High Court Orders Immediate Tax Refund Processing Under CGST/SGST After Improper Rejection and Appellate Authority's Favorable Directive

HC allowed petitioner's refund claim under CGST/SGST after respondent improperly rejected application. Despite appellate authority's favorable order and review directive, respondent failed to process refund due to tribunal non-constitution. Court mandated immediate refund processing while preserving respondent's right to future legal challenges if warranted.

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Issues:
1. Refund claim rejection based on filing periods not corresponding to returns filed.
2. Appeal against rejection allowed, but refund application not processed.
3. Review order directing filing of appeal not acted upon due to tribunal not constituted.

Analysis:
1. The petitioner, engaged in supplying footwear, applied for a refund under CGST and SGST for June to December 2018 due to an inverted duty structure, where Input Tax Credit exceeded output liability. The refund claim was rejected not on entitlement grounds but because the claimed periods did not align with the return filing frequency, either quarterly or monthly, as per the respondent's contention.

2. Upon the petitioner's appeal, the appellate authority allowed the appeal on 08.10.2020, setting aside the rejection order. Subsequently, a refund application was filed on 29.12.2020, but remained unprocessed despite the favorable appellate decision, as the respondent did not file the directed appeal within the stipulated time frame.

3. The review order under Section 112(3) of the Act directed the respondent to file an appeal against the appellate authority's decision, but due to the non-constitution of the appellate tribunal, the appeal was not filed. The court noted that the review order did not stay the appellate authority's decision and emphasized that the respondent cannot ignore the appellate order merely on the basis of intending to file an appeal in the future.

4. In light of the above, the court allowed the petition, directing the respondent to promptly process the petitioner's refund claim. The court clarified that the order did not prevent the respondent from seeking legal remedies, and if successful in obtaining a further order from the appellate tribunal, the respondent could recover any disbursed amount accordingly.

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