Facts of the Case:

In this case, the petitioner had filed a refund application claiming unutilized Input Tax Credit (ITC) for the period July 2019 to September 2019. The refund was partially sanctioned while the balance was rejected by the adjudicating authority. On appeal, the Appellate Authority set aside the rejection order and allowed the appeal. Based on the appellate order, the petitioner sought consequential refund of the rejected amount. However, the Proper Officer, while processing the consequential refund claim, independently re-examined the refund eligibility under Section 54 of the CGST Act and Rule 89 of the CGST Rules. Upon detailed scrutiny of GSTR-1, GSTR-3B and GSTR-9 returns, the officer found significant inconsistencies in turnover reporting and reconciliation, concluded that the refund computation remained unsubstantiated, and again rejected the refund claim.

Challenging this fresh rejection, the petitioner approached the Delhi High Court contending that the appellate order had attained finality and the Proper Officer was bound to grant the consequential refund without reopening the issue.

Issue:

Whether the Proper Officer, while processing a consequential refund claim arising from an appellate order, is bound to mechanically grant the refund, or whether he can independently examine the admissibility and correctness of the refund claim under Section 54 of the CGST Act and reject it on grounds distinct from those considered by the Appellate Authority.

Held That:

The Court held that the Proper Officer was not precluded from independently examining the refund claim on other legally permissible grounds while processing the consequential refund under Section 54 of the CGST Act.

Since the impugned order contained detailed findings based on verification of statutory returns and reconciliation of turnover, it could not be regarded as an order passed without jurisdiction. The Court observed that the validity of such findings involves disputed questions requiring examination on merits, which falls within the domain of the statutory appellate authority under Section 107 of the CGST Act. 

Accordingly, the Court declined to exercise writ jurisdiction, relegated the petitioner to the statutory appellate remedy, and permitted exclusion of the period spent in prosecuting the writ petition while computing limitation for filing the appeal. The Delhi High Court dismissed the writ petition and held that the appellate order merely set aside the earlier rejection of refund on the grounds considered therein and did not direct unconditional sanction of the refund.

Case name: M/s. Karamsar Poultry Appliances Versus Assistant Commissioner, Janakpuri Division, CGST Delhi West & Ors. dated 13.07.2026

To read the complete judgement 2026 Taxo.online 1938