Hi,
Sorry, I checked the code and I was wrong. The status won't change when a refund notification is received. It has to be done manually.
Allowing that woul require the modification of the PayPal plugin file plugins/hikashoppayment/paypal/paypal.php, replacing the code:
$this->modifyOrder($action, null, $history, $email);
by such code:
if(preg_match('#Refunded#i', $vars['payment_status'])) $this->modifyOrder($order_id, 'refunded', $history, $email);
else $this->modifyOrder($action, null, $history, $email);