M/S G.S Industries vs. Commissioner Of Central Tax And GST , Delhi ( West)

Facts

The petitioner, M/s G.S Industries, sought a refund for the period April 2018 to March 2019. After receiving deficiency memos, which the petitioner claims to have addressed, and subsequent representations, the respondents rejected the refund claim. This rejection was challenged, leading to an order from the High Court directing processing of the claim. Subsequently, the respondents rejected the refund by an order dated 09 June 2023. The Department appealed this order, and the appellate authority, by an order dated 24 May 2024, set aside the refund sanction order. The petitioner then filed the present writ petition challenging the appellate authority's order dated 24 May 2024.

Held

The Court held that the Commissioner, in purported exercise of powers under Section 107(2) of the CGST Act, 2017, could not question the validity of the order dated 09 June 2023, as this order was passed to give effect to the Order-in-Appeal dated 03 January 2022. The Court reasoned that the power under Section 107(2) is concerned with examining the proceedings of an adjudicating authority and does not extend to reviewing an order passed by an appellate authority. This was further reinforced by the Court's earlier order dated 28 March 2023, which had established that the refund claim could not be denied since the respondents had failed to assail the Order-in-Appeal dated 03 January 2022. The Court found the impugned order dated 24 May 2024 unsustainable and allowed the writ petition, quashing the order. The grievance regarding the denial of interest was left open to be examined in other pending proceedings.

Key Issues

1. Whether the Commissioner, in purported exercise of powers under Section 107(2) of the CGST Act, 2017, could question the validity of an order passed by an adjudicating authority (dated 09 June 2023) which was passed to give effect to a prior Order-in-Appeal (dated 03 January 2022). Petitioner's arguments: The petitioner argued that the Commissioner's power under Section 107(2) is limited to examining the record of proceedings of an adjudicating authority and does not permit reviewing an order passed by an appellate authority. They relied on the High Court's previous order dated 28 March 2023, which had stated that the refund claim could not be denied as the respondents had failed to assail the Order-in-Appeal dated 03 January 2022. Revenue's arguments: The revenue's appeal before the appellate authority was based on the ground that the refund was sanctioned without considering Annexure-B, a mandatory document as per Circular No. 125/44/2019-GST and Circular No. 135/05/2020-GST. They contended that the refund sanctioning authority erred by not obtaining and examining Annexure-B, making the order dated 09 June 2023 illegal and improper. The appellate authority agreed, noting that the petitioner filed the refund application on 04 February 2022, after the effective date of the circular, thus requiring Annexure-B.