2025(05)LCX0565

M D Securities Private Limited

Versus

Sales Tax Officer

W.P.(C) 6375/2025 decided on 14-05-2025

IN THE HIGH COURT OF DELHI AT NEW DELHI

W.P.(C) 6375/2025

M.D. SECURITIES PRIVATE LIMITED               .....Petitioner
                                    Through:    Mr. Kishore Kunal, Ms. Ankita
                                                     Prakash & Mr. Anuj Kumar, Advs.
                                                     (Mob:7675809801)

                               versus

SALES TAX OFFICER CLASS II AVATO & ORS.
                                                                      .....Respondents
                                              Through:    Mr. Sumit K Batra, Adv.
                                                                (Mob:9911211000)

CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE RAJNEESH KUMAR GUPTA

ORDER
14.05.2025

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner- M.D. Securities Private Limited under Article 226 of the Constitution of India, inter alia, seeking refund of accumulated unutilised Input Tax Credit (hereinafter, ‘ITC’) of the following amounts:

3. The submission of Mr. Kishore Kunal, ld. Counsel appearing for the Petitioner is that the Department has deliberately delayed the refund sought by the Petitioner at the following stages:

i. At the stage of issuance of acknowledgement which has to be done within 15 days of filing of the application in terms of Rule 90 of the Central Goods and Services Tax Rules, 2017 (hereinafter, ‘CGST Rules’).

ii. Issuance of refund within 60 days from the date of issuance of acknowledgement in terms of Section 54(7) of the Central Goods and Services Tax Act, 2017 (hereinafter, ‘CGST Act’).

4. Ld. Counsel for the Petitioner relies upon the decision in Jian International vs. Commissioner of Delhi Goods and Services Tax, 2020 (39) GSTL 385 (Del) to argue that if no deficiency memo is issued within the period of 15 days in terms of the Scheme of Rule 90 of the CGST Rules, then after the expiry of the period of 15 days within which acknowledgment is to be issued, no deficiency memo can even be raised. The relevant portion of the said judgment reads as under:-

“6. Having heard Learned Counsel for the parties, this Court finds that Rules 90 and 91 of CGST/DGST Rules provide a complete code with regard to acknowledgement, scrutiny and grant of refund. The said Rules also provide a strict timeline for carrying out the aforesaid activities. For instance, Rules 90(2) and (3) of the DGST Rules states that within fifteen days from the date of filing of the refund application, the respondent has to either point out discrepancy/deficiency in FORM GST RFD-03 or acknowledge the refund application in FORM GSTRFD-02. In the event deficiencies are noted and communicated to the applicant, then the applicant would have to file a fresh refund application after rectifying the deficiencies. The relevant portion of Rule 90 of CGST/DGST Rules is reproduced hereinbelow :

…

7. In the event of default or inaction to carry out the said activities within the stipulated period, consequences like payment of interest are stipulated in Section 56 of CGST/DGST Act.

8. Admittedly, till date the petitioner’s refund application dated 4th November, 2019 has not been processed. As neither any acknowledgment in FORM GST RFD-02 has been issued nor any deficiency memo has been issued in RFD-03 within timeline of fifteen days, the refund application would be presumed to be complete in all respects in accordance with sub-rule (2), (3) and (4) of Rule 89 of CGST/DGST Rules.

9. To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90 of the CGST Rules, referred above. This could then also be construed as rejection of the petitioner’s initial application for refund as the petitioner would thereafter have to file a fresh refund application after rectifying the alleged deficiencies. This would not only delay the petitioner’s right to seek refund, but also impair petitioner’s right to claim interest from the relevant date of filing of the original application for refund as provided under the Rules.

10. Moreover, the respondent’s prayer to raise a deficiency memo is a hyper-technical plea as admittedly, all the relevant documents have been annexed with the present writ petition and the respondent is satisfied about their authenticity.

11. Consequently, this Court is of the view that the respondent has lost the right to point out any deficiency, in the petitioner’s refund application, at this belated stage.

12. Accordingly, this Court directs the respondent to pay to the petitioner the refund along with interest in accordance with law within two weeks.”

5. It is, therefore, the submission of the ld. Counsel for the Petitioner that the entire amount deserves to be refunded to the Petitioner along with interest immediately, failing which the Department ought to pay a higher rate of interest as is charged from Assessees in terms of Section 50(1) of the CGST Act.

6. Mr. Batra, ld. Counsel for the Respondents submits that he wishes to seek instructions in the matter. Ld. Counsel further submits that he has been informed that the process of refund is already underway.

7. Accordingly, it is directed that the refund shall be processed in accordance with law and the same be credited to the Petitioner’s account by the next date of hearing, failing which in terms of the Scheme of the CGST Act, this Court would consider passing appropriate directions on the next date of hearing in respect of refund and rate of interest.

8. List on 28^th May, 2025.

PRATHIBA M. SINGH, J

RAJNEESH KUMAR GUPTA, J

MAY 14, 2025