Interest on delayed refunds
Commencement. 22nd June, 2017 for sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 1st July, 2017 for sections 6 to 9, 11 to 21, 31 to 41, 42 (except proviso to sub-section (9) of S 42), 43 (except proviso to subsection (9) of S 43), 44 to 50, 53 to 138, 140 to 163, 165 to 174.
Section 56 of the Central Goods and Services Tax Act, 2017 deals with 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. The Act was enacted on 12 Apr 2017.
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 1[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]:
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).
Section 56, The Central Goods and Services Tax Act, 2017 (Act 12 of 2017).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 7
- s. 54 Refund of tax
- s. 60 Provisional assessment
- s. 115 Interest on refund of amount paid for admission of appeal
- Finance Act s. 116 Amendment of notification issued under sub-sections (1) and (3) of section 50, sub-section (12) of section 54 and section 56 of Central Goods and Services Tax Act, retrospectively
- Finance Act s. 119 Amendment of notification issued under section 20 of Integrated Goods and Services Tax Act, read with sub-sections (1) and (3) of section 50, sub-section (12) of section 54 and section 56 of Central Goods and Services Tax Act, retrospectively
- Finance Act s. 122 Amendment of notification issued under section 21 of Union Territory Goods and Services Tax Act read with sub-sections (1) and (3) of section 50, sub-section (12) of section 54 and section 56 of Central Goods and Services Tax Act, retrospectively
- Finance Act s. 147 Amendment of section 56
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Union of India vs Willowood Chemicals Pvt. LTD
Court's Decision & Legal Precedent
Where a statute specifies or regulates the rate of interest on delayed refunds, the interest must be payable strictly in accordance with the statutory provisions. The principal provision of Section 56 of the CGST Act prescribes a maximum rate of 6% per annum for interest on delayed refunds in normal circumstances. The proviso to Section 56, which provides for 9% interest, applies only where the refund claim arises from an order passed by an adjudicating authority, appellate authority, appellate tribunal, or court. In cases where the refund claim does not arise from such an order, the interest rate is limited to 6% per annum, and courts cannot exceed this statutory rate even in cases of substantial delay, unless the delay is so inordinate (such as 12-17 years) as to warrant equitable compensation beyond the statutory prescription.
On this section: Prescribes interest on delayed refunds at rate not exceeding 6% per annum from date after expiry of 60 days from receipt of application till date of refund; proviso provides for 9% interest where refund arises from order of adjudicating authority or appellate authority or court
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Union of India vs Saraf Natural Stone
Court's Decision & Legal Precedent
Where a statute specifies or regulates the rate of interest on delayed refunds, the interest must be payable strictly in terms of the statutory prescription. The principal provision of Section 56 of the CGST Act prescribes 6% per annum interest on delayed refunds not arising from court orders. The proviso prescribing 9% interest applies only when the refund claim arises from an order passed by an Adjudicating Authority, Appellate Authority, Appellate Tribunal, or Court. In the absence of special circumstances constituting inordinate delay comparable to 12-17 years (as in Sandvik Asia), the statutory rate prescribed in the principal provision must be applied, and courts cannot award interest at a higher rate on equitable grounds alone.
On this section: Prescribes interest on delayed refunds: 6% per annum for ordinary refunds delayed beyond 60 days; 9% per annum for refunds arising from court orders delayed beyond 60 days. This is the central provision in dispute.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… He also states that the petitioner had filed refund application for the month of August, 2019 on 19 th March, 2020. However, as the status of said application was not shown on the portal, the petitioner re-applied for the said refund by way of online application on 9th May, 2020. 6. He submits that Sections 54 and 56 of the Central Goods and Services Tax Act, 2017 and Rules 90 and 91 of the Central Goods and Services Tax Rules, 2017 provide a complete code with regard to acknowledgement, scrutiny and grant of refund within a strict time frame. In support of his submission, he relies upon judgment of this Court in Jian …
Made under this section, and citing it
1 instrument states that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 2 instruments name this provision in its title or its text without being made under it.
Questions about Section 56
What have the courts held on Section 56 of the Central Goods and Services Tax Act?
Union of India vs Willowood Chemicals Pvt. LTD (19 Apr 2022) is the leading judgment on this section among those set out below: Prescribes interest on delayed refunds at rate not exceeding 6% per annum from date after expiry of 60 days from receipt of application till date of refund; proviso provides for 9% interest where refund arises from order of adjudicating authority or appellate authority or court. Another 1 judgment on this section is set out below, all of them from the Supreme Court.
How do I find court cases under Section 56 of the Central Goods and Services Tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: CGST Act 56, section 56 CGST Act, section 56 of the Central Goods and Services Tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Union of India vs Willowood Chemicals Pvt. LTD (19 Apr 2022).
What should I read with Section 56 of the Central Goods and Services Tax Act, and has it changed?
Its own text turns on section 54 (Refund of tax), so none of them can safely be read on its own. 7 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there is one: most recently Notification No. 13/2017 – Central Tax dated 28.06.2017 (2017).
When was Section 56 of the Central Goods and Services Tax Act enacted?
Section 56 of the Central Goods and Services Tax Act, cited as CGST Act 56, was enacted on 12 Apr 2017 as Act 12 of 2017. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5109 words
- 142. Miscellaneous transitional provisions1966 words
- 140. Transitional arrangements for input tax credit1883 words
- 54. Refund of tax1858 words
- 110. President and Members of Appellate Tribunal, their qualification, appointment, conditions of service, etc1647 words
- 74A. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward1299 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.