Keeping refund order in abeyance merely on allegation of wrongful availment of ITC unjustified: Delhi HC

HCC VCCL Joint Venture Vs Union of India & Ors. (Delhi High Court)

Delhi High Court held that keeping in abeyance refund order by exercising powers conferred u/s. 108 of the CGST Act merely on the basis of intelligence regarding wrongful availment of ITC unjustified since pre-requisite conditions for invoking section 108 not satisfied.

Facts- The writ petitioner assails the validity of the order dated 05 July 2023 made in purported exercise of powers conferred by Section 108 of the Central Goods & Services Tax Act, 2017 and which has principally placed in abeyance an order of refund dated 09 December 2022. That order had sanctioned the refund of a sum of INR 5,50,00,000/- in favour of the writ petitioner.

Notably, the petitioner is principally aggrieved by the order dated 05 July 2023 and which has essentially placed in abeyance the Refund Sanction Order dated 09 December 2022. The Refund Sanction Order undisputedly pertained to the amounts standing to the credit of the Electronic Cash Ledger of the writ petitioner.

Conclusion- The pre-requisite condition for invocation of Section 108 is the formation of an opinion that an order made under the CGST Act is erroneous, prejudicial to the interest of the Revenue, illegal or improper. By virtue of Section 108 the Commissioner is also empowered to invoke its revisional authority in a situation where it comes to the conclusion that the order under scrutiny was made without taking into account certain material facts whether available at the time of making of that order or not as well as in consequence of an observation rendered by the Comptroller and Auditor General of India.