Delhi High Court restrains GST authorities from taking coercive action on refund recovery until GST Appellate Tribunal is functional

The Hon’ble Delhi High Court in the case of M/s IKIRAON TECHNOLOGIES PVT. LTD. Versus THE ASSISTANT COMMISSIONER, CGST JANAKPURI DIVISION, & ANR. - 2025 (9) TMI 1451 - DELHI HIGH COURT held that in a situation where a refund order in favour of the assessee has been set aside by the appellate authority, GST authorities restrained from taking coercive action on refund recovery until GST Appellate Tribunal is functional.

Facts:

Ikiraon Technologies Pvt. Ltd. ('the Petitioner'), an electronics trader, had secured a refund of approximately ₹13.43 crores from the GST Department after alleged satisfactory verification of its business premises and documents.

The Appellate Authority ('the Respondent'), subsequently set aside the sanctioned refund by an Order-in-Appeal dated June 2, 2025, allegedly due to doubts regarding the adequacy of physical verification of the Petitioner's place of business.

The Petitioner contended that full physical verification had, in fact, occurred; relevant documents were furnished, and thus the ground cited for reversal was baseless.

The Respondent contended that the Petitioner’s claim that no personal hearing was granted was inaccurate, asserting that a hearing was indeed given; the reversal was justified by the deficiencies noted in verification.

Aggrieved, the Petitioner challenged the order by way of writ petition before the Delhi High Court, submitting that the GST Appellate Tribunal (GSTAT), the normal appellate forum, was not yet notified, leaving the Petitioner with no statutory appellate remedy.

Issue:

Whether, in absence of a notified GST Appellate Tribunal, coercive recovery or adverse action may proceed against a taxpayer whose refund was reversed by appellate order, despite disputes about sufficiency of verification and opportunity of hearing?

Held

The Hon’ble Delhi High Court in M/s IKIRAON TECHNOLOGIES PVT. LTD. Versus THE ASSISTANT COMMISSIONER, CGST JANAKPURI DIVISION, & ANR. - 2025 (9) TMI 1451 - DELHI HIGH COURTheld as under:

• Observed that, an Order-in-Appeal is ordinarily appealable to the GST Appellate Tribunal (GSTAT), but the forum is not yet operational.
• Noted that. the Petitioner disputes the stated grounds for reversal, affirming physical verification and documentation.
• Noted that, the Respondent maintained that a personal hearing was granted.
• Directed that, no coercive steps be taken against the Petitioner in the meantime and ordered Respondent to file a counter affidavit within six weeks, with the rejoinder in four weeks thereafter, and posted the matter for further hearing.

Our Comments:

This interim order aligns with principles established in several cases addressing the unavailability of GSTAT as a statutory remedy, where High Courts have permitted writ jurisdiction to be exercised to prevent irreparable harm or coercive recovery.  In this case a refund that had been sanctioned in favour of the assessee, was subsequently set aside by the Appellate Authority. The authorities had initially granted the refund after verification of all relevant documents and inspection of the business premises. The Court took note that the order-in-appeal reversing the refund is ordinarily appealable before the GST Appellate Tribunal. However, since the Tribunal had not yet been constituted, the High Court intervened to ensure interim protection, highlighting the lack of alternative appellate remedy during this period.

Relevant Provisions:

Section 107, CGST Act, 2017

“107.Appeals to Appellate Authority.-

(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person….”

Section 112, CGST Act, 2017:

 “112. Appeals to Appellate Tribunal.-

(1) Any person aggrieved by an order passed against him under Section 107 or Section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months  from the date on which the order sought to be appealed against is communicated to the person preferring the appeal or the date, as may be notified by the Government, on the recommendations of the Council, for filing appeal before the Appellate Tribunal under this Act, whichever is later.”

 (Author can be reached at [email protected])