GST: Refund can’t be held back on Commissioner’s opinion alone, Twin Conditions Must Be Satisfied:
- Delhi High Court has recently held that assessee’s Refund Can’t Be held back on commissioner’s opinion alone & twin conditions must be satisfied.
- The Hon’ble Delhi High Court, in Shalender Kumar v. Commissioner Delhi West CGST Commissionerate & Ors [W.P. (C) 3824/2025], clarified that Section 54(11) of the CGST Act, 2017 mandates fulfillment of two conditions before withholding a refund, despite an order directing its release.Section 54(11) stipulates that a refund can be withheld only when:(i) The refund order is the subject of an appeal or other proceeding under the Act, and
(ii) The Commissioner forms an opinion that releasing the refund would adversely affect revenue.The Court held that the Commissioner’s opinion cannot operate independently. In the absence of a pending challenge to the Appellate Authority’s order, the refund cannot be held back.
In this case, although the refund claim was initially rejected, the Appellate Authority allowed it after verifying that conditions under Section 16(2) of the Act were met. However, the refund was not processed, citing an intention to review and an internal opinion under Section 54(11).
The Petitioner argued that since no appeal or review order existed, the Department could not invoke Section 54(11). The Department responded that an appeal was intended but not filed due to the absence of an Appellate Tribunal.The Court ruled in favour of the Petitioner, directing the Department to process the refund along with interest under Section 56 within two months.
This decision reinforces that statutory requirements must be satisfied before administrative discretion can be exercised under the GST regime.
- The copy of the order is as under:
