Facts of the Case

The petitioner, M/s Cholayil Pvt. Ltd., approached the Uttarakhand High Court challenging the order dated 15.04.2026, issued by the respondent along with Form GST RFD-06.

The petitioner had filed an application dated 24.02.2026 claiming refund of accumulated Input Tax Credit.

Thereafter, the Department issued a show-cause notice dated 09.04.2026, asking why the petitioner’s refund application should not be rejected.

The petitioner was given only:

four days’ time to reply.

On the very next day, i.e. 10.04.2026, the petitioner filed an application requesting additional time so that it could:

  • collect relevant documents; and
  • submit a proper reply to the show-cause notice along with those documents.

Despite this request, on 15.04.2026, the respondent passed the impugned order rejecting the refund request.

The chronology is expressly recorded on page 1 of the judgment: refund application on 24.02.2026, show-cause notice on 09.04.2026, next-day extension request on 10.04.2026, followed by the impugned refund rejection on 15.04.2026.

Issues Involved

The principal issues involved were:

  1. Whether the Department acted fairly in rejecting the petitioner’s accumulated ITC refund claim after granting only four days to reply to the show-cause notice.
  2. Whether the petitioner’s request dated 10.04.2026 for additional time to collect relevant documents and respond to the show-cause notice deserved consideration.
  3. Whether the Department was justified in proceeding to pass the impugned order dated 15.04.2026 despite the petitioner having sought additional time on the very next day after the show-cause notice.
  4. Whether the haste shown by the Department in deciding the refund claim was warranted in the facts and circumstances of the case.
  5. Whether the impugned order issued along with Form GST RFD-06 should be quashed.
  6. Whether the petitioner should be granted a fresh opportunity to file a reply with relevant supporting documents.
  7. Whether, after receiving the reply and documents, the Department should be permitted to decide the refund application afresh.

Petitioner’s Arguments

The petitioner’s counsel argued that the respondent had erred in:

  • rejecting the request for grant of further time; and
  • proceeding to pass the impugned order immediately after the short four-day period.

The petitioner’s case rested on the specific chronology of events:

  • the show-cause notice was issued on 09.04.2026;
  • only four days were given for reply;
  • on the very next day, 10.04.2026, the petitioner requested additional time;
  • the purpose of seeking time was to collect relevant documents and submit a proper reply; and
  • despite the prompt extension request, the refund claim was rejected on 15.04.2026.

The petitioner therefore contended that the Department should not have proceeded with such haste when a timely request for additional time had already been made.

The petitioner’s argument is expressly recorded in paragraph 4 on page 2 of the judgment.

Respondent’s Arguments

The respondent Revenue was represented by learned counsel Mr. Shobhit Saharia.

The judgment expressly records that learned counsel for the Revenue stated:

he had not been provided with instructions by the Department so far.

Accordingly, the judgment does not record any detailed merits-based counter-submission from the Department concerning:

  • why additional time was refused;
  • why the refund claim was decided on 15.04.2026;
  • why four days were considered sufficient;
  • whether any urgency existed;
  • whether the petitioner’s extension request was independently considered; or
  • why the Department proceeded despite the request for time to collect relevant documents.

Therefore, no additional argument should be attributed to the respondent beyond the express statement recorded in paragraph 5 of the judgment.

Court Order / Findings

The Uttarakhand High Court expressly acknowledged that:

it was within the discretion of the Department to allow more time or not.

However, the Court did not stop at that general proposition.

It examined the specific facts and circumstances, particularly that:

  • the petitioner received the show-cause notice;
  • the petitioner was given a short period to reply;
  • on the very next day, the petitioner applied for additional time;
  • the purpose was to collect relevant documents and file a reply to the show-cause notice; and
  • the Department nevertheless proceeded to pass the impugned order.

In these circumstances, the Division Bench held that:

the haste shown by the Department in passing the impugned order is wholly unwarranted.

This is the central judicial finding of the case and appears in paragraph 6 on page 2 of the judgment.

Accordingly, the High Court ordered that:

  • the order dated 15.04.2026 is quashed;
  • the petitioner is granted two weeks’ time to file its reply;
  • the reply may be accompanied by relevant documents;
  • the reply is to be filed against the show-cause notice dated 09.04.2026;
  • thereafter, it shall be open to the Department to pass a fresh order on the petitioner’s refund application;
  • the writ petition stands allowed; and
  • any pending application also stands disposed of.

The quashing and two-week opportunity are recorded in paragraph 7 beginning on page 2 and continuing onto page 3 of the judgment.

Important Clarification

This judgment does not finally allow the petitioner’s accumulated ITC refund claim on merits.

The High Court did not conclusively determine that:

  • the petitioner was legally entitled to the entire refund claimed;
  • the accumulated ITC was fully admissible;
  • every document proposed to be filed would establish refund eligibility;
  • the Department had no substantive ground to reject the refund;
  • the refund amount must be sanctioned automatically; or
  • Form GST RFD-06 could never be issued after a short reply period.

The actual effect of the judgment is procedural:

  • the refund rejection order dated 15.04.2026 was quashed;
  • the petitioner was granted two weeks to respond to the show-cause notice with relevant documents; and
  • the Department was left free thereafter to pass a fresh order on the refund application.

A second important clarification is that the Court did not hold that the Department must grant every request for extension of time.

On the contrary, the Court expressly recognised that allowing more time was within departmental discretion. The interference was based on the particular circumstances, especially the petitioner’s prompt next-day request for time to collect relevant documents and the Department’s haste in passing the rejection order.

A third important clarification is that the judgment does not expressly state the precise substantive reason why the accumulated ITC refund was proposed to be rejected. Therefore, no unrecorded ground should be attributed to the Department.

Sections / Legal Provisions Involved

Accumulated Input Tax Credit Refund under the GST Framework

The substantive subject matter concerned the petitioner’s claim for refund of accumulated Input Tax Credit.

However, the three-page judgment does not expressly mention the specific statutory section number governing the refund claim.

Therefore, to preserve accuracy, no particular refund section should be represented as expressly cited by the Court when the judgment itself does not mention it.

Form GST RFD-06

The impugned order dated 15.04.2026 was issued along with Form GST RFD-06.

This form is central to the challenged refund decision.

Show-Cause Notice dated 09.04.2026

The petitioner was called upon to explain why its refund application should not be rejected and was given four days to reply.

Article 226 of the Constitution of India

The matter was brought before the High Court through a writ petition challenging the refund rejection process and order.

Important Statutory Accuracy Note

The judgment does not expressly cite:

  • a specific CGST Act refund section;
  • a specific CGST Rules provision;
  • any specific section governing accumulated ITC;
  • or any particular rule prescribing the response period.

Accordingly, such provisions should not be presented as sections expressly considered or adjudicated in this judgment.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783069720_468compressed.pdf 

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