Edelweiss Rural & Corporate Services Limited & Anr. Vs Deputy Commissioner of Revenue (Calcutta High Court)
Refund should not be credited to the Electronic Credit Ledger of a taxpayer whose business is no longer operational; Calcutta HC: Refund to Bank for Non-Operational GST Firm; Calcutta High Court directs reconsideration of GST refund for a closed business, stating credit to bank account, not electronic ledger, is appropriate; Calcutta High Court Directs Refund to Bank Account for Closed Business.
The Calcutta High Court, in the case of Edelweiss Rural & Corporate Services Limited & Anr. v. The Deputy Commissioner of Revenue, Taltala Charge, WBGST & Ors. [WPA 3033 of 2025 dated May 5, 2025], has instructed the tax authorities to re-evaluate a refund sanction order for a taxpayer whose business operations have ceased and GST registration cancelled. The court’s directive stems from a contradiction in the refund order, which initially indicated payment to the taxpayer’s bank account but then specified crediting the amount to their Electronic Credit Ledger (ECrL). The petitioners, Edelweiss Rural & Corporate Services, argued that crediting the refund to an ECrL would render it unusable given their non-operational status.
The petitioners had successfully appealed a previous refund rejection, leading to a refund application being filed. Subsequently, a Refund Sanction Order was issued in FORM GST RFD-06, which directed the refund to the petitioners’ bank account. However, a detailed order accompanying this, the “Impugned Order,” inconsistently stated that the refund would be credited to the Electronic Credit Ledger. The core issue before the High Court was whether a refund should be credited to an ECrL for a taxpayer no longer in business. The Court observed this contradiction and, noting that the petitioner’s business was closed and GST registration cancelled with no outstanding tax liabilities, held that the refund should be reconsidered to ensure its effective utilization by the petitioner. The court directed the proper officer to make a decision within six weeks after providing an opportunity for a hearing to the petitioners.
