The Hon’ble High Court of Delhi vide its order dated 28.03.2023 in the matter of G.S. Industries Vs. Commissioner Central Goods And Service Tax Delhi West & Anr. & Ors. in W.P. (C) – 14719/2022, directed the department to immediately process the refund claim of the assessee, which was withheld by the revenue on the ground that revenue has decided to file an appeal against the order sanctioning the refund claim.  It was found the revenue till date has not filed any appeal and there is no order of any Court or Tribunal staying the order.

The Petitioner filed the writ petition before the Hon’ble High Court praying for directions to the respondent to refund the amounting to ₹23,10,333/- claimed by the petitioner for the period September, 2017 to March, 2018 as well as an amount of ₹14,46,417/- claimed as refund for the period April, 2018 to March, 2019 along with interest.

Facts Of The Case: –

  • That the petitioner filed an application on 04.07.2019 claiming refund of ₹23,10,333 accumulated Input Tax Credit for the period September 2017 to March, 2018. Another application was filed by the petitioner on 09.07.2019 for the period for claiming a refund of Rs. 14,46417/- for the period of April, 2018 to March, 2019.  Thus, the petitioner claims an amount of ₹37,56,750/- as refund of accumulated tax.
  • The applications filed were duly acknowledged, however, thereafter two separate deficiency memos, both dated 29.11.2019, were issued, wherein certain deficiencies were pointed by the respondents and also sought certain clarifications with regard to the said applications. The petitioner was also asked to submit a Chartered Accountant Certificate confirming the incidence of tax and interest was not passed on to any other person.
  • The petitioner responded to the said deficiency memos by a communication dated 27.01.2020. However, petitioner’s explanation was not accepted by the respondents and a show cause notice dated 23.11.2020 was issued to the petitioner calling upon the petitioner to show cause why his applications for refund not be rejected.
  • It was alleged that major part of the refund claim is Brass Scrap (18%), though you are manufacturing India Mark 11 hand pump and their parts which fall under the 5% GST classification. Further, the product claimed to be manufactured by you requires very little to no Brass.  The petitioner was also asked to submit the details of the registered place of business as a Physical Verification was conducted by the AE branch on 16.09.2020 and it was observed that some other firm is running since January, 2019.
  • The petitioner responded to the said Show Cause Notices. Petitioner’s explanation was not accepted and by a separate order dated 14.12.2020, the applications for refund were rejected.
  • Being aggrieved, the petitioner filed two appeals, which was disposed by the Appellant Authority by a common order dated 03.01.2022. The Appellate Authority allowed the petitioner’s appeal accepting that the petitioner was in existence at the material time, and the findings contrary to the same were erroneous.  It was found by the Appellate Authority that the Adjudicating Authority had not provided any basis for observing that the product manufactured by the petitioner required very less or no brass at all.
  • Since, the petitioner appeal was allowed, the petitioner is entitled to get the amount claimed as refund, however the same has not been disbursed.

It was submitted on the behalf of the petitioner that the issue is covered by the earlier decision of this Court in Mr. Brij Mohan Mangla Vs. Union of India & Ors.: W.P.(C) 14234/2022 dated 23.02.2023.

It was submitted on the behalf of the respondents that the respondent has decided to challenge the Order-in-appeal dated 03.01.2022, and the Commissioner has passed an order dated 19.05.2022, setting out the grounds on which the appeal is required to be preferred against the Order-in-appeal.

Held: –

  • The Hon’ble Court after considering the submissions made and facts of the case, found that the principal question that falls for consideration by this Court is whether the benefit of Order-in-appeal dated 03.01.2022 can be denied to the petitioner and the refund amount be withheld solely on the ground that the respondent has decided to file an appeal against the said order.
  • The Hon’ble Court taking note of the decision in Brij Mohan Mangla Vs. Union of India & Ors. referred by the petitioner, allowed the writ petition.

The Hon’ble Court with the above findings, directed the respondents to immediately process the refund claim of the petitioner with interest.  However, it was clarified that this would not preclude the respondents from availing any remedy against the Order-in-appeal dated 03.01.2022 passed by the Appellate Authority.

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