Case Law Details
Truth Fashion Vs S.K Singh Special Commissioner & Anr. (Delhi High Court)
In , the Delhi High Court dealt with a petition alleging wilful disobedience and non-compliance with directions issued earlier in W.P.(C) 486/2025 concerning release of a GST refund along with statutory interest.
The dispute originated from a refund rejection order dated 05.02.2024 passed by the Proper Officer/Assistant Commissioner, Department of Trade and Taxes, Government of NCT of Delhi in GST RFD-06. The petitioner challenged the rejection before the Objection Hearing Authority/GST Additional Commissioner. By order dated 10.05.2024, the appellate authority allowed the appeal and set aside the rejection order, holding that the refund rejection was not justified or tenable under the CGST/DGST provisions and rules.
Despite the appellate order, the refund was not processed. Consequently, the petitioner approached the Delhi High Court through W.P.(C) 15886/2024. On 18.11.2024, the Court directed the respondents to ensure that the refund claim was processed expeditiously, preferably within three weeks, while clarifying that the direction would remain subject to any statutory appeal that may be preferred by the respondents and any consequential orders passed therein.
As the refund still remained unpaid, the petitioner filed W.P.(C) 486/2025 seeking compliance with the earlier orders. During those proceedings, the respondents relied upon Section 54(11) of the Central Goods and Services Tax Act, 2017, contending that since the Commissioner had decided to prefer an appeal against the order granting refund, the refund could be withheld.
The High Court rejected this contention. Referring to the plain language of Section 54(11), the Court observed that the provision applies where an order giving rise to refund “is the subject matter of an appeal.” The Court held that a mere decision to prefer or institute an appeal would not attract Section 54(11). It further observed that a decision by the Commissioner to challenge an order cannot automatically place the principal order in abeyance.
The Court also relied on observations made in Alex Tour & Travel (P) Ltd. vs. Commissioner (CGST), where it had been held that the Revenue cannot refuse to comply with appellate orders merely because it proposes to file an appeal, especially in the absence of any stay granted by a competent court. The earlier judgment further held that appellate orders cannot be ignored solely because the Revenue intends to challenge them and that fresh refund applications are not necessary once proceedings have culminated in orders-in-appeal.
Accordingly, by order dated 10.02.2025 in W.P.(C) 486/2025, the Delhi High Court directed the respondents to forthwith release the refund to the petitioner along with statutory interest payable under law.
However, the refund was still not released because the Commissioner of DGST filed W.P.(C) 6571/2025 challenging the appellate authority’s order dated 10.05.2024. On 16.05.2025, the Court directed that instead of processing the refund directly, the Department should deposit the entire refund amount with the Registrar General of the Court by 15.07.2025, to be kept in a fixed deposit subject to further proceedings.
Subsequently, W.P.(C) 6571/2025 was disposed of on 05.02.2026 after the Court noted that the GST Appellate Tribunal was likely to become functional within two weeks. The Court relegated the Department to the alternative remedy of filing an appeal before the Tribunal and clarified that it had not examined the merits of the dispute.
The Court also recorded the petitioner’s submission that the entire liability under the impugned order stood discharged through deposit of the amount.
In the present proceedings, the High Court noted that the respondents had already been relegated to pursue their appellate remedy before the Tribunal and that admittedly no interim order had been passed by the Appellate Tribunal restraining release of the refund.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present petition has been filed by the petitioner alleging wilful disobedience/ non-compliance of the directions contained in the order dated 10.02.2025 passed in W.P(C) 486/2025. The said order reads as under:-
1. The instant writ petition has been preferred seeking the following reliefs: –
“(1) Directing to flit respondent to comply in respect of order dated 10.03.2024 (ANNEXURE-P-1) of the 2Lp pe I [ale authority for release of refund of Rs L 8,33,00W- in spite of the direction of the Mobile High wart of Delhi vide order dated 18.11.2024 (ANNEXURE P4) to release the refund of the petitioner expeditiously within three weeks from &c data of the order.
