The Goods and Services Tax Appellate Tribunal (GSTAT) has issued several significant rulings in September 2026, reinforcing taxpayer rights across various GST provisions. The Ernakulam bench held on September 8 that refund of unutilised Input Tax Credit cannot be denied on grounds of ineligibility unless credit is first disallowed through prescribed GST law provisions. In a separate case, the Thiruvananthapuram bench ruled on September 17 that clerical errors in reporting export turnover cannot justify denial of IGST refunds, describing such errors as "making correct entries at wrong places." These rulings demonstrate the consistent approach of tribunals in upholding taxpayer rights and clarifying procedural requirements for GST refunds.
The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) has established a significant precedent for taxpayers facing refund interest disputes. According to reports from Mint, the tribunal ruled that making an error in an income tax return does not forfeit a taxpayer's entitlement to interest on tax refunds. The case originated from Assessment Year 2012-13, where a taxpayer initially reported capital gains from an apartment sale as short-term gains but later revised this position to claim the property as a long-term capital asset eligible for a 20 per cent tax rate under Section 112.
The tax authority had refused to grant interest under Section 244A on part of the refund, arguing that the taxpayer selected a higher tax bracket in the original filing and failed to rectify it through a revised return. As reported by Mint, the tribunal rejected this reasoning, emphasizing that Section 244A guarantees a statutory right to interest on refunds. While Section 244A(2) allows interest to be withheld, that exception applies strictly to periods of delay directly caused by the taxpayer. The tribunal noted that the assessee did not withhold details, ignore notices, request delays, or hinder the assessment and appeal processes.
The tribunal instructed the department to release interest on a ₹5.39 crore refund, following standard verification and accounting for any prior payments. According to Mint, the judgment clarifies that while an inaccurate return might trigger a later claim, the mistake alone does not prove that the taxpayer stalled assessment or appeal proceedings. Tax experts noted that authorities can only evaluate whether the taxpayer specifically caused procedural delays when an erroneous return creates a tax demand that is later corrected. Additionally, Section 244A imposes a threshold: no interest is awarded if the refund total falls below 10 per cent of the final tax determined under Section 143(1) or during regular assessment.
In separate proceedings, the tribunal reviewed a ₹90.94 lakh refund resulting from an appellate directive, where the payment exceeded the mandated timeframe. As reported by Mint, the ITAT ruled the department liable for interest on the delay under Section 244A(1A), which applies an extra 3 per cent annual interest when refunds stem from enforcing appellate or court orders. The tribunal's ruling provides crucial guidance for taxpayers facing refund interest disputes, establishing that procedural delays must be specifically attributed to the taxpayer rather than inherent in the correction process itself.
