The Supreme Court of India has dismissed the Union of India’s special leave petition challenging a Delhi High Court verdict that quashed a stay order on the refund of Rs. 5.5 crore to M/s HCC-VCCL Joint Venture. The refund amount was credited to the Electronic Cash Ledger (ECL) and had been sanctioned under the Central Goods and Services Tax (CGST) Act, 2017.
The bench of Justice Sudhanshu Dhulia and Justice Joymalya Bagchi has dismissed the SLP holding that there was no ground to interfere with the judgment of the High Court. However, question of law, if any, is kept open.
The case stemmed from the Delhi Metro Rail Corporation’s (DMRC) tax deductions under Section 51 of the CGST Act, which were deposited into the joint venture’s ECL. On December 9, 2022, a refund order was passed by the tax authorities. However, by invoking Section 108 of the CGST Act, the revisional authority placed this refund in abeyance on July 5, 2023. The duration of the stay was later extended from six months to two years through a corrigendum issued in December 2023.
The Delhi High Court, in its judgment dated November 5, 2024, held that the revisional authority had failed to record any preliminary finding that the refund order was erroneous, illegal, or prejudicial to the revenue—an essential requirement for invoking Section 108. The Court emphasized that Section 108 cannot be used arbitrarily and quashed the impugned stay order.
Crucially, the High Court also clarified a long-standing interpretative issue under GST law: while refunds of Input Tax Credit (ITC) from the Electronic Credit Ledger may be restricted under certain conditions, the same does not apply to funds lying in the Electronic Cash Ledger. The Court noted that there was no quantified demand or liability pending against the taxpayer that could justify withholding the refund.
The Union of India approached the Supreme Court, arguing that the revisional authority had sufficient powers to stay such refunds even from the ECL. However, the Apex Court bench comprising Justice Sudhanshu Dhulia and Justice Joymalya Bagchi dismissed the petition, stating:
“We see absolutely no reason to interfere with the order of the High Court in exercise of our jurisdiction under Article 136 of the Constitution of India. However, question of law, if any, is kept open.”
The Delhi High Court, however, allowed the tax authorities liberty to initiate fresh proceedings in accordance with law, if justified.
Case Details
Case Title: UNION OF INDIA VERSUS M/S. HCC VCCL JOINT VENTURE
Case No.: SLP 24660/2025
Date: 09-07-2025
Counsel For Petitioner: S Dwarakanath, A.S.G.
Counsel For Respondent: Bharat Raichandani
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