2026-VIL-1139-DEL
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SGST High Court Cases

GST - Withholding of refund under Section 54(11) of the CGST Act of an amount arising from an Order-in-Appeal - Petitioner, an exporter who paid IGST, succeeded before the Appellate Authority in respect of refund claims - Department reviewed the order and decided to appeal before the GSTAT, and the Commissioner thereafter withheld the refund under Section 54(11) relying on a pending anti-evasion investigation and findings of fraud and malfeasance - Whether the Commissioner rightly invoked Section 54(11) to withhold the refund in the absence of a pending appeal or a stay - HELD - Section 54(11) rests on two distinct, cumulative ingredients: first, the order giving rise to the refund must be the subject matter of an appeal, further proceedings or any other proceedings pending under the Act, and second, the Commissioner must independently form an opinion after hearing that grant of refund is likely to adversely affect the revenue on account of malfeasance or fraud - The expression ‘any other proceedings under this Act is pending’ is deliberately wide and is not confined to a formally instituted appeal. The provision is a self-contained safeguard for protection of revenue operating independently of any stay granted by a Court or Tribunal - The decisions holding that Revenue cannot withhold refund merely on the strength of a proposed or contemplated appeal turned on the singular fact that the case rested only on the first limb with no independent material of malfeasance or fraud. Here the anti-evasion investigation was already underway, the Commissioner examined the tier-wise supply chain, found suppliers non-existent or cancelled, and noted denial of movement of goods by transporters, so the opinion of fraud was based on contemporaneous material and not on a mere apprehension. The subsequent issuance of the show cause notice merely crystallised the allegations arising from the investigation - The challenge to the order withholding the refund cannot be sustained - The Writ Petition is dismissed - Order of the Commissioner under Section 54(11) - Whether appealable under Section 107 and effect on judicial review - Petitioner contended that the order was passed by the Commissioner in an administrative capacity and not by an Adjudicating Authority, so that no alternative remedy under Section 107 was available - Whether absence of appeal under Section 107 against an order under Section 54(11) bars judicial review - HELD - Section 54(11) expressly confers the power to withhold refund upon the Commissioner, which is distinct from the adjudicatory mechanism under Sections 73 and 74 and the appellate remedy under Section 107. The absence of an appeal under Section 107 does not exclude judicial review under Article 226. However, since it is an admitted position that an appeal against the Impugned Order already stands filed before the GSTAT, it is not appropriate or necessary in writ jurisdiction to adjudicate disputed questions concerning the genuineness of the suppliers, actual movement of goods or the correctness of the findings in the Impugned Order and the show cause notice - The Petitioner is left at liberty to raise all contentions before the GSTAT.
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