after 20 years, and whether it should be only @ 3% p.a., even after 20 years. Section 26 is silent about the rate of interest payable, if the compensation is not paid within 20 years. We are therefore of the view that Section 26 - 52 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 contemplates payment of the compensation within 20 years from the date of taking possession with interest at 3% p.a.; and for the period beyond 20 years, the said provision regarding interest will cease to apply and the general equitable principles relating to interest will apply; and interest can be awarded at any reasonable rate, in the discretion of the court. Interest @ 6% p.a., beyond 20 years would be appropriate and payable on equitable principles.” 17.4. In Sandvik Asia Ltd. [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] , a Bench of two Judges of this Court was called upon to consider whether the inordinate delay of about 12 to 17 years in making a refund would entitle grant of interest. In the facts of that case, interest @ 9% p.a. from 31-3-1986 to 27- 3-1998 was granted. Even while doing so this Court observed : (SCC p. 540, para 48) “48. There cannot be any doubt that the award of interest on the refunded amount is as per the statutory provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute, such provision has to govern the field. Therefore, the court has to take all relevant factors into consideration while awarding the rate of interest on the compensation.” 17.5. In Gujarat Fluoro Chemicals [CIT v. Gujarat Fluoro Chemicals, (2014) 1 SCC 126] , the correctness of the decision in Sandvik Asia Ltd. [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] came up for consideration before a Bench of three Judges of this Court, and the matter was considered thus : (Gujarat Fluoro Chemicals [CIT v. Gujarat Fluoro Chemicals, - 53 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (2014) 1 SCC 126] , SCC pp. 127-28, paras 3-6) “3. 127-28, paras 3-6) “3. In order to answer the aforesaid issue before us, we have carefully gone through the judgment of this Court in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] and the order of reference. We have also considered the submissions made by the parties to the lis. 4. We would first throw light on the reasoning and the decision of this Court on the core issue in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] . The only issue formulated by this Court for its consideration and decision was whether an assessee is entitled to be compensated by the Income Tax Department for the delay in paying interest on the refunded amount admittedly due to the assessee. This Court in the facts of the said case had noticed that there was delay of various periods, ranging from 12 to 17 years, in such payment by the Revenue. This Court had further referred to the several decisions which were brought to its notice and also referred to the relevant provisions of the Act which provide for refunds to be made by the Revenue when a superior forum directs refund of certain amounts to an assessee while disposing of an appeal, revision, etc. Since there was an inordinate delay on the part of the Revenue in refunding the amount due to the assessee this Court had thought it fit that the assessee should be properly and adequately compensated and therefore in para 51 of the judgment, the Court while compensating the assessee had directed the Revenue to pay a compensation by way of interest for two periods, namely, for Assessment Years 1977-1978, 1978- 1979, 1981-1982, 1982-1983 in a sum of Rs 40,84,906 and interest @ 9% from 31-3- 1986 to 27-3-1998 and in default, to pay the - 54 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 penal interest @ 15% p.a. for the aforesaid period. 5. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 6. As we have already noticed, in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest.” 18. Since reliance was placed by the High Court on the decision of the Constitution Bench of this Court in K.T. Plantation [K.T. Plantation (P) Ltd. v. State of Karnataka, (2011) 9 SCC 1 : (2011) 4 SCC (Civ) 414] , we must note that what arose for consideration in that case, was the constitutional validity of the Devika Rani Roerich Estate - 55 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 (Acquisition & Transfer) Act, 1996, and Section 110 of the Karnataka Land Reforms Act, 1996 and certain notifications issued by the State Government. The questions which arose for consideration were set out in para 25 of the decision as under: “Whether the relevant provisions violated the basic structure of the Constitution insofar as they conferred power on the executive government for withdrawal of exception without hearing and without reasons and whether the provisions of the Acquisition Act were protected by Article 31(A) of the Constitution and whether they were violative of Article 300(A) of the Constitution?” 