Case Summary
Case Title: M/s Bishnu Flour Mills Pvt. Ltd. v. Union of India & Ors.
Court: Patna High Court
Petition No.: Civil Writ Jurisdiction Case No. 18879 of 2024
Judgment Date: 29 July 2025
Coram: Justice P. B. Bajanthri and Justice Alok Kumar Pandey
Category: Refund of Input Tax Credit (ITC) on export without payment of IGST
Relevant Sections:
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Section 54(5), CGST Act, 2017 – Refund
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Section 107, CGST Act, 2017 – Appeals
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Principles of natural justice and quasi-judicial functioning
Facts (Paras 1–3)
M/s Bishnu Flour Mills Pvt. Ltd. filed an application in Form GST RFD-01 dated 23.01.2024 seeking refund of accumulated ITC on exports made without payment of IGST. The Joint Commissioner, State Tax, Katihar initially allowed the refund through order dated 05.04.2024 and directed issuance of RFD-06. However, later a fresh show cause notice was issued citing a CAG Report (2008-09) alleging pending tax liability of ₹97.28 lakhs, without furnishing any supporting documents or demand notice. Based on this, the refund application was rejected on 16.05.2024. The petitioner’s appeal against this order was rejected on 09.09.2024 on the sole ground of non-payment of 10% pre-deposit under Section 107, despite the fact that the matter concerned refund denial and not any disputed tax liability.
Questions for Consideration (Paras 2–3)
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Whether rejection of refund claim based on vague reliance on CAG report without providing supporting material is sustainable?
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Whether the appeal could be dismissed for non-deposit of 10% under Section 107 when no additional demand of tax was in dispute?
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Whether the impugned orders satisfy the requirement of being reasoned and speaking orders?
Observations (Paras 4–5)
The Court noted that the refund was denied solely on the ground of alleged dues from CAG Report 2008–09, but no calculation, document, or assessment order establishing the liability of ₹97.28 lakhs was provided. The order dated 16.05.2024 was thus non-speaking. The Court reiterated that quasi-judicial authorities are bound to pass reasoned orders, as held by the Supreme Court in Oryx Fisheries Pvt. Ltd. v. Union of India (2010) 13 SCC 427 and Kranti Associates v. Masood Ahmed Khan (2010) 9 SCC 496, emphasizing transparency, fairness, and accountability. Since the foundation of the demand was unclear, the refund rejection and subsequent appellate dismissal were unsustainable.
Judgment (Para 5–7)
The High Court set aside both the refund rejection order dated 16.05.2024 and the appellate order dated 09.09.2024, terming them as non-speaking and contrary to principles of natural justice. The matter was remitted back to the concerned authority to pass a fresh, detailed, reasoned order after granting an opportunity of oral hearing. The entire exercise was directed to be completed within three months, and the writ petition was allowed.
Table of Cases Referred
| Case | Citation | Ratio / Verdict |
|---|---|---|
| Oryx Fisheries Pvt. Ltd. v. Union of India | (2010) 13 SCC 427 | Quasi-judicial authorities must give reasoned orders; cryptic orders violate natural justice. |
| Kranti Associates v. Masood Ahmed Khan | (2010) 9 SCC 496 | Recording of reasons is indispensable; ensures fairness, transparency, and judicial review. |
| Ruiz Torija v. Spain | (1994) 19 EHRR 553 | European Court: Adequate reasons are part of fairness under Article 6 ECHR. |
| Anya v. University of Oxford | [2001 EWCA Civ 405] | Requirement of reasoned orders integral to human rights and judicial transparency. |
Between Fine Lines
This ruling underscores that refund claims under GST cannot be denied based on vague references to old audit objections without concrete evidence. Authorities must issue speaking orders with clear reasoning. For trade and industry, the case offers relief against arbitrary withholding of refunds, assuring exporters that refund disputes must be handled with transparency, not on unsubstantiated allegations.
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