(ii) Directing to the respondent to grant interest in terms of Section 56 under DGST/CGSTIIQST Act 2017:”
2. We note that in an earlier round of litigation, the writ petitioner had approached this Court by way of V.P.(C) 15886/2024 and which came to be disposed of on 18 November 2024 in the following terms:-
“2. Mr. Aggarwal, learned counsel who appears on behalf of the respondent, states That subject to due verification of all facts and contentions on merits being kept open, the respondent shalt Ensure that the claim for refund is disposed of with expedition ead preferably within a period of three weeks from today. The statement so made is recorded and accepted.
3. The aforesaid direction shall be subject to any orders that may be obtained by the respondents on any statutory appeal that they may choose to prefer and orders that may be passed thereon.
4. The petition shall stand disposed of on the aforesaid terms. ”
3. Despite the aforesaid directions, the respondents have failed to take appropriate steps and release the refund as claimed. Ti is this which has constrained the writ petitioner to approach the Court yet again
4. The claim for refund itself emanates From an order dated 10 May 2024 in terms of which the Objection Hearing Authority’ had allowed the objections as were preferred by the writ petitioner and set aside the order which had rejected the claim for refund.
5. When the matter was taken up for consideration today, learned counsel appearing for the respondents had drawn our attention to the provisions contained in Section 54(11) of the Central Goods and Services Tax Act, 2017 to submit that since the Commissioner has taken a decision to prefer an appeal against the order dated 10 May 2024, the respondents are justified in not effecting the refund as claimed. Section 54(11) of the CGST Act reads as follows: –
‘Section 54 Refund of Tax
xxxx
(11) Where an order giving rise to refund is the subject matter of an appeal or further proceedings et where any othu r,pmceeditio under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or ether prouctAings on aucouril of malfeasance or fraud committed, be may, after giving the taxable pasun an opportunity of being heard, withhold the refund till such time as flu may determine.”
6. We find ourselves unable to countenance that submission bearing in mind the plain language in which Section 54(11) stands couched and which refers to a contingency where an order giving rise to a refund “is the subject matter of an appeal”. In our considered opinion, the mere decision to prefer or institute an appeal would not qualify Section 54(11).
7. This we hold since a decision taken by the Commissioner to assail an order cannot ipso facto or automatically result in the principal order being placed in abeyance. We, in this regard, also bear in mind the following pertinent observations which had been rendered by the Division Bench of the Court in Alex Tour & Travel (P) Ltd. vs. Commr. (CGST)³:-
“17. Undisputedly, the Revenue is entitled to file an appeal under section 112 of the Central Goods and Services tax Act, 2017, within a period of three months from the date of the order. We are informed that the said period has been extended as the Appellate Tribunal has not been constituted as yet. However, the respondent cannot refuse to comply with the appellate orders on this ground.
18. We are unable to accept that the Revenue can ignore an order passed by the appellate authority on the ground that it proposes to appeal the said order.
19. Suffice it to note that there is no order passed by any competent court, staying the implementation of the orders-in-appeal passed by the appellate authority. The Revenue has also taken no steps for securing orders to that effect.
20. We are also unable to appreciate the insistence on the part of the Revenue for the appellant to file fresh applications for the refund.
21. Mr. Singla fairly states that fresh applications for refund or response-to show-cause notices are not necessary, considering that the proceedings emanated from the petitioner filing applications for refund, which culminated in orders-in-appeals passed by the appellate a whortiy.
XXXX
25. The present petition is allowed. The reNpundent is directed to forthwith disburse the petitioner’s claim for Rtfund along with interest as payable in accordance with law.
26. It is, however, clarified that this order would not preclude the respondent from availing statutory remedy against the orders-in-appeal in accordance with law.”
8. Accordingly, and for all the aforesaid reasons, we allow the instant writ petition and hereby command the respondents to affect the refund to the writ petitioner forthwith togelher with statutory intemt, Eit!. payable.
2. The background of the matter is that an appeal came to be filed by the petitioner before the Objection Hearing Authority/GST Additional Commissioner, Department of Trade and Taxes, Government of NCT of Delhi against a Refund Rejection Order dated 05.02.2024 passed by the Proper Officer/Assistant Commissioner, Department of Trade & Taxes, Government of NCT of Delhi in GST RFD 06. Vide an order dated 10.02.2025, the said appeal preferred by the petitioner came to be allowed by the Objection Hearing Authority and the aforementioned order dated 05.02.2024 was set aside. The operative directions contained in the order dated 10.05.2024 are as under:
“8. Upon a careful perusal of above deliberations and the facts of the case alongwith other available records and provisions thereof I am of the considered view that the impugned rejection orders passed by the proper officer appears to be not justified and not tenable in accordance with the provisions of the CGST/DGST and rules made therein under. Accordingly, the appeal preferred by the Appellant is allowed and hence the impugned Rejection orders of refund dated 05.02.2024 for the period April 2022 to March 2023 is hereby set aside in the aforesaid terms. This is in accordance with the prescribed procedure under the GST Act and Rules.”
3. Subsequently, the petitioner filed W.P(C)15886/2024 before this Court on account of the failure of the respondent to process the refund application of the petitioner submitted in consequence to the order dated 10.05.2024 passed by the Objection Hearing Authority. Vide order dated 18.11.2024, this Court in W.P(C)15886/2024 directed as under: –
“1. The solitary grievance of the writ petitioner is a failure on the part of the respondents to process the refund application of the petitioner submitted in consequence to the order dated 10th May 2024 passed by the Objection Hearing Authority, the Additional Commissioner.
2. Mr. Aggarwal, leamed counsel who appears on behalf of the respondent, states that subject to due verification of all facts and contentions on merits being kept open, the respondent shall ensure that the claim for refund is disposed of with expedition and preferably within a period of three weeks from today. The statement so made is recorded and accepted.
3. The aforesaid direction shall be subject to any orders that may be obtained by the respondents on any statutory appeal that they may choose to prefer and orders that may be passed thereon.
4. The petition shall stand disposed of on the aforesaid terms.”
4. However, since the respondents failed to comply with the aforementioned orders, the petitioner filed W.P.(C) 486/2025 seeking to direct the respondent to comply with the directions contained in the order dated 10.05.2024 passed by the Objection Hearing Authority and order dated 18.11.2024 passed by this Court. Vide order dated 10.02.2025 passed in W.P(C) 486/2025 (contempt of which has been alleged in the present proceedings), this Court allowed the aforementioned writ petition and directed the respondents to refund the requisite amount to the petitioner along with the statutory interest, as payable.
5. Even after the passing of the aforesaid order, the requisite refund was not given to the petitioner, in view of the fact that an appeal bearing W.P.(C) No. 6571/2025 was filed by the Commissioner of DGST, Delhi, assailing the aforesaid order dated 10.05.2025 passed by the Objection Hearing Authority. Vide order dated 16.05.2025 passed in W.P(C) 6571/2025 it was, inter alia, directed as under:
“20. Under these circumstances, instead of processing the refund and granting the same in favour of the Respondent, since the appellate authority’s order is under challenge before this Court, the Department shall deposit the entire amount of refund with the Registrar General of this Court by 15th July, 2025. Upon the said amount being deposited, the same shall be kept in a fixed deposit on an auto renewal mode”
6. Subsequently, the said W.P.(C) 6571/2025 came to be disposed of by this Court vide order dated 05.02.2026, in the following terms:
“1. Since the Tribunal is being likely to be functional within a period of two weeks as was assured in other collateral proceedings, we dispose of the petition by relegating the petitioner to the remedy of filing an appeal before the Tribunal.
2. Time spent in prosecuting the petition be considered, in case, if the issue of issue of limitation crops up.
3. Needless to clarify, we have not appreciated the merits of the matter.
4. We take note of the fact that the Ms. Urvi Mohan, counsel appearing for the petitioner has stated that the entire liability under order impugned is discharged by depositing the said amount.
5. The present writ petition stands disposed of”
7. As such, the respondents/DGST Department has been relegated to pursue the appellate proceedings before the concerned Tribunal. Admittedly, no interim order/s has been passed by the concerned Appellate Tribunal preventing release of the refund to the petitioner.
8. Accordingly, the amount lying deposited in this Court pursuant to the directions contained in the order dated 16.05.2025 passed in W.P.(C) No. 6571/2025 is directed to be released to the petitioner. Needless to say, the same shall necessarily be subject to further orders in the appeal preferred by the respondent/DGST Department before the concerned Appellate Tribunal.
9. Let the aforesaid amount be released to the petitioner upon expiry of three weeks from today.
10. The present petition stands disposed of in the above terms.
Note:
³ 2023 SCC OnLine Del 2709
Author Bio
