Facts of the Case: The petitioner, engaged in technical consultancy and certification services, applied for GST refund. On appeal, the Appellate Authority, vide Order-in-Appeal set aside the rejection and allowed the refund, holding that the petitioner was not an “intermediary” and services were correctly zero-rated.
The Department did not file any appeal against the OIA; however, it passed an internal “review opinion” dated 16 December 2022 under Section 54(11) stating that the refund would adversely affect revenue and indicating an intention to challenge the order. Acting on this opinion, the Commissioner withheld the refund through an order dated 4 March 2025 until final adjudication by appellate forums.
Aggrieved, the petitioner filed a writ petition seeking release of the refund, contending that the OIA had attained finality and there was no stay or pending appeal.
Issue: Whether refund sanctioned by the Appellate Authority can be withheld merely on the basis of a Commissioner’s opinion under Section 54(11) when no appeal or proceeding is pending. Whether the Department’s intention to file an appeal, without actual challenge or stay, can justify withholding of refund.
Held that:
The Court noted that withholding of refund under Section 54(11) requires two conditions: (i) pendency of an appeal or proceeding; and (ii) Commissioner’s opinion that refund would adversely affect revenue.
In the absence of any pending appeal or proceeding, the Commissioner’s opinion cannot independently justify withholding.
Until set aside or stayed, the OIA remains binding on the Department. Reliance placed on G.S. Industries v. Commissioner CGST Delhi West and Shalender Kumar v. Commissioner Delhi West CGST Commissionerate. Mere expression of intent to challenge cannot substitute for filing an appeal. The Court observed that no GSTAT was functional, but that did not allow the Department to deny the benefit of a final order.
The Court directed the Department to process the refund with statutory interest under Section 56 within two months, i.e., by 30 September 2025. However, refund will remain subject to the outcome of any appeal if filed in the future.
Case Name: Omega Qms. Versus Commissioner, CGST, Delhi West & Anr. dated 19.08.2025
To read complete judgement 2025 Taxo.online 2044
