The petitioner sought refund of Rs. 33 lakh deposited during a DGGI investigation, which had been allowed by the First Appellate Authority. However, the Deputy Commissioner refused to consider the refund application on the ground that the Department still had time under Section 112(3) of the CGST Act to file an appeal before the GST Appellate Tribunal and, therefore, the appellate order had not attained finality.
The issue involved in this case was whether the Department can refuse or withhold a refund under Section 54(11) of the CGST Act merely because the limitation period for filing an appeal has not expired, even though no appeal or other proceeding is pending.
The Orissa High Court held that the power to withhold refund under Section 54(11) can be exercised only where the order giving rise to the refund is actually the subject matter of an appeal or other pending proceeding, and the Commissioner forms the requisite opinion that grant of refund is likely to adversely affect the revenue. A mere possibility or intention to file an appeal is insufficient. Since no appeal was pending on the date the refund application was rejected, the Deputy Commissioner had no jurisdiction to refuse the refund on the ground that the appellate order had not attained finality. Accordingly, the impugned order was set aside and the matter was remanded for fresh consideration.
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