GST Update

Desk of CA. Praveen Sharma – 1068 Series (CAPS) 

PUNJAB & HARYANA HIGH COURT IN THE CASE OF IMPORTANT GST RULING

J.K. Cement Works v. Commissioner of Central Goods and Services Tax & Another

Sanctioned GST Refund Cannot Be Withheld Merely Because Revenue Has Filed an Appeal

In an important ruling, the Punjab and Haryana High Court directed the GST Department to release the refund sanctioned to J.K. Cement Works.

J.K. Cement Works operates a cement manufacturing unit at Jharli, Haryana. Its GST refund claim was approved by the competent authority through an order dated 29 September 2022. However, despite the refund being sanctioned, the amount was not credited to the company’s bank account for nearly four years.

The company was therefore compelled to approach the High Court for the release of its refund.

The Revenue informed the Court that it had challenged the refund order by filing an appeal under Section 112 of the CGST Act before the Goods and Services Tax Appellate Tribunal. However, the departmental appeal was filed only on 27 March 2026, and no date of hearing had been fixed by the Tribunal.

The High Court observed that merely filing an appeal could not be a valid reason for withholding a duly sanctioned refund for an indefinite period. The Court also noted that J.K. Cement Works was an established cement manufacturing company and could not be treated as a “fly-by-night operator.”

To protect the interests of the Revenue, the Court directed the company to furnish an undertaking. Under this undertaking, the company would be required to deposit the amount in accordance with law if the Revenue ultimately succeeded in its appeal and any liability was determined against the company.

Accordingly, the High Court directed the Department to release the sanctioned GST refund within six weeks from the date on which the company submits the undertaking and a certified copy of the Court’s order.

The ruling makes it clear that a refund sanctioned through a valid order cannot be withheld indefinitely merely because the Department has filed an appeal. Unless the refund order is stayed, modified or reversed by a competent forum, the taxpayer’s legitimate refund should ordinarily be released, subject to appropriate safeguards.

LINK:CA. Praveen Sharma on Linkedin

Regards
CAPS