Kpil-Jwil Joint Venture vs. The State Of Bihar

Held

The Court held that the respondent authorities had not passed any specific order in terms of Section 54(11) of the CGST Act, 2017, to warrant withholding the petitioner's refund of Rs. 1,75,00,000/- during the pendency of the appeal before the Tribunal. The Court found that the impugned Show Cause Notice was issued under Rule 90(3) of the CGST Rules, 2017, which deals with communicating deficiencies in a refund application. However, the petitioner's argument regarding the necessity of a specific order under Section 54(11) for withholding refund during appeal was persuasive. The Court directed the Commissioner to pass a specific order under Section 54(11) of the CGST Act, 2017, concerning the payment or withholding of the refund, after issuing a show cause notice to the petitioner and providing them with a proper opportunity of hearing. The writ application was disposed of with these directions.

Facts

The petitioner, KPIL-JWIL Joint Venture, sought to quash a Deficiency Memo/Show Cause Notice (GST RFD-03) dated 01.03.2025, issued by the Joint Commissioner of State Tax, Munger Circle. This notice proposed to reject a refund of Rs. 1,75,00,000/- accumulated in the petitioner's Electronic Cash Ledger. The petitioner had initially applied for this refund on 15.12.2023. Their earlier refund application was rejected on 31.05.2024, citing ineligible input tax credit. An appeal to the Appellate Authority set aside this rejection on 31.12.2024. The revenue then filed a revision application before the Commissioner on 28.01.2025. Subsequently, the petitioner filed a fresh refund application on 05.02.2025, leading to the impugned deficiency memo.

Key Issues

1. Whether the respondent authorities can withhold the refund of Rs. 1,75,00,000/- during the pendency of an appeal before the GST Appellate Tribunal without a specific order from the Commissioner under Section 54(11) of the CGST Act, 2017? Petitioner's contention: The petitioner argued that the respondents' action violates Section 54(11) of the CGST Act, 2017, which requires the Commissioner to pass a specific order, after providing an opportunity of being heard, to withhold refund during the pendency of an appeal if it is likely to adversely affect revenue. The petitioner asserted that no such order was passed in their case. Revenue's contention: The revenue argued that the Show Cause Notice was issued under Rule 90(3) of the CGST Rules, 2017, and the petitioner's writ application was premature as they should have awaited the final order from the Joint Commissioner.