Section 54 of the CGST Act, 2017 – Refund — The Petitioner sought quashing of the impugned order dated 28.07.2022, rejecting the claim of the petitioner of payment of interest from the date of encashment of bank guarantees i.e., 29.03.2019 till grant of refund on 05.01.2022.The counsel for the petitioner submitted that during the period from 17.10.2018 to 26.10.2018, furnished 8 Bank Guarantees by way of security for release of goods. The GST authorities illegally encashed the aforesaid bank guarantees. He preferred Writ before the Bombay High Court which was allowed vide final order dated 15.09.2020. Subsequently, on 05.01.2022, the 3rd respondent granted refund but rejected the interest claimed by the petitioner for which the respondent issued a SCN dated 30.06.2022. The court observed that a perusal of the judgment of the Bombay High Court indicate that the respondents were directed to refund the said amount together with applicable statutory interest thereon. The petitioner has been wrongly and without any fault on its part been deprived of the use, utilisation and benefit of the amount, during which period, the respondents illegally withheld and retained the said amount. By applying the principles of restitution and by way of compensation for the loss caused to the petitioner on account of illegal and wrongful deprivation of the aforesaid amount by the respondents, the petitioner would be entitled to interest for the aforesaid period.

Held that:- The Hon’ble High Court set aside the order dated 28.07.2022 and directed the concerned respondents to pay interest at the rate of 6% p.a. on an amount for the period from 29.03.2019 to 05.01.2022, within a period of two months.