Facts of the Case

The petitioner, Jacobs Solutions India Pvt. Ltd., engaged in exporting engineering consulting services to overseas group entities without payment of GST, claimed a refund of accumulated Input Tax Credit. After a show cause notice and rejection of the refund in Form GST RFD-06, the petitioner's appeal was allowed by the Additional Commissioner (Appeals) on 11.10.2022, which found that HSBC bank letters sufficiently established the correlation between invoices and Bank Realisation Certificates/FIRCs, entitling the petitioner to a refund of Rs.11,69,07,326/-. When the petitioner re-filed its refund claim per procedure on 29.11.2022, the Assistant Commissioner issued a fresh show cause notice on the very same ground (non-disclosure of invoice details/FIRCs) already decided in appeal, and by order dated 27.01.2023, rejected the refund claim afresh.

Issues Involved

