Refund cannot be denied even if Investigation is Pending.

Facts:

• The petitioner claimed that he is entitled to refund under the provisions of section 16 of the IGST Act, 2017.
• It is the case of learned counsel that in respect of the goods that have been supplied, the petitioner is entitled to claim the refund under sub-section 3(b) of section 16 of the said Act.
• The claim for refund is not being processed by respondent on the ground that the investigation is pending against the petitioner.

Submission by the learned counsel:

Learned counsel invited our attention on the provisions of sub-section 10 of section 54 of the CGST 2017 which states:

“(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in fur“(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may

• Withhold payment of refund due until the said person has furnished the return or paid the tax, interestor penalty, as the case may be;
• Deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.”

Learned counsel appearing on behalf of the respondent submitted that the department is justified in not processing the application on the count of a pending investigation to secure the interest of the revenue.

Decision of the Hon’ble High Court:

Refund not to be denied merely on the ground that investigation is pending and refund to be processed by respondents in accordance with law. Respondent is directed to process application made by petitioner for refund and pass reasoned order upon hearing the petitioner.

Nakul Sharma Audit Associate, SW