IGST Ocean Freight Refund Interest Runs From Date of Deposit, Not Date of Court Order: Orissa HC Follows Paradeep Phosphates

The Orissa High Court has directed the Revenue to pay interest at 6% per annum on Rs. 17.59 crores of IGST refunded on ocean freight charges, with interest running from the date of original deposit to the date of actual payment — rejecting the department's position that interest can only run from the date of the court order or the date of refund application. The ruling in M/s Rawmet Resources (P) Ltd. v. Union of India (W.P.(C) No. 37153 of 2023, decided 14.08.2026) follows the Orissa Division Bench's earlier ruling in Paradeep Phosphates Ltd. (2026 (106) GSTL 112 (Ori.)), which had settled this question for the state.

The underlying entitlement arises from the Supreme Court's 2022 ruling in Union of India v. Mohit Minerals Pvt. Ltd., which held that the levy of IGST on ocean freight (on a reverse charge basis on the importer) for cost-insurance-freight basis imports was unconstitutional. The judgment came after the petitioner had paid IGST on ocean freight covering the period July 2017 to March 2021 — a total of Rs. 17,59,39,952. The refund application was filed and was rejected by order dated 30.06.2023. The petitioner sought not only the refund but also interest under Section 56 of the CGST/OGST Acts on the amounts wrongly collected and retained by the Revenue over the years.

The Revenue's resistance to interest was rooted in an argument that the Mohit Minerals ruling operates prospectively — or at least that interest can only accrue from the date of the refund application or the date of the court's direction — not from the much earlier date of original payment. The Orissa High Court in Paradeep Phosphates had rejected this characterisation of Mohit Minerals, holding that a Supreme Court ruling on the invalidity of a levy operates from the inception of the levy itself, not prospectively, and that the taxpayer's claim for interest under Section 56 accordingly runs from the date of deposit. The same principle was applied to Rawmet Resources, and the Revenue was directed to pay interest at 6% per annum from the date of deposit of the IGST to the date of actual payment of refund, within six weeks of the order.

The ruling is directly relevant to any importer who paid IGST on ocean freight under the reverse charge mechanism and has since recovered the principal but has not yet received interest, or whose refund with interest was denied. The applicable rate under Section 56 is 6% per annum for refunds delayed beyond 60 days after the refund application, with 9% for delays beyond eight weeks of a court direction.

- 2026-juristway.com-2262-HC(Orissa)-GST  |  High Court of Orissa (Division Bench) | W.P.(C) No. 37153 of 2023  |  14.08.2026