GST Update

Desk of CA. Praveen Sharma – 889 Series (CAPS)

Delhi High Court in the case of Phoenix Impex

The petitioner filed a refund claim of ?25,16,760 on 15 January 2024 for unutilised ITC of November 2023. The refund was not processed within the time limit prescribed under Section 54(7) of the CGST Act. Aggrieved by the delay, the petitioner approached the Delhi High Court and relied on the Calcutta High Court decision in Suraj Mangar, arguing that delayed refunds violate statutory timelines.

After the writ petition was filed, the department issued a show cause notice on 21 August 2025 seeking clarification on ITC, alleging that the supplier had paid tax largely through ITC instead of cash. The petitioner clarified that payment of tax using more than 90% ITC is permitted under Rule 86B and cannot be a ground to deny refund.

The Court directed the department to consider the reply, provide a personal hearing, and pass a reasoned order. Subsequently, on 19 September 2025, the department sanctioned the full refund of ?25,16,760 but failed to deal with the issue of interest.

The Delhi High Court held that the refund must be released along with statutory interest within one month and disposed of the petition.

LINK:CA. Praveen Sharma on Linkedin

Regards

CAPS