Harbhajan Singh Thukral Vs Government of NCT of Delhi Department of Trade And Taxes & Anr (Delhi High Court)
GST Refund along with statutory interest allowed when wrongly adjusted against cancelled outstanding liability
The Delhi High Court in the case of Harbhajan Singh Thukral v. Government of NCT of Delhi directed that a taxpayer is entitled to a refund along with statutory interest when their refund amount is wrongly adjusted against an outstanding liability that was subsequently cancelled. The petitioner, Harbhajan Singh Thukral, a trader, applied for a refund of excess balance in his electronic cash ledger. Although the refund application was accepted, the respondent authorities adjusted the amount against an outstanding liability of over ₹10 lakh. The core of the dispute was that the outstanding demand was later officially cancelled via an order dated July 24, 2023 (in FORM GST DRC-8A). The petitioner contended that the amount was thus wrongly appropriated and should be immediately refunded.
The respondent authorities admitted that the cancellation order was not uploaded onto the relevant system portal at the time of the adjustment, which led to the appropriation of the sanctioned refund. The Delhi High Court took note of this procedural lapse, acknowledging that the cancelled demand should not have been used to offset the refund amount. Citing Sections 54 and 56 of the CGST Act, 2017, which deal with the refund of tax and interest on delayed refunds, the Court ruled in favor of the petitioner. The judgment reiterates the necessity of fair treatment in fiscal matters and holds that procedural shortcomings, like the non-uploading of cancellation orders, cannot penalize the taxpayer. Consequently, the High Court directed the authorities to process and pay the full refund amount of approximately ₹9 lakh to the petitioner, along with the applicable statutory interest, within a period of two months from the date of the order.
