HC Grants Relief Against Recovery of GST Refund Already Sanctioned

Case Details: AWL Agri Business vs. State of Odisha - [2026] 185 taxmann.com 621 (Orissa)

Judiciary and Counsel Details

• Harish Tandon, CJ. & Murahari Sri Raman, J.
• Rudra Prasad Kar, Senior Advocate & Chitta Ranjan Das, Adv. for the Petitioner.
• Sunil Mishra, Standing Counsel for the Respondent.

Facts of the Case

The petitioner, a manufacturer of edible oils, was availing input tax credit on inputs taxed at 12% and 18%, while its outward supplies were taxable at 5%, resulting in accumulation of ITC under the inverted duty structure. Refund claims for the period April 2021 to March 2022 were processed and sanctioned by the proper officer through speaking orders passed under the refund provisions. Subsequently, the Deputy Commissioner initiated proceedings under the demand provisions and passed an adjudication order seeking to recover the refunds already sanctioned. Aggrieved by the action, the petitioner filed a writ petition contending that the refund orders could not be nullified through demand proceedings and could only be challenged through the statutory review and appellate mechanism.

High Court Held

The High Court observed that CBIC Instruction No. 03/2022-GST specifically required refund orders to be reviewed for examining their legality and propriety and, where necessary, challenged through the appellate remedy. It was noted that instead of following the prescribed procedure, the authority had invoked the demand provisions to nullify the effect of the refund sanction orders. The Court held that the petitioner had made out a prima facie case and that interim protection was warranted. Accordingly, the authorities were restrained from taking coercive action pursuant to the impugned demand order until further consideration of the matter.