GST Refund Cannot Be Credited to Electronic Credit Ledger of Defunct Business with Cancelled Registration: Calcutta HC [Read Order]

A significant ruling was recently passed by the Calcutta High Court, directing the Revenue to reconsider its earlier decision which sanctioned a Goods and Services Tax (GST) refund into the Electronic Credit Ledger of a company whose business operations had ceased, and whose registration had been cancelled.

The petitioner, Edelweiss Rural & Corporate Services Limited (Edelweiss), approached the Court after being aggrieved by the contradictory orders issued by the respondent Deputy Commissioner of Revenue, Taltala Charge, WBGST & Ors.

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Edelweiss had previously successfully appealed against a refund rejection order dated February 11, 2022. Consequently, the appellate authority ruled in their favor, following which Edelweiss filed a refund application in Form GST RFD-01 on October 20, 2023.

Ankit Kanodia, Megha Agarwal, Tulika Roy, and Piyush Khaitan appearing for Edelweiss submitted that following the closure of the business, the refund sanction order in form GST RFD06 had explicitly stated that the refund amount of ₹68,66,238 had directed the amount to be paid to the bank account

However, the detailed refund sanction order dated 29th November, 2023 stated that the refund will be paid to the registered taxpayer’s credit ledger instead which was by no means viable since the business ceased to exist and the registration had been cancelled at the time.

Meanwhile, Anirban Ray, Md. T. M. Siddiqui, Tanoy Chakraborty and Saptak Sanyal appeared for the respondents.

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The single-judge bench of Justice Raja Basu Chowdhury observed clear contradictions between the original sanctioning order and the detailed order subsequently issued by the GST authority.

The Calcutta High Court further noted that the petitioners had closed down their business operation and its registration had already been cancelled and that no tax was due payable by the petitioner.

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Justice Chowdhury instructed the Deputy Commissioner to reconsider and rectify this contradiction, granting a period of six weeks to make a new determination after providing an opportunity for a hearing to the petitioner

To Read the full text of the Order CLICK HERE

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