GST Update

Desk of CA. Praveen Sharma – 1038 Series (CAPS) 

 Orissa High Court – Refund Cannot Be Withheld Merely on the Possibility of an Appeal

Case: M/s. Rashmi Agency v. Deputy Commissioner CT & GST Circle, Cuttack-I City & Others

 Orissa High Court: Refund Cannot Be Withheld Merely Because the Department May File an Appeal

The Orissa High Court has held that the GST department cannot withhold a taxpayer's refund merely on the ground that it may file an appeal against an appellate order in the future. A mere possibility of appeal is not sufficient to deny a refund that has become due under law.

In the case of M/s. Rashmi Agency v. Deputy Commissioner, CT & GST Circle, Cuttack-I City and Others, the taxpayer became entitled to a refund under Section 54 of the CGST Act after obtaining a favourable appellate order. However, the Deputy Commissioner rejected the refund application, stating that the department still had time to challenge the appellate order before a higher authority.

The High Court observed that Section 54(11), which permits withholding of refunds in specified circumstances, can be invoked only when the statutory conditions are actually satisfied. The authority must pass a reasoned order supported by law before withholding any refund.

The Court further emphasized that subordinate officers are bound to give effect to a valid appellate order unless it is stayed or overturned by a competent forum. Since no appeal had been filed by the department on the date the refund was rejected, the action of withholding the refund was found to be without legal basis.

Accordingly, the High Court set aside the refund rejection order, holding that it was without jurisdiction. The judgment reinforces that taxpayers cannot be deprived of statutory refunds based on speculative or future actions of the Revenue.

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CAPS