Section 107(13) CGST Act: Appeals Must Conclude in One Year; Prolonged Refund Blocking Unjustified, Interest Payable

HC held that under Section 107(13) of the CGST Act, statutory appeals must be decided within one year, and the delay of over four years in the petitioner's appeals was impermissible. The court directed the Appellate Authority to adjudicate all pending appeals expeditiously and, in any event, by 10 January 2026. It further held that blocking refunds for such prolonged periods adversely impacts business and cannot be justified. If, upon adjudication, refunds are found due to the petitioner, the authority must also pay statutory interest for the entire relevant period in accordance with law. The petition was disposed of with these directions.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether prolonged non-disposal of statutory appeals against refund rejection orders under the Central Goods and Services Tax Act, 2017, justifies exercise of writ jurisdiction to direct time-bound adjudication.

1.2 Interpretation and effect of Section 107(13) of the Central Goods and Services Tax Act, 2017 regarding the time limit for disposal of appeals by the Appellate Authority.

1.3 Consequences in respect of statutory interest in the event refunds are ultimately granted pursuant to the appellate orders.

2. ISSUE-WISE DETAILED ANALYSIS

2.1 Delay in disposal of GST refund appeals and exercise of writ jurisdiction

Interpretation and reasoning

2.1.1 The Court noted that the petitioner's appeals against refund rejection orders for three financial years were filed in 2021, 2022 and 2023, and yet remained undecided despite multiple hearings and repeated requests for early hearing.

2.1.2 On examining the chronology of events, the Court found that repeated personal hearings and submissions had taken place, but orders were not being passed and the matters were being kept pending.

2.1.3 The Court observed that such prolonged non-adjudication of refund-related appeals results in blocking of refunds, which can have an adverse impact on businesses, and therefore cannot be countenanced.

Conclusions

2.1.4 The Court held that the Appellate Authority cannot delay adjudication of refund appeals in the manner reflected in the record.

2.1.5 The Court exercised writ jurisdiction to direct the Appellate Authority to decide the pending appeals expeditiously and, in any event, to pass adjudication orders in accordance with law on or before 10 January 2026.

2.1.6 The Court further directed that a final hearing be fixed, specifying the date, time and mode of service of notice on the petitioner and its counsel.

2.2 Time limit for disposal of appeals under Section 107(13) of the CGST Act

Legal framework

2.2.1 The Court reproduced Section 107(13) of the Central Goods and Services Tax Act, 2017, which stipulates that the Appellate Authority shall, where it is possible to do so, hear and decide every appeal within one year from the date of its filing, excluding any period during which issuance of order is stayed by a court or tribunal.

Interpretation and reasoning

2.2.2 The Court referred to the statutory indication that appeals are to be heard and decided within a period of one year, observing that, in the present case, more than four years had elapsed since filing of the first appeal without a final decision.

2.2.3 On this basis, the Court found the delay to be inconsistent with the legislative scheme reflected in Section 107(13), even though the provision is couched in the phrase "where it is possible to do so".

Conclusions

2.2.4 The Court concluded that, in light of Section 107(13), the Appellate Authority is required to act with expedition in deciding appeals and that the long pendency in this case warranted issuance of a specific outer time limit for disposal.

2.3 Consequences regarding statutory interest on refund

Interpretation and reasoning

2.3.1 While not deciding the merits of the refund claims, the Court considered the effect of delayed adjudication on the petitioner's entitlement to monetary relief if the appeals succeed.

Conclusions

2.3.2 The Court directed that, in the event refunds are granted to the petitioner pursuant to the appellate orders, statutory interest shall also be payable for the entire period, in accordance with law.

2.3.3 The Court permitted the petitioner to place before the Appellate Authority judgments of the Bombay High Court and other High Courts said to be in its favour, for due consideration at the time of deciding the appeals.

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