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CA Final · Indirect Tax Laws · Refunds

Kaveri Exports Pvt. Ltd. received a refund order for ₹10,00,000 after the 60-day period. Its claim arose from an order of an Appellate Authority that has attained finality, and the refund was not paid within sixty days of receiving the application filed consequent to that order. Which statement about the interest is correct as per the proviso to section 56?

For a refund arising from a final order of an appellate authority, tribunal or court, the proviso to section 56 allows interest at a rate not exceeding nine per cent. It runs from the day after sixty days from receipt of the consequent application until the refund is paid.

  1. AInterest at a rate not exceeding nine per cent. is payable from the date immediately after expiry of sixty days from receipt of application till the date of refundCorrect
  2. BInterest at a rate not exceeding six per cent. is payable from the date of the appellate order
  3. CNo interest is payable because the refund arises from an appellate order
  4. DInterest at a rate not exceeding nine per cent. is payable from the date of the original refund application filed before the appellate order

Explanation

The proviso to section 56 applies where the refund arises from an order that has attained finality and is not paid within sixty days of the application filed consequent to the order. The higher rate, not exceeding nine per cent., applies from the day after those sixty days expire until the date of refund. The six per cent. ceiling applies only to ordinary delayed refunds.

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