Case Summary
W.P.(C) 13041/2023 — High Court of Delhi — Refund of Accumulated ITC
Order dated: 30.10.2023
Facts (Paras 1–8)
The petitioner, Kunal Autotech Pvt. Ltd., filed a refund claim on 30.08.2022 for accumulated Input Tax Credit on goods exported without payment of tax for May–June 2022, amounting to ₹1,14,14,405. The refund was rejected by the Order-in-Original dated 25.11.2022, holding that (i) the turnover for the relevant period was allegedly lower than the refund claimed, and (ii) an excess ITC of ₹1,86,14,376.6 was allegedly availed by the petitioner based on a mismatch in GSTR-2A and GSTR-3B.
The petitioner appealed under Section 107, CGST Act, and by Order-in-Appeal dated 19.06.2023, the Appellate Authority allowed the appeal, directing sanction of ₹1,13,09,772. Despite this favourable appellate order, the refund was not granted. The respondents informed the Court that they were yet to decide whether to review or appeal against the order.
Questions / Issues (Paras 8–10)
Whether the GST authorities can withhold refund sanctioned by an appellate order, merely on the basis that they are contemplating review/appeal, despite the absence of any stay on said appellate order?
Court’s Observations (Paras 9–11)
The Court noted that:
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Though the respondents were undecided about filing a review/appeal, no stay operated against the appellate order dated 19.06.2023.
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The authorities cannot withhold a refund that stands conclusively allowed by a competent appellate authority.
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Mere contemplation of further remedy does not clothe the State with authority to delay implementation of the appellate order.
The Court emphasised that finality of an appellate order must be respected unless stayed; otherwise, it undermines statutory safeguards and creates unwarranted hardship to taxpayers.
Judgment / Verdict (Paras 11–12)
The Court directed the respondents to forthwith process the refund, along with applicable interest, strictly in accordance with law, within three weeks. It clarified that the direction does not prevent the respondents from pursuing any legal remedies available against the appellate order.
Statutory References
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Section 54, CGST Act – Refund of tax.
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Section 107, CGST Act – Appeals to Appellate Authority.
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No Rule invoked to justify withholding refund; withholding without stay found impermissible.
Cases Referred — Summary Table
(No external case law cited in the judgment; hence table confined to internal references only.)
| Sl. No. | Case Referred | Court / Details | Verdict / Relevance |
|---|---|---|---|
| 1 | Order-in-Original dated 25.11.2022 | Proper Officer | Rejected refund citing turnover & ITC mismatch |
| 2 | Order-in-Appeal dated 19.06.2023 | Appellate Authority under S.107 | Allowed refund of ₹1.13 crore; directed sanction |
Between Fine Lines
For trade and industry, this judgment reinforces that refunds sanctioned by appellate authorities cannot be withheld merely because the department is considering further appeal. Unless a formal stay is obtained, the department must release the refund with interest, ensuring liquidity to exporters and preventing arbitrary withholding of funds.
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