Kunal International v. Union of India – Refund directed to be released as non-compliance of Appellate Authority order was held impermissible
Court: Delhi High Court
Petition: W.P.(C) 12154/2023
Date of Judgement: 05.10.2023
Category: Refund – Export without payment of tax
Relevant Provisions: Sections 54, 107, 112, 172 of the CGST Act, 2017; Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.
Cited Case: Alex Tour and Travel Private Limited v. Assistant Commissioner, CGST (2023:DHC:3303-DB)
Facts (Paras 1–4)
The petitioner sought refund of ITC on zero-rated exports (March 2020). The refund claim of ₹71,13,806 was substantially rejected by the Adjudicating Authority via order dated 21.09.2020, alleging wrongful availment of ITC amounting to ₹1,92,78,267. Only ₹9,23,957 was sanctioned. The petitioner preferred an appeal under Section 107 CGST Act, and the Appellate Authority, vide order dated 07.04.2021, allowed the claim and sanctioned refund of ₹61,79,004.20, setting aside the rejection. Despite succeeding in appeal, the refund was still withheld. The petitioner approached the High Court seeking directions for immediate disbursal.
Issues (Paras 5–7)
The critical question before the Court was whether the respondents could refuse to implement the Appellate Authority’s order on the ground that a review had been ordered and the Department intended to file an appeal before the yet-to-be-constituted GST Appellate Tribunal. The respondents relied on the Ninth Removal of Difficulties Order, 2019, asserting extended limitation to file such appeal.
Observations (Paras 6–8)
The Court noted that although there exists a controversy concerning the validity of extending limitation through a Removal of Difficulties Order under Section 172, such issue need not be adjudicated in this matter. The Court held that the Department cannot disregard a binding appellate order merely because it proposes to file an appeal in the future. Unless a competent authority stays the appellate order, the Government is obligated to honour it. The Court relied on its earlier decision in Alex Tour and Travel Pvt. Ltd., which held that absence of the Appellate Tribunal does not empower the Department to keep legitimate refunds pending.
Judgement (Paras 8–9)
The writ petition was allowed. The Court directed the respondents to forthwith disburse the refund sanctioned by the Appellate Authority on 07.04.2021. The Court clarified that the direction does not prevent the respondents from pursuing statutory remedies before the Tribunal once constituted, nor from recovering the amount subsequently if the Department succeeds in appeal.
Summary of Referred Case Law
| Case Name | Court | Issue | Verdict / Ratio |
|---|---|---|---|
| Alex Tour and Travel Pvt. Ltd. v. AC, CGST (2023:DHC:3303-DB) | Delhi High Court | Non-disbursement of refund despite favourable appellate order due to absence of Tribunal | Department cannot withhold refund; absence of Tribunal does not suspend statutory obligation to implement appellate orders. |
Between Fine Lines – Practical Takeaways for Trade
Once an assessee succeeds before the Appellate Authority, the Department must release the refund immediately, even if it proposes to appeal further. The absence of the GST Appellate Tribunal or extensions of limitation cannot justify delaying refund payments. Businesses facing similar delays can directly invoke writ jurisdiction for enforcement of appellate orders.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
