GST Refund Interest 2026: Fresh Certification Not Required - HC Ruling

What Happened?

The Telangana High Court has recently ruled that when a GST refund is finally sanctioned by the tax authority, the applicant does not require a fresh Rule 89(2)(m) certification from their Chartered Accountant or cost accountant specifically for claiming interest on the delayed refund. This judgment removes a procedural hurdle that many businesses faced while processing their GST refund interest claims, especially for refunds sanctioned after significant delays.

Background & Legal Context

Understanding Rule 89(2)(m) of CGST Rules, 2017:

Under the GST regime, Rule 89(2) of the Central Goods and Services Tax (CGST) Rules, 2017 requires that refund claims must be accompanied by a certification from a qualified professional (CA or cost accountant) in cases where the applicant is required to maintain books of accounts. Rule 89(2)(m) specifically deals with certification requirements for various components of the refund claim.

Previously, there was confusion in the industry about whether a fresh certification under Rule 89(2)(m) was mandatory when claiming interest on a previously sanctioned refund. Many GST departments insisted on obtaining fresh certifications, even though the original refund had already been approved, which created additional compliance burden and delays.

The Legal Position Under GST Law:

Section 54 of the Goods and Services Tax Act, 2017 provides for refunds when:

• Excess input tax credit has been accumulated
• Supply of goods is deemed as nil-rated or exempt
• Inverted duty structure exists
• Tax paid on inputs exceeds tax liability

Additionally, Section 56 of CGST Act, 2017 mandates that simple interest at the rate of 6% per annum must be paid on delayed refunds. This interest accrues from the date of filing the refund claim until the date of actual refund sanction.

What the Telangana HC Judgment Says:

The High Court held that once a refund has been sanctioned by the GST authority under Section 54, the interest component payable under Section 56 is a statutory obligation of the government. Therefore, the applicant does not need to go through the fresh certification process under Rule 89(2)(m) again for claiming the interest portion. The original certification submitted with the refund claim covers the entire claim, including the eventual interest liability.

This judgment is based on the principle that interest is not an "additional claim" but a legal consequence of delayed refund processing. The applicant's accountability through the original CA/cost accountant certification is sufficient; there is no new information to certify.

What Does This Mean for You?

If You Have Pending GST Refunds:

This ruling provides significant relief to businesses and traders who have:

• Filed GST refund claims that have been pending for months or years
• Finally received sanction letters from the GST department
• Been asked by tax authorities to submit fresh certifications before processing interest payments

Practical Impact:

Previously, the refund process worked like this:

1. You file refund claim → Submit CA certification under Rule 89(2)(m)
2. Refund sanctioned after 6 months, 1 year, or even longer
3. GST department demands fresh CA certification for interest portion
4. Further delay in receiving interest amount

After this judgment, the process is streamlined:

1. You file refund claim → Submit CA certification under Rule 89(2)(m)
2. Refund sanctioned after any period of delay
3. Interest is automatically calculated and processed without requiring fresh certification
4. Faster receipt of both refund and interest

Financial Impact:

For businesses with large refund amounts, the interest component can be substantial. For example:

• Refund amount: ₹10,00,000
• Delay period: 18 months
• Interest rate: 6% per annum
• Interest payable: ₹90,000 (approximately)

This judgment ensures you don't lose another 2-3 months in processing this ₹90,000 just because of certification procedural requirements.

Who Benefits Most?

• Exporters: Who typically have large refund claims and have faced significant delays
• ITC-heavy businesses: Manufacturing units with accumulated input credit
• Traders in inverted duty structure sectors: Textiles, steel, etc.
• SMEs and startups: Who cannot afford extended working capital gaps

Important Note for AY 2025-26 and AY 2026-27:

This ruling applies to all pending refund claims, whether filed in previous financial years or current year. If you have refunds still awaiting sanction or already sanctioned but interest not yet paid, this judgment works in your favor.

What Should You Do Now?

Immediate Action Items:

• Review your refund status: Check the GST portal to identify all pending refund claims. Note the dates of filing and current status.
• Track sanctioned refunds: For refunds already sanctioned, verify whether interest has been credited to your bank account. If not, the GST department should process it without demanding fresh certification.
• Communicate with GST authorities: If any GST officer asks for fresh Rule 89(2)(m) certification for interest on a sanctioned refund, you can now cite this Telangana HC judgment and respectfully decline. Provide reference to this recent judgment in your correspondence.
• Document everything: Keep records of:
  • Original refund claim filing date
  • Original CA certification submitted
  • Refund sanction date
  • Expected interest amount (calculated at 6% per annum)
  • Any communication from GST department asking for fresh certification
• File follow-up claims if needed: If interest has not been paid within a reasonable period after sanction, you may file a representation citing this judgment and requesting expedited processing.
• Consult your CA: Even though fresh certification is not required, your existing CA should maintain records and be prepared to defend the original claim if questioned.

For Future Refund Claims (from AY 2026-27 onwards):

• While filing new refund claims, still submit proper Rule 89(2)(m) certification as it's mandatory for initial claim processing
• Understand that this certification covers both the refund principal and the interest that will be calculated
• You won't need to re-certify when the refund is finally sanctioned

Key Takeaways

• No Fresh Certification Required: Once a GST refund is sanctioned, interest under Section 56 can be claimed without submitting a fresh Rule 89(2)(m) certification from your CA.
• Interest is Statutory Obligation: The 6% interest on delayed refunds is a legal duty of the GST department, not an additional claim requiring new accountability through fresh certification.
• Faster Processing of Interest: This judgment eliminates a procedural bottleneck that previously delayed interest payments by several months even after refund sanction.
• Applies to All Pending Refunds: Whether your refund was sanctioned 6 months ago or yesterday, this ruling protects your right to claim interest without fresh certification requirements.
• Practical Relief for Businesses: Especially beneficial for exporters, manufacturing units, and businesses with substantial refund amounts where interest delays impact cash flow and working capital management.

Final Word:

This Telangana HC judgment represents a significant shift toward business-friendly GST administration. It acknowledges that procedural requirements should not become obstacles to the execution of statutory rights. The ruling emphasizes that taxpayer accountability is established through the original claim and certification; unnecessary repetition of the same certification process for a statutory interest calculation is wasteful and burdensome.

If you are currently facing this issue with your GST refunds, this judgment provides strong legal backing to resist demands for fresh certifications. Use it strategically, but always maintain professional courtesy with GST authorities and provide clear references to support your position.

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