2021 (10) TMI 477 - HC - GST

Refund of IGST - submission is that the claim for refund is not being processed by respondent no.4 on the ground that the investigation is pending against the petitioner - section 16 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT - Having regard to the facts of the present case, it would be appropriate if the claim for the refund is processed by the respondents in accordance with law. It is found that there is no order or decision on record on the application claiming refund. In this view of the matter, it would be appropriate to direct the respondent No.4 to process the application made by the petitioner for refund and pass a reasoned order upon hearing the petitioner. The claim for refund be decided as expeditiously as possible on its own merits and preferably within a period of eight weeks from today. Petition disposed off.

Summary

Issues:
Claim for refund under section 16 of the IGST Act, refusal to process refund due to pending investigation, interpretation of sub-section 10 of section 54 of the CGST Act, justification for withholding refund, directive to process refund application.

Analysis:
The petitioner contended that they are entitled to a refund under section 16 of the Integrated Goods and Services Tax Act, 2017, for goods supplied, specifically under sub-section 3(b) of the said Act. However, the refund claim was not being processed by respondent no.4 due to an ongoing investigation against the petitioner. The petitioner argued that the refusal to process the refund based on the pending investigation was unjustifiable. The petitioner's counsel highlighted the provisions of sub-section 10 of section 54 of the Central Goods and Services Tax Act, 2017, which allows for withholding a refund if the registered person has defaulted in filing returns or has tax liabilities. The petitioner sought the release of the outstanding amount of drawback and IGST refund through an application made on May 18, 2021, emphasizing the need for processing the refund claim.

The respondent's counsel, representing respondent Nos. 2 to 4, justified the department's decision not to process the refund application citing the ongoing investigation as necessary to safeguard revenue interests. However, the court, after considering the facts of the case, deemed it appropriate for the refund claim to be processed in accordance with the law. The court noted the absence of any order or decision on record regarding the refund application and directed respondent No.4 to process the petitioner's refund application. The court instructed that a reasoned order be passed after hearing the petitioner, and the claim for refund be decided expeditiously, preferably within eight weeks. The petitioner was directed to appear before the Competent Authority on a specified date for further proceedings.

In conclusion, the court disposed of the writ petition, keeping all contentions open and ruling that there shall be no order as to costs. The judgment emphasized the importance of processing refund claims in a timely manner and in adherence to the legal provisions, ensuring a fair and just resolution for the parties involved.