2025 (10) TMI 482 - HC - GST

Refund to be processed and excess e-cash ledger balance paid with statutory interest within two months after adjustments

HARBHAJAN SINGH THUKRAL Versus GOVERNMENT OF NCT OF DELHI DEPARTMENT OF TRADE AND TAXES & ANR.

HC directed that the refund application be processed and the excess electronic cash ledger balance paid to the petitioner with statutory interest within ... Seeking refund for the excess balance lying in the electronic cash ledger alongwith interest - HELD THAT:- A perusal of the records would show that though initially a sum of Rs.7,71,000/- has been issued as refund to the Petitioner, the same has been appropriated/adjusted towards the outstanding liabilities against the Petitioner, of Rs.10,71,941/- vide order dated 18th September, 2023 - On the last date i.e., 7th April, 2025, it was submitted by the ld. Counsel for Delhi GST that a demand of Rs.12,10,668/- has been cancelled against the Petitioner and the same has been sent to the Goods and Services Tax Commissionerate, Palam. Accordingly, Mr. Singla, ld. SSC was directed to seek instructions. The Petitioner submits that the amount of refund being sought is liable to be paid to the Petitioner. Accordingly, let the refund application be processed and the refund be paid to the Petitioner along with statutory interest in accordance with law within a period of two months from today. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the refund of the electronic cash ledger balance of Rs.9,09,727/- is payable to the petitioner despite earlier appropriation/adjustment of the sanctioned refund against an outstanding liability reflected on the AIO portal. 2. Whether cancellation of a previously reflected demand (by issuance of FORM GST DRC-8A) - which was not uploaded on the AIO portal at the time of appropriation - disentitles the revenue from appropriating an already sanctioned refund, and if so, what relief follows. 3. Whether statutory interest is payable on the refund amount and the appropriate direction for processing and payment of the refund. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Payability of refund despite appropriation shown on AIO portal Legal framework: Refunds under the GST regime are processed from electronic cash ledgers and may be appropriated against outstanding liabilities reflected in the departmental records/portals. Administrative records (such as AIO portal entries and FORM GST DRC series orders) govern the mechanics of adjustment/appropriation. Precedent Treatment: The Court did not rely upon or distinguish any judicial precedents in the judgment; no prior authorities were invoked in the text. Interpretation and reasoning: The Court examined documentary material showing that a refund sanction had been issued but the sanctioned amount was appropriated against an outstanding liability reflected on the AIO portal. The counter-affidavit of the revenue confirmed that a cancellation of the underlying demand (vide FORM GST DRC-8A dated 24.07.2023) had occurred but was not uploaded to the AIO portal at the relevant time, which resulted in the administrative appropriation. The Tribunal treated the non-uploading of the cancellation order as an administrative lapse that produced an unauthorized appropriation of a sanctioned refund. Ratio vs. Obiter: The finding that administrative non-uploading of a cancellation order can result in wrongful appropriation of a sanctioned refund and that such appropriation must be rectified is ratio - it directly governs the remedy awarded. Conclusions: The Court concluded that the sanctioned refund was payable to the petitioner and that the administrative appropriation, occasioned by failure to upload the cancellation order on the AIO portal, did not extinguish the petitioner's entitlement to the refund. Issue 2 - Effect of cancellation order not uploaded on AIO portal on appropriation Legal framework: Administrative orders canceling demands (FORM GST DRC-8A) affect the existence of liabilities; however, the operational effect on electronic systems (AIO portal) controls appropriation of funds and must be given effect to by departmental action. The legal effect of cancellation is to remove the liability, but operational implementation is necessary to prevent or reverse appropriations. Precedent Treatment: No prior decisions were cited; the Court resolved the matter on the basis of documentary record and departmental admissions. Interpretation and reasoning: The Court accepted the revenue's admission that the cancellation order was not uploaded, thereby explaining the sequence whereby the refund was sanctioned and subsequently appropriated. The non-uploading was characterized as the cause of the appropriation. The Court treated the cancellation order (once issued) as extinguishing the underlying liability; failure to reflect that cancellation on the operational portal did not validate the appropriation that had been effected in ignorance of the cancellation. Ratio vs. Obiter: The holding that cancellation of demand, even if not timely uploaded, should lead to refund and reversal of appropriation insofar as a sanctioned refund was taken, is ratio to the judgment. Conclusions: Cancellation of the demand removes the basis for appropriation; operational lapses in updating the portal cannot defeat a validly sanctioned refund and must be remedied by the revenue by releasing the refund with interest. Issue 3 - Entitlement to statutory interest and timeframe for compliance Legal framework: Refunds withheld or wrongfully appropriated attract statutory interest under the applicable law; courts routinely direct payment of statutory interest where refunds are found to be due. Precedent Treatment: No authority was cited; the Court applied the statutory scheme and general remedial principles to direct interest. Interpretation and reasoning: Having determined that the refund was due on account of cancellation of the demand and that appropriation resulted from an administrative lapse, the Court held that the petitioner was entitled to statutory interest for delayed payment. The Court provided a specific compliance timeline to ensure expeditious redress. Ratio vs. Obiter: The direction to pay statutory interest and to process the refund within a fixed period is part of the operative ratio providing effective relief. Conclusions: The revenue was directed to process the refund and pay the sanctioned amount along with statutory interest within two months from the date of the order. Additional procedural/consequential point Legal framework and reasoning: The Court disposed of the petition by directing administrative action (processing and payment), and expressly disposed of any pending interlocutory applications. No separate or dissenting opinion was recorded. Ratio vs. Obiter: The disposal of ancillary applications and the direction for departmental compliance are operative consequences of the Court's determination and therefore part of the ratio implementing the relief. Conclusions: The petition was disposed of by mandating departmental compliance with the refund sanction, payment of statutory interest, and finalization within the prescribed two-month period; pending applications were also disposed.