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CA Final · Indirect Tax Laws · Refunds

A refund of Rs 4,00,000 was sanctioned to Narmada Chemicals Ltd., but the credit to its bank account failed because the account details furnished were incorrect. The applicant took 12 days to furnish correct bank details and have them validated. Which statement correctly reflects rule 94 of the CGST Rules, 2017 for computing interest on delay?

The 12 days are excluded from the period of delay. Rule 94(2)(b) excludes any time taken by the applicant to furnish correct bank details or validate them where the sanctioned refund could not be credited. Unlike the notice-reply clause, this exclusion has no fifteen-day threshold, so the whole period is left out.

  1. AThe 12 days are excluded from the period of delayCorrect
  2. BThe 12 days are included, because bank errors are the department's responsibility
  3. CThe 12 days are excluded only if they exceed fifteen days
  4. DInterest is not payable at all once the sanction order is passed

Explanation

Rule 94(2)(b) excludes any period of time taken by the applicant for furnishing correct bank account details or validating them, where the sanctioned refund could not be credited. There is no fifteen-day threshold for this clause; that threshold applies to the RFD-08 reply under clause (a). So all 12 days are excluded.

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