S.54(11) GST Act | Assessee's Refund Can't Be Held Back On Commissioner's Opinion Alone, Twin Conditions Must Be Satisfied: Delhi HC

Section 54(11) of the Act would show that the refund can be held back on the satisfaction of the following two conditions – (i) when an order directing a refund is subject matter of a proceeding which is pending either in appeal or any other proceeding under the Act; and (ii) thereafter the Commissioner gives an opinion that the grant of refund is likely to adversely affect the revenue.

A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed, “In the opinion of this Court the Department's opinion under Section 54(11)cannot be relied upon on a standalone basis. In the absence of an appeal or any other proceeding pending, challenging the order of the Appellate Authority, the opinion under Section 54(11) cannot result in holding back the refund.”

The development comes in a petition filed by a wholesale trader, aggrieved by Revenue holding back refund despite an order of the Appellate Authority.

As per facts, the refund claimed by the Petitioner was rejected. However, the Appellate Authority had found that the claim was genuine and legitimate and the Petitioner was eligible for refund as the same satisfied the mandatory conditions prescribed under Section 16(2) of the CGST Act.

However, the said refund was not processed in favour of the Petitioner and the Department decided to file a review of the said Appellate Authority's order. It also gave an opinion under Section 54(11) that processing the refund now would be contrary to the interest of the revenue.

Petitioner submitted that the Appellate Authority's order had not been challenged or set aside by any forum and thus, it still stands. No order was also passed in the Review. It thus argued that Section 54(11) cannot be invoked.

Revenue on the other hand submitted that the Department intends to file an appeal against the Appellate Authority's order but since there is no Appellate Tribunal as on date, the appeal has not been filed.

The High Court however held that since refund has been permitted by the Appellate Authority and no order in review has been passed, the Department cannot hold back the refund.

As such, it directed the Department to process the refund along with interest in terms of Section 56, within two months.

Appearance: Mr. Sidhant Sarwal, Adv for Petitioner; Mr. Gibran Naushad, Sr. Standing Counsel with Mr. Harsh Singhal & Mr. Suraj Shekhar Singh, Advs for Respondent

Case title: Shalender Kumar v. Commissioner Delhi West Cgst Commissionerate & Ors

Citation: 2025 LiveLaw (Del) 439

Case no.: W.P.(C) 3824/2025

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