19. After dealing with these questions, the reference was answered thus : (K.T. Plantation case [K.T. Plantation (P) Ltd. v. State of Karnataka, (2011) 9 SCC 1 : (2011) 4 SCC (Civ) 414] , SCC p. 62, para 221) “221. [Ed. : Para 221 corrected vide Official Corrigendum No. F.3/Ed.B.J./23/2012 dated 7-4-2012.] We, therefore, answer the reference as follows: (a) Section 110 of the Land Reforms Act and the Notification dated 8-3-1994 are valid, and there is no excessive delegation of legislative power on the State Government. (b) Non-laying of the Notification dated 8-3-1994 under Section 140 of the Land Reforms Act before the State Legislature - 56 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 is a curable defect and it will not affect the validity of the notification or action taken thereunder. (c) The Acquisition Act is protected by Article 31-A of the Constitution after having obtained the assent of the President and hence immune from challenge under Article 14 or 19 of the Constitution. (d) There is no repugnancy between the provisions of the Land Acquisition Act, 1894 and the Rocrich and Devika Rani Rocrich Estate (Acquisition & Transfer) Act, 1996 (in short “the Acquisition Act”), and hence no assent of the President is warranted under Article 254(2) of the Constitution. (e) Public purpose is a precondition for deprivation of a person from his property under Article 300-A and the right to claim compensation is also inbuilt in that article and when a person is deprived of his property the State has to justify both the grounds which may depend on scheme of the statute, legislative policy, object and purpose of the legislature and other related factors. (f) Statute, depriving a person of his property is, therefore, amenable to judicial review on grounds hereinbefore discussed.” The aforestated answers and especially one at serial (e) show the context in which the issue of compensation was considered by this Court, which is - 57 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 completely distinct and different from the issue with which we are presently concerned. 20. Coming back to the present cases, the relevant provision has prescribed rate of interest at 6% where the case for refund is governed by the principal provision of Section 56 of the CGST Act. As has been clarified by this Court in Modi Industries [Modi Industries Ltd. v. CIT, (1995) 6 SCC 396] and Godavari Sugar Mills [Godavari Sugar Mills Ltd. v. State of Maharashtra, (2011) 2 SCC 439 : (2011) 1 SCC (Civ) 467] wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the statute. Wherever a statute, on the other hand, is silent about the rate of interest and there is no express bar for payment of interest, any delay in paying the compensation or the amounts due, would attract award of interest at a reasonable rate on equitable grounds. It is precisely for this reason that para 9 of the decision in Godavari Sugar Mills [Godavari Sugar Mills Ltd. v. State of Maharashtra, (2011) 2 SCC 439 : (2011) 1 SCC (Civ) 467] accepted the submission made by the learned counsel for the respondents and confined the rate of interest to the prescription made in the statute. The award of interest at a rate in excess of what was prescribed by the statute was only for a period beyond 20 years where the matter was not strictly - 58 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 covered by the statute and as such it would be in the realm of discretion of the Court. 21. It must also be noted here that the inordinate delay of up to 17 years in making refunds was a special circumstance when this Court was persuaded to accept grant of interest @ 9% p.a. in Sandvik Asia [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] . Even while doing so, the observations made by this Court in para 48 of the decision are quite clear that “the award of interest in refund and amount must be as per the statutory provisions of law and whenever a specific provision has been made under the statute such provision has to govern the field”. The subsequent decision of the Bench of three Judges in Gujarat Fluoro Chemicals [CIT v. Gujarat Fluoro Chemicals, (2014) 1 SCC 126] noticed that the grant of interest @ 9% was in the facts of the case in Sandvik Asia [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] . 22. Since the delay in the instant case was in the region of 94 to 290 days and not so inordinate as was the case in Sandvik Asia [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] , the matter has to be seen purely in the light of the statutory provisions concerned. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded @ - 59 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 6%. The award of interest at 9% would be attracted only if the matter was covered by the proviso to the said Section 56. The High Court was in error in awarding interest at the rate exceeding 6% in the instant matters. 23. We, therefore, allow these appeals and direct that the original writ petitioners would be entitled to interest @ 6% p.a. on amounts that they were entitled by way of refund of tax. Since the amounts concerned along with interest @ 6% p.a. have already been made over to them, nothing further need be done in both the cases. 24. The instant civil appeals are thus allowed to the extent indicated above without any order as to costs. 10. In the instant case, it is an undisputed fact as borne out from the material on record that the respondent retained the service tax paid by the petitioners for about 15 years till the same was ultimately refunded back to the petitioners in the year 2025, as a result of which, the respondent would be liable to pay interest at a reasonable rate of 7.5% on the refund from the date of the petitioners’ filing the refund applications till date of refund - 60 - HC-KAR NC: 2025:KHC:52517 WP No. 31364 of 2025 and the present petition deserves to be disposed of accordingly. 11. In the result, I pass the following: ORDER (i) Petition is hereby allowed. (ii) The respondent is directed to grant / pay interest to the petitioners on the refund amount at 7.5% p.a. from the date of filing of refund applications by the petitioners till the date of refund by taking necessary steps in this regard within a period of six weeks from the date of receipt of a copy of this order. Sd/- (S.R.KRISHNA KUMAR) JUDGE NBM/SRL List No.: 2 Sl No.: 6