29.01.2022 – Refund should not be withheld on the ground that an investigation is pending against the Applicant

taxo.onlineThe Hon’ble High Court of Bombay vide its Order dated 08 October 2021 in the matter of Evertime Overseas (P.) Ltd.  Vs Union of India in Writ Petition No. 3793 of 2021 held that the refund cannot be denied on the ground that an investigation is pending against the assessee.

The Petitioner filed a refund application seeking refund as per Section 16 of IGST Act, 2017, i.e. for zero rated supplies. However, refund application of the Petitioner was not processed by the Department on the ground that an investigation is pending against the Petitioner.

Petitioner while referring to sub-section 10 of Section 54 of the CGST Act, 2017, pleaded before the Hon’ble High Court that the action on the part of respondents refusing to process the refund on the ground that the investigation is pending is untenable. While Department’s Counsel submitted that department is justified in not processing refund application to save the interest of Revenue.

The Hon’ble High Court after considering the submissions made and the facts of the case held that it would be proper if the claim for the refund is processed by the respondents in accordance with Law. It was further found that there is no order or decision on record on the application claiming refund. Therefore, Hon’ble Court directed the proper officer to process the application made by the Petitioner for refund and pass a reasoned order upon hearing the Petitioner.

This decision discusses provisions of Section 54 of the CGST Act, 2017 and rules made thereunder.

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