Refund Sanctioned by Appellate Authority Cannot Be Withheld Without Appeal | HC

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  • Last Updated on 3 June, 2025

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Withholding GST refund

Case Details: K-NXT Logisticx (P.) Ltd. vs. Union of India - [2025] 174 taxmann.com 1054 (Delhi)

Judiciary and Counsel Details

  • Pratibha M. Singh & Rajneesh Kumar Gupta, JJ.
  • Siddharth Malhotra, Adv. for the Petitioner.
  • Gibran Naushad, SSC, Suraj Shekhar Singh & Harsh Singhal, Advs. for the Respondent.

Facts of the Case

The petitioner, a registered person under CGST and Delhi GST Act, had filed a claim for refund of unutilised input tax credit under Section 54 of CGST. In the course of proceedings, a show cause notice was issued to the petitioner, to which a detailed reply was submitted. However, during the pendency of the show cause notice, the refund claim was rejected by the adjudicating authority. Aggrieved by the rejection, the petitioner preferred an appeal before the Appellate Authority, which allowed the refund claim in favour of the petitioner.

Despite the appellate order granting the refund, the petitioner submitted that the Department had failed to disburse the refund, despite repeated representations. No appeal or review proceedings had been initiated by the Department against the order of the Appellate Authority, and the matter was accordingly placed before the Hon’ble High Court of Delhi in a writ petition seeking enforcement of the refund.

High Court Held

The Hon’ble High Court of Delhi held that the Department cannot withhold refund granted by the Appellate Authority in the absence of any challenge to such appellate order. It was observed that the Department’s internal opinion or objections cannot independently justify the non-disbursal of refund under Section 54(11) of CGST, unless supported by any appeal or other statutory proceeding.

The Court noted that once refund has been sanctioned by the Appellate Authority, and no further legal challenge is pending, the Department is duty-bound to process and release the refund. It further referred to the obligation under Section 56 of CGST to grant refund within the stipulated time. Accordingly, the Court concluded that in the absence of a review order or appellate challenge, the refund could not be lawfully withheld, thereby reinforcing the finality and enforceability of appellate orders in refund matters.

List of Cases Reviewed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied