GST Dept’s Opinion Can’t Be Relied Upon On Stand-Alone Basis For Holding Back Refunds: Delhi High Court
GST Dept’s Opinion Can’t Be Relied Upon On Stand-Alone Basis For Holding Back Refunds: Delhi High Court
The Delhi High Court has held that the opinion of the Department cannot be relied upon on a stand-alone basis, without any challenge to the order by the Appellate Authority for holding back refunds.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta has observed that refund amounts are payable with interest for the delayed period for paying the refund, it would in fact be contrary to the interest of the Department itself to hold back the refund inasmuch as if any appeal is filed and the order of the Appellate Authority is reversed, then the same would also bind the Petitioner.
The Petitioner/assessee, M/s K-NXT Logisticx Pvt. Ltd. is engaged in rendering freight forwarding services to various clients in India and abroad. The Petitioner procures various input services from various dealers in respect of domestic sales and discharges GST liability at 18%. It is stated that usually, the Petitioner has an excess balance and unutilized Input Tax Credit (ITC) exists in favour of the Petitioner.
The Petitioner filed a refund claim on 7th April, 2023. The Show Cause Notice was issued and the Petitioner filed an online reply to the same. However, during the pendency of the Show Cause Notice, the refund claim was rejected passed by the Office of Assistant Commissioner, Central Tax GST West, Rohini, Delhi. This order was challenged by the Petitioner before the Appellate authority. The Appellate authority allowed the refund claim on 16th January, 2024.
In the meantime, after the Appellate authority’s order, it is stated that the Petitioner repeatedly made representations. However, the refund has not been granted.
The department by exercising powers under Section 54(11) of the CGST Act, 2017, the order under appeal has been reversed. The department withheld the processing and sanction of refund filed by the taxpayer consequent to passing of Order till the finality of the Appellate proceedings before GSTAT or High Court or the Supreme Court against said order or further order passed by these forums and appealed against before the next Higher Appellate forum, as grant of refund at this stage will adversely affect the revenue in said appeal on account of the malfeasance.
The court held that the department has not filed any appeal against the order and there is no order of any Court or Tribunal staying the said order. Indisputably, the order cannot be ignored by the department solely because according to the revenue, the said order is erroneous and is required to be set aside.
Case Details
Case Title: M/S K-Nxt Logisticx Private Limited Versus Union Of India And Anr
Case No.: W.P.(C) 3713/2025 & CM APPL. 17335/2025
Date: 15/05/2025
Counsel For Petitioner: Siddharth Malhotra
Counsel For Respondent: Gibran Naushad
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
