Section 56 compensates a taxpayer whose refund is paid late. Interest runs once sixty days have passed from the application, at 6% — or 9% where the refund results from an order that has attained finality.
Key points
- Under section 56 of the CGST Act, 2017, if a refund ordered under section 54(5) is not paid within sixty days of receipt of the application, interest is payable for the period of delay beyond sixty days, at the notified rate of 6%.
- Where the refund arises from an order of an adjudicating or appellate authority, the Tribunal or a court that has attained finality, the rate is 9%, from sixty days after the application filed following that order (proviso).
- An appellate or court order directing refund against the officer's order is treated as an order under section 54(5) (Explanation).
- In Union of India v Willowood Chemicals (2022) the Supreme Court held that where the statute fixes the rate, interest is awarded at that rate: delayed export refunds carried 6%, not the 9% the Gujarat High Court had allowed.
- From 01.10.2023 the period of delay is computed as prescribed — Rule 94(2) excludes delays attributable to the applicant.
The provisions
56Interest on delayed refunds
Statutory text
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).
*Enforced w.e.f. 1st July, 2017.
1. Substituted (w.e.f. 1st October, 2023 vide Notification No. 28/2023-C.T., dated 31st July, 2023.) by s. 147 of The Finance Act 2023 (No. 8 of 2023) for "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".
- Notification 13/2017-Central Tax — 6% and 9%
- Rule 94, CGST Rules — Form RFD-05; excluded periods
Cases on this provision
Union of India v Willowood Chemicals Pvt Ltd
Civil Appeal Nos. 2995–2998 of 2022 · 19.04.2022 · Supreme Court, 2 Judges (U.U. Lalit, S. Ravindra Bhat JJ.)
- Facts
- Two exporters, Willowood Chemicals and Saraf Natural Stone, received refunds of IGST paid on exports 94 to 290 days late and sought compensation by writ. The Gujarat High Court (10.07.2019) awarded simple interest at 9% from the date of filing of the returns and dismissed the department's review petitions. The Union appealed, accepting liability for interest but at 6%.
- Held
- Appeals allowed. Where a statute specifies the rate of interest, interest is payable in terms of the statute; equitable interest at a higher rate is for cases where the statute is silent or the delay is extraordinary (as in Sandvik Asia, with delays up to 17 years). The refunds did not arise from an order of an adjudicating or appellate authority or court, so they fell under the main part of section 56 at 6%, not the proviso at 9%. The 6% already paid under the Court's interim direction sufficed.
- Here
- For an ordinary refund delayed beyond sixty days, the rate is 6%. The 9% rate applies only where the refund follows a final order of an authority, the Tribunal or a court.
Ranbaxy Laboratories Ltd v Union of India
(2011) 10 SCC 292 · 21.10.2011 · Supreme Court, 2 Judges (D.K. Jain, Anil R. Dave JJ.)
- Facts
- Under section 11BB of the Central Excise Act, 1944, interest was payable if a refund was not paid within three months "from the date of receipt of application". The department paid interest only from three months after the date of the order sanctioning the refund.
- Held
- Interest under section 11BB runs from the expiry of three months from the date of receipt of the refund application, not from the date of the order of refund. The provision is attracted automatically once the period passes.
- Since then
- Section 56 follows the same structure, with sixty days in place of three months, measured from the application.
- Here
- The sixty days run from receipt of the application, not from the date of the refund order; an officer's delay in passing the order does not postpone the start of interest.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- What interest is payable on a delayed GST refund?
- 6% a year for the period beyond sixty days from the application (section 56 CGST); 9% where the refund arises from a final order of an appellate authority, the Tribunal or a court. The Supreme Court in Union of India v Willowood Chemicals (2022) held that interest is payable at the statutory rate, not a higher equitable rate, where the statute applies.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Interest is payable automatically once the sixty days run out; it does not depend on a separate claim. The Finance Act, 2023 (from 01.10.2023) changed the wording to "the period of delay beyond sixty days", computed as prescribed — Rule 94(2), from 01.10.2023 (Notification 38/2023-Central Tax), excludes time the applicant takes beyond fifteen days to reply to a notice in Form RFD-08, and time taken to furnish or validate correct bank account details. Interest on refunds withheld under section 54(11) is governed by section 54(12), also at up to 6%.