Shalender Kumar vs. Commissioner Delhi West CGST Commissioerate & Ors.

Facts

The Petitioner, Shalender Kumar, engaged in wholesale trade and export of FMCGs, challenged orders dated January 14, 2025, and July 21, 2024, passed by the Commissioner, Delhi West CGST Commissionerate. The Petitioner was initially denied a refund of Rs. 15,15,499.90 by an Adjudicating Authority on September 26, 2023, citing cancellation of suppliers' licenses. However, the Appellate Authority allowed the Petitioner's appeal on January 17, 2024, holding the refund claim genuine and eligible under Section 16(2) of the CGST Act, 2017. The Department then filed a review and issued an opinion under Section 54(11) of the CGST Act, 2017, to withhold the refund pending further appellate proceedings, citing adverse impact on revenue. The Petitioner argued that the Appellate Authority's order remained unchallenged and the Section 54(11) opinion was invalid.

Held

The Court held that the Revenue Department cannot unilaterally withhold a refund based on an opinion under Section 54(11) of the CGST Act, 2017, if the order directing the refund has not been set aside by a higher forum and no appeal or other proceedings are pending against it. The Court found that the conditions for withholding refund under Section 54(11) – namely, a pending appeal or other proceeding and the Commissioner's opinion of adverse impact on revenue – were not met. The Court relied on the reasoning in G.S. Industries v. Commissioner Central Goods and Services Tax Delhi West & Ors., emphasizing that an order-in-appeal cannot be ignored solely because the revenue deems it erroneous and intends to challenge it. The Court directed that the refund be processed in favor of the Petitioner along with interest as per Section 56 of the CGST Act, 2017, within two months, subject to any future decision in any appeal filed by the Department. The Court noted that withholding the refund would be contrary to the Department's own interest, as delayed refunds accrue interest.

Key Issues

1. Whether the Revenue Department can withhold a sanctioned refund based on an opinion under Section 54(11) of the CGST Act, 2017, when the order directing the refund has not been set aside by any higher forum and no appeal has been filed against it? Petitioner's Contention: The Petitioner argued that the Appellate Authority's order dated January 17, 2024, allowing the refund, has not been challenged or set aside. Therefore, it remains valid and binding. The Petitioner contended that the opinion issued under Section 54(11) of the CGST Act, 2017, is invalid in the absence of any pending appeal or other proceedings challenging the Appellate Authority's order. The Petitioner relied on the decision in G.S. Industries v. Commissioner Central Goods and Services Tax Delhi West & Ors. Revenue's Contention: The Revenue Department submitted that they intend to file an appeal against the Appellate Authority's order but have not yet done so due to the absence of a GST Appellate Tribunal. The Revenue sought to distinguish the G.S. Industries case by stating that it did not involve an opinion under Section 54(11) of the Act.