M/S. Neptune Sales Corporation vs. Commissioner, Commercial Taxes, U.P., Lucknow And Another

Facts

The petitioner, M/s Neptune Sales Corporation, filed a batch of writ petitions before the Allahabad High Court. The core grievance across these petitions, as narrated from Writ Tax No. 1264 of 2022, is the non-refund of tax and penalty deposited by the petitioner. This deposit was made at the time of assessment, and an appeal filed by the petitioner was accepted by the Additional Commissioner/Grade-II (Appeal)-6, Commissioner Tax, Kanpur, via an order dated April 9, 2019, which had attained finality. Subsequently, the refund was sanctioned by the Competent Authority on May 6, 2020. Despite the passage of time and service of the writ petition on the CGST Department, no instructions were available to their counsel. The petitions highlight a delay of approximately two years in granting the sanctioned refund.

Held

The Court held that the petitioner is entitled to the refund of the tax and penalty deposited. The reasoning was based on the fact that the petitioner's appeal had been accepted by the appellate authority, rendering the original assessment order inoperative to that extent. Furthermore, the refund had been sanctioned by the Competent Authority. The Court found the delay in granting the sanctioned refund unacceptable. The ratio decidendi is that once an appeal is allowed and a refund is sanctioned, the revenue cannot withhold the refund without a valid legal impediment. The Court directed respondent No.3 (Assistant Commissioner, Central Goods and Services Tax, Division Kanpur Dehat) to grant the refund to the petitioners within four weeks of receiving the order, along with statutory interest as provided under Section 56 of the Central Goods and Services Tax Act, 2017. No issues were expressly left undecided.

Key Issues

1. Whether the petitioner is entitled to the refund of tax and penalty deposited, given that their appeal was allowed and the refund was sanctioned by the Competent Authority, and if so, what is the legal basis for this entitlement under the Central Goods and Services Tax Act, 2017? Petitioner's Contention: The petitioner argued that since their appeal was allowed and the refund was sanctioned, they are legally entitled to receive the refund. They relied on the finality of the appellate order and the subsequent sanction of the refund by the Competent Authority. Revenue's Contention: The judgment notes that the learned counsel for the CGST Department did not have any instructions in the case, implying no specific argument was presented by the revenue against the refund claim.