Case Summary
Case Title: M/s. Induvarna LPG Bottling Pvt. Ltd. v. Union of India & Ors.
Court: Patna High Court
Petition Number: CWJC No. 14403 of 2024
Date of Judgment: 05.05.2025
Category of Dispute: Refund – Inverted Duty Structure
Relevant Sections: Section 54 & 56 of the CGST Act, 2017; Rule 89(5) of the CGST Rules, 2017
Facts (Paras 1–3, 4)
The petitioner, an LPG bottling company, filed a refund claim of ₹6,12,487/- for the period October 2018–March 2019 on account of inverted duty structure. The adjudicating authority sanctioned only ₹4,81,247/- and rejected ₹1,31,240/- by order dated 29.06.2024 under Section 54 read with Rule 89(5) of the CGST Rules. The petitioner argued that in an earlier writ petition (CWJC 18609/2023 decided on 29.02.2024), the Court had directed processing of its physical refund application within two months, which was not complied with fully. The present writ sought quashing of the refund rejection, release of balance refund, payment of statutory interest under Section 56, and reimbursement of litigation and professional expenses.
Questions/Issues (Paras 2–5)
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Whether the High Court could directly entertain a writ petition under Article 226 without the petitioner exhausting the appellate remedy against the refund rejection.
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Whether rejection of ₹1,31,240/- refund was legally valid in light of Section 54 CGST Act and Rule 89(5) CGST Rules.
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Whether the petitioner was entitled to interest on delayed refund under Section 56 and compensation for litigation expenses.
Observations (Paras 4–6)
The Court observed that the refund rejection was based on disputed factual issues, namely classification of LPG empty cylinders vis-à-vis gas supply, and applicability of inverted duty refund under Rule 89(5). The petitioner failed to produce material evidence before the refund authority to substantiate the claim that empty cylinders were not sold. The earlier order of 29.02.2024 did not exempt the petitioner from pursuing statutory appeal. Hence, the matter involved mixed questions of fact and law which could not be adjudicated in writ jurisdiction.
Judgment (Paras 7–8)
The High Court disposed of the writ petition by relegating the petitioner to the appellate remedy. It directed that if the petitioner files an appeal within eight weeks, the appellate authority shall consider and decide it within four months from receipt. No relief on interest or costs was granted at this stage.
Table of Earlier Cases Referred
| Case | Citation | Verdict/Ratio |
|---|---|---|
| CWJC No. 18609 of 2023 (M/s. Induvarna LPG Bottling Pvt. Ltd. v. State of Bihar) | Patna HC, 29.02.2024 | Directed respondents to process physical refund application within two months. Did not dispense with appellate remedy. |
Between Fine Lines
For businesses, this ruling emphasizes that refund disputes involving factual issues like classification and inverted duty structure cannot bypass the statutory appeal route. Even where there is earlier judicial intervention, unless specifically exempted, appeals under Section 107 must be exhausted before approaching the High Court. Trade should prepare detailed evidence on input–output tax differentials, especially in sectors like LPG where cylinder handling complicates claims.
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