Delhi HC Stops Coercive GST Refund Recovery Until GSTAT Becomes Functional

Ikiraon Technologies Pvt. Ltd. Vs Assistant Commissioner (Delhi High Court)

Delhi High Court restrains GST authorities from taking coercive action on refund recovery until GST Appellate Tribunal is functional

In the case of Ikiraon Technologies Pvt. Ltd. v. Assistant Commissioner, the Delhi High Court restrained GST authorities from taking coercive action to recover a refund from the company. The company, an electronics trader, had initially received a refund of approximately ₹13.43 crores, which was subsequently set aside by the Appellate Authority. The Appellate Authority’s decision was allegedly based on concerns about the physical verification of the company’s business premises. The company, however, contended that a full verification had been completed and that the grounds for reversal were baseless. Aggrieved by the Appellate Authority’s order, Ikiraon Technologies Pvt. Ltd. filed a writ petition with the Delhi High Court. The company argued that with the GST Appellate Tribunal (GSTAT) not yet functional, it had no statutory appellate remedy available to it, leaving it vulnerable to coercive action. The court acknowledged that the Appellate Authority’s order was ordinarily appealable to the GSTAT. However, due to the non-operational status of the Tribunal, the court intervened to provide interim protection to the taxpayer. The Delhi High Court ordered that no coercive steps be taken against the petitioner in the meantime. The court also directed the GST authorities to file a counter affidavit and scheduled the matter for a future hearing. This interim order aligns with principles established in other cases where courts have exercised writ jurisdiction to prevent irreparable harm or coercive recovery in the absence of a functional GSTAT. It highlights the judiciary’s role in ensuring taxpayers have a forum to challenge disputed orders and are not subject to adverse actions when the normal statutory appeal process is unavailable.

Facts:

Ikiraon Technologies Pvt. Ltd. (“the Petitioner”), an electronics trader, had secured a refund of approximately ₹13.43 crores from the GST Department after alleged satisfactory verification of its business premises and documents.

The Appellate Authority (“the Respondent”), subsequently set aside the sanctioned refund by an Order-in-Appeal dated June 2, 2025, allegedly due to doubts regarding the adequacy of physical verification of the Petitioner’s place of business.

The Petitioner contended that full physical verification had, in fact, occurred; relevant documents were furnished, and thus the ground cited for reversal was baseless.

The Respondent contended that the Petitioner’s claim that no personal hearing was granted was inaccurate, asserting that a hearing was indeed given; the reversal was justified by the deficiencies noted in verification.

Aggrieved, the Petitioner challenged the order by way of writ petition before the Delhi High Court, submitting that the GST Appellate Tribunal (GSTAT), the normal appellate forum, was not yet notified, leaving the Petitioner with no statutory appellate remedy.

Issue:

Whether, in absence of a notified GST Appellate Tribunal, coercive recovery or adverse action may proceed against a taxpayer whose refund was reversed by appellate order, despite disputes about sufficiency of verification and opportunity of hearing?

Held

The Hon’ble Delhi High Court in W.P.(C) 13392/2025 held as under:

• Observed that, an Order-in-Appeal is ordinarily appealable to the GST Appellate Tribunal (GSTAT), but the forum is not yet operational.
• Noted that. the Petitioner disputes the stated grounds for reversal, affirming physical verification and documentation.
• Noted that, the Respondent maintained that a personal hearing was granted.
• Directed that, no coercive steps be taken against the Petitioner in the meantime and ordered Respondent to file a counter affidavit within six weeks, with the rejoinder in four weeks thereafter, and posted the matter for further hearing.

Our Comments:

This interim order aligns with principles established in several cases addressing the unavailability of GSTAT as a statutory remedy, where High Courts have permitted writ jurisdiction to be exercised to prevent irreparable harm or coercive recovery. In this case a refund that had been sanctioned in favour of the assessee, was subsequently set aside by the Appellate Authority. The authorities had initially granted the refund after verification of all relevant documents and inspection of the business premises. The Court took note that the order-in-appeal reversing the refund is ordinarily appealable before the GST Appellate Tribunal. However, since the Tribunal had not yet been constituted, the High Court intervened to ensure interim protection, highlighting the lack of alternative appellate remedy during this period.

Relevant Provisions:

Section 107, CGST Act, 2017

“107. Appeals to Appellate Authority.-

(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person….”

Section 112, CGST Act, 2017:

“112. Appeals to Appellate Tribunal.-

(1) Any person aggrieved by an order passed against him under Section 107 or Section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal or the date, as may be notified by the Government, on the recommendations of the Council, for filing appeal before the Appellate Tribunal under this Act, whichever is later.”

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. This hearing has been done through hybrid mode.

CM APPL. 54876/2025 (for exemption)

2. Allowed, subject to all just exceptions. Application is disposed of.

W. P.(C) 13392/2025 & CM APPL. 54875/2025

3. The present petition has been filed by the Petitioner – M/s Ikiraon Technologies Pvt. Ltd., inter alia, challenging the impugned Order-in-Appeal dated 2^nd June, 2025 by which the refund orders, which were granted in favour of the Petitioner to the tune of Rs.13.43 crores, have been set aside by the Appellate Authority.

4. Submission of Mr. Gulati, ld. Counsel appearing for the Petitioner is that the refund orders have been set aside, inter alia, on the ground that physical verification of the Petitioner’s place of business was not done which as per him is completely baseless. It is submitted that in fact the physical verification was done and all the relevant documents have been submitted post which the refund was granted.

5. Issue notice. Mr. Aditya Singla, ld. SSC accepts notice.

6. Ld. Counsel for the Respondent objects to the ground in the petition that no personal hearing was given. It is submitted that the hearing was, in fact, afforded to the Petitioner.

7. Be that as it may, this is an Order-in-Appeal, which is also an appealable order before the GST Appellate Tribunal. However, the GSTAT is yet to be notified.

8. In view thereof, let the counter affidavit be filed within six weeks. Rejoinder thereto be filed within four weeks thereafter.

9. No coercive steps be taken against the Petitioner in the meantime.

10. List before the Joint Registrar on 6^th October, 2025.

11. List before the Court on 15^th December, 2025.

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(Author can be reached at info@a2ztaxcorp.com)