Delhi High Court rejects demand notice on GST refund

Delhi High Court rejects demand notice on GST refund

The Delhi High Court stated that the Respondent was at liberty to trigger the process under the rules, once clarity was attained on the outcome of the pending appeal

The Delhi High Court, while considering a petition challenging the show-cause notice by the Goods and Services Tax (GST) department has held that it was premature. That was because the appeal relating to the claim for a refund was still under process.

The petitioner pleaded that a February 2021 show-cause notice issued to it had already been adjudicated by the concerned authority via the May 2022 order and the refund claim lodged by the petitioner was rejected. The adjudicating authority concluded that the refund was founded on a forged Input Tax Credit (ITC) claim .

The bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that once the petitioner's refund claim was rejected on the ground that it was founded on forged ITC, the petitioner would be liable to pay tax, interest, and perhaps also penalty.

It stated, "The fact that an appeal has been preferred by the petitioner, which is pending adjudication, persuades us to hold that the impugned show-cause notice is premature. In the event the appeal was to be dismissed, it would then be open to the respondent/revenue to take recourse to the Act and the attendant rules framed thereunder."

The court disposed of the petition and held, "The impugned demand notice of June 2022 is set aside. The respondent has the liberty to trigger the process under the Act and the attendant rules, once clarity is attained on the outcome of the pending appeal lodged by the petitioner."