Shalender Kumar Vs Commissioner Delhi West CGST Commissionerate & Ors. (Delhi High Court)
The Delhi High Court addressed a petition by Shalender Kumar challenging orders by the Commissioner, Delhi West CGST Commissionerate, that withheld his GST refund. The petitioner had initially faced rejection of his refund claim by the Adjudicating Authority due to issues with his suppliers’ licenses. However, the Appellate Authority subsequently ruled in the petitioner’s favor, deeming his refund claim genuine and compliant with GST Act requirements. Despite this appellate order, the refund was not processed. The Department then issued a review order and an opinion under Section 54(11) of the CGST Act, stating that granting the refund would be against revenue interests while they intended to appeal the appellate order.
The core legal question was whether the Commissioner’s opinion alone could justify withholding the refund approved by the Appellate Authority, especially when no appeal had been formally filed. The Delhi High Court analyzed Section 54(11) of the CGST Act, highlighting that withholding a refund requires two conditions to be met: firstly, the refund order must be the subject of a pending appeal or other proceedings, and secondly, the Commissioner must form an opinion that granting the refund would adversely affect revenue due to malfeasance or fraud. The court concluded that the Commissioner’s opinion, in isolation, is insufficient to withhold the refund. Since no appeal or other proceedings challenging the Appellate Authority’s order were pending, the Department could not unilaterally withhold the refund. Citing a similar ruling by a coordinate bench, the High Court directed the respondents to process the petitioner’s refund along with applicable interest within two months, clarifying that this order would be subject to the outcome of any future appeal filed by the Department against the Appellate Authority’s decision. The court also noted that delaying the refund would actually be against the Department’s interest due to the accrual of interest on the refund amount.
