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Case Details: K-NXT Logisticx (P.) Ltd. vs. Union of India - [2025] 174 taxmann.com 1054 (Delhi)

Judiciary and Counsel Details

Pratibha M. Singh & Rajneesh Kumar Gupta, JJ.
Siddharth Malhotra, Adv. for the Petitioner.
Gibran Naushad, SSC, Suraj Shekhar Singh & Harsh Singhal, Advs. for the Respondent.

Facts of the Case

The petitioner, a registered person under CGST and Delhi GST Act, had filed a claim for refund of unutilised input tax credit under Section 54 of CGST. In the course of proceedings, a show cause notice was issued to the petitioner, to which a detailed reply was submitted. However, during the pendency of the show cause notice, the refund claim was rejected by the adjudicating authority. Aggrieved by the rejection, the petitioner preferred an appeal before the Appellate Authority, which allowed the refund claim in favour of the petitioner.

Despite the appellate order granting the refund, the petitioner submitted that the Department had failed to disburse the refund, despite repeated representations. No appeal or review proceedings had been initiated by the Department against the order of the Appellate Authority, and the matter was accordingly placed before the Hon’ble High Court of Delhi in a writ petition seeking enforcement of the refund.

High Court Held

The Hon’ble High Court of Delhi held that the Department cannot withhold refund granted by the Appellate Authority in the absence of any challenge to such appellate order. It was observed that the Department’s internal opinion or objections cannot independently justify the non-disbursal of refund under Section 54(11) of CGST, unless supported by any appeal or other statutory proceeding.

The Court noted that once refund has been sanctioned by the Appellate Authority, and no further legal challenge is pending, the Department is duty-bound to process and release the refund. It further referred to the obligation under Section 56 of CGST to grant refund within the stipulated time. Accordingly, the Court concluded that in the absence of a review order or appellate challenge, the refund could not be lawfully withheld, thereby reinforcing the finality and enforceability of appellate orders in refund matters.