2023 (3) TMI 327 - HC - GST

Withholding of Refund claim - department to go in appeal against the order in favor of assessee - It is the petitioner s case that on account of an inverted duty structure, he could not fully utilise his input tax credit - HELD THAT - Admittedly, the appeals have not been filed by the respondents as yet. The time for preferring the appeal has also expired. However, the learned counsel for the respondent submits that the appeals would still be in time as in terms of the circular dated 03.12.2019, the time for the Department to prefer an appeal has been extended till three months after the date on which the Tribunal is constituted. It is not necessary for this Court to examine the question whether appeals if and when preferred would be within time. Suffice it to state that the respondent has not secured any order which would, in any manner, stay the operation of the appellate orders passed by the Appellate Authority - Clearly, it is not open for the respondents to ignore the orders passed by the Appellate Authority merely on the ground that it has decided to appeal those orders. It would be debilitating to the rule of law, if the respondents are permitted to withhold implementation of the orders passed by the authority in this manner. Petition allowed.

Summary

Issues:
1. Refund disbursement for a specific period.
2. Eligibility for refund under Section 54(3) of the Act.
3. Processing of refund applications.
4. Cancellation of GSTIN registration.
5. Compliance with orders of the Appellate Authority.

Analysis:
1. The petitioner sought directions for refund disbursement for the period May 2019 to December 2019, based on an order by the Appellate Authority. The petitioner claimed an accumulated input tax credit of Rs. 74,02,337 due to an inverted duty structure.

2. The respondent issued Show Cause Notices questioning the petitioner's existence at the registered premises and the cancellation of GSTIN registration. The petitioner responded, stating business operations at the declared address and subsequent relocation to Haryana. The respondent rejected refund applications, citing the petitioner as a non-registered person.

3. The petitioner appealed these rejections and succeeded before the Appellate Authority. The Authority acknowledged the petitioner's business operations during the relevant period and upheld the genuineness of refund claims, emphasizing the petitioner's registered status during the application filing.

4. Despite the favorable Appellate Authority's decision, the respondents did not process the refund claims. The petitioner reapplied for refunds after revocation of GSTIN cancellation, which led to repeated issuance of deficiency memos and rejection of applications.

5. The Court intervened, emphasizing the respondents' obligation to implement the Appellate Authority's orders promptly. The Court directed immediate processing of the petitioner's refund claims with interest, highlighting that respondents could challenge the Appellate Authority's orders within the legal framework. The Court's decision aimed to uphold the rule of law and ensure timely compliance with judicial directives.