M.D. Securities Private Limited Vs Sales Tax Officer Class II Avato & Ors (Delhi High Court)
Delhi High Court has expressed concern over significant delays in the processing and disbursement of accumulated unutilized Input Tax Credit (ITC) refunds for M.D. Securities Private Limited, directing the Department to expedite the process. The petitioner is seeking a total refund of over Rs. 106 crore across multiple periods, alleging deliberate delays by the tax authorities at various stages.
M.D. Securities Private Limited filed a petition under Article 226 of the Constitution of India, seeking the refund of unutilized ITC for the periods of October 2024, November 2024, December 2024 – January 2025, and February 2025. The company highlighted substantial delays in the issuance of acknowledgements (RFD-02) and the final refund orders. For instance, the refund for October 2024, filed on November 22, 2024, showed a 99-day delay against the 60-day outer timeline for refund order issuance. Similarly, November 2024’s refund had a 67-day delay. Alarmingly, for December 2024 – January 2025 and February 2025, the RFD-02 acknowledgements had not been issued at all, despite statutory deadlines passing.
Counsel for the petitioner, Mr. Kishore Kunal, argued that the Department deliberately delayed the refund process at two critical stages:
1. Issuance of Acknowledgement: Under Rule 90 of the Central Goods and Services Tax Rules, 2017 (CGST Rules), acknowledgement (RFD-02) must be issued within 15 days of filing the refund application.
2. Issuance of Refund Order: Section 54(7) of the Central Goods and Services Tax Act, 2017 (CGST Act) mandates the issuance of the refund order within 60 days from the date of acknowledgement.
Mr. Kunal relied on the Delhi High Court’s own decision in Jian International vs. Commissioner of Delhi Goods and Services Tax, 2020 (39) GSTL 385 (Del). In that case, the court provided a clear interpretation of Rules 90 and 91 of the CGST/DGST Rules, stating they constitute a complete code for acknowledgement, scrutiny, and grant of refund, with strict timelines. The Jian International judgment explicitly held that if no deficiency memo (FORM GST RFD-03) is issued within the 15-day period stipulated by Rule 90(2) and (3), then the refund application is presumed to be complete in all respects. The court in Jian International further ruled that the authorities lose the right to point out deficiencies at a belated stage, as doing so would delay the refund and impair the applicant’s right to claim interest from the original filing date as per Section 56 of the CGST/DGST Act. That judgment directed the respondent to pay the refund with interest within two weeks.
