Delhi High Court: Refund Ruling

•

Refund Cannot Be Withheld Merely by Invoking Section 54(11) Without Pending Appeal: Delhi High Court in Shalender Kumar vs Commissioner Delhi West CGST [W.P.(C) 3824/2025; dated 03-Apr-2025] Issue ❓ Whether the Department can withhold refund merely based on an opinion under Section 54(11) in the absence of any pending appeal or proceeding?

Court Judgment 🏛️ 🧩 Mere formulation of opinion under Section 54(11) without any pending appeal or proceeding is insufficient to withhold refund. 📌 The Department has neither filed an appeal nor obtained any stay against the Appellate Order. ✅ Refund sanctioned by Appellate Authority must be processed. ⏳ Directed to release refund with interest within 2 months under Section 56. ⚠️ Refund subject to outcome of future appeal, if filed.

Facts of the Case 📜 🔹 January 2024: Appellate Authority allowed refund for Dec 2022 exports under Section 16(2) of CGST Act. 🔹 June 2023: Show cause issued alleging supplier GSTINs were cancelled. 🔹 September 2023: Adjudicating Authority rejected refund of ₹15.15 lakhs.

🔹 January 2024: Assessee won on appeal; refund allowed. 🔹 July 2024: Department issued Review Order under Section 112(3) & Rule 111(1). 🔹 January 2025: Department withheld refund under Section 54(11), citing likely revenue loss due to “malfeasance.” 🔹 April 2025: Assessee filed writ before the Delhi High Court.

Assessee’s Grounds of Appeal ✅ Order of Appellate Authority still valid and unchallenged ✅ No pending appellate proceeding ✅ Section 54(11) invoked without statutory foundation—refund must be released

Department’s Argument ❌ Refund rightly withheld since opinion under Section 54(11) cited “malfeasance” and revenue risk ❌ Intends to appeal when GST Appellate Tribunal becomes functional

Precedent Analysis ⚖️ • G.S. Industries v. Commissioner CGST Delhi West, W.P.(C) 14719/2022 Refund allowed; Appellate Order must be respected in the absence of stay or pending appeal Affirmed & relied upon • Brij Mohan Mangla v. Union of India, W.P.(C) 14234/2022 Refund cannot be withheld on mere intent to appeal Followed

Key Takeaways 📌 • ✅ Appellate refund orders are enforceable unless stayed or appealed. • ❌ Department cannot withhold refund by mere expression of intent to appeal. • ⚖️ Section 54(11) requires both: a pending proceeding & a valid opinion. • 💡 Refund, if withheld improperly, attracts interest under Section 56. • 🔁 Refunds granted by appellate bodies must be respected for legal finality.