2023 (6) TMI 446 - HC - GST

Refund of GST - Export of goods - Alleged inaction on the part of the respondents in not finalizing petitioner s claim for refund - use of fake invoices to claim refund - Section 54 of the CGST Act read with provisions contained in Rule 96 of the CGST Rules - HELD THAT - The application for grant of refund once filed is required to be decided one way or the other and cannot be kept pending with an oral information that the claim has been withheld. The provisions contained in Section 54 of the CGST Act read with provisions contained in Rule 96 of the CGST Rules provides for refund of tax. Once an application for grant of refund is submitted, the application is required to be decided in accordance with the provisions of law applicable. In this case, the respondents have sought to justify by stating why they have not taken decision in the matter. However, there is no order passed by the competent authority on petitioner s application for refund. The refund application, therefore, is required to be decided and cannot be kept pending indefinitely on the ground of pendency of certain proceedings. The effect of pendency of proceedings could be a matter of consideration while exercising discretion in deciding the claim for refund. In the present case, the proceedings were initiated in the year 2020 and 2022. If the statement at the Bar made by the learned counsel for the petitioner has to be accepted, the second show cause notice dated 11.03.2022 has been brought to its logical conclusion. As far as the first show cause notice dated 17.07.2020 is concerned, the same is still pending. Since the present is a case of an allegation of raising fake invoices and the matter is under investigation, we are not inclined to issue a direction for refund but to direct the competent authority to decide petitioner s refund application in accordance with law keeping in view the mandate of Section 54 of the CGST Act and provisions contained in Rule 96 of the CGST Rules and all relevant considerations within a period of 60 days. The writ petition stands disposed of.

Summary

Issues: Alleged inaction on finalizing petitioner's claim for refund, Allegations of fake invoices in refund claim, Delay in deciding refund application

Alleged inaction on finalizing petitioner's claim for refund:
The petitioner, a manufacturer of electrical wires and allied products engaged in export business, filed a petition against the respondents for not finalizing the claim for refund of IGST paid on exported goods. The petitioner's claim was based on export invoices, shipping bills, and bills of lading generated during the export process. Despite the petitioner's representations, the respondents did not decide on the refund claim, citing ongoing investigations into alleged use of fake invoices by the petitioner.

Allegations of fake invoices in refund claim:
The respondents received information that the petitioner's refund claim was linked to fake invoices from a non-existent company, leading to the issuance of a show cause notice under Section 74 of the CGST Act. The proceedings against the petitioner remained pending due to these serious allegations, with two show cause notices issued by different authorities.

Delay in deciding refund application:
The petitioner argued that under Section 54 of the CGST Act and Rule 96 of the CGST Rules, refund applications must be decided within a stipulated period unless specific deficiencies are identified. The petitioner contended that the refund application should have been granted as per the law, with only limited grounds for withholding refunds as provided in Section 54(10) of the CGST Act. The respondents justified the delay by citing the ongoing investigations and pending show cause notices.

Judgment:
The court noted that while investigations were ongoing regarding the alleged fake invoices, the refund application could not be indefinitely withheld. Emphasizing the need to decide refund applications promptly, the court directed the competent authority to decide the petitioner's refund application within 60 days in accordance with the provisions of Section 54 of the CGST Act and Rule 96 of the CGST Rules, considering all relevant factors and legal requirements.

Conclusion:
The writ petition was disposed of with the direction for the timely decision on the petitioner's refund application, balancing the need for investigation with the legal obligation to process refund claims efficiently.