GST on sale/transfer of leasehold rights in an industrial plot allotment, refund claim upheld; deficiency memo set aside

The dominant issue was whether GST was leviable on assignment by sale/transfer of leasehold rights in an industrial plot allotted by a statutory development corporation and, consequently, whether a deficiency memo denying refund could stand. The HC accepted that the petitioner was entitled to pursue refund of the GST paid in relation to such transfer and directed the proper officer to process the refund upon a fresh application. The deficiency memo was effectively neutralised by directing that, on the petitioner filing a refund application, the refund amount shall be paid within one week of receipt of the application, and the petition was disposed of accordingly.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, in view of the revenue's statement that the refund claim would be considered and paid upon filing of an application, the Court should issue a time-bound direction for grant of refund.

(ii) What consequential directions, including liberty to revive the petition and imposition of costs, should follow in the event of non-compliance with the Court's time-bound direction.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Whether a time-bound direction for payment of refund should be issued upon filing of an application

Legal framework: The Court records that the petitioner sought refund under Section 54 of the Central Goods and Services Tax Act, 2017, and challenged issuance of a deficiency memo in the refund process.

Interpretation and reasoning: The Court noted the submission on behalf of the State that "as and when" a refund application is filed, it would be considered and the refund would be paid. In light of this stand, the Court opted to resolve the matter by directing the petitioner to submit an application for refund and by fixing a short, definite timeline for payment after receipt of such application, rather than undertaking further adjudication on the deficiency memo dispute.

Conclusion: The Court directed that the petitioner shall make an application seeking refund, and upon receipt of such application, the refund amount shall be paid within one week.

Issue (ii): Consequences of non-compliance-revival of petition and exemplary costs

Interpretation and reasoning: To ensure compliance with the time-bound refund direction, the Court granted a mechanism for enforcement without requiring initiation of fresh proceedings. It expressly preserved the petitioner's right to revive the disposed petition through a simple note to the registry if the refund is not paid within the stipulated period. The Court further indicated that non-compliance would attract deterrent consequences against the responsible officer.

Conclusion: The petition was disposed of with liberty to revive in case of non-payment within the stipulated period, and the Court directed that if revival becomes necessary, exemplary costs of Rs. 25,000/- shall be imposed on the erring officer.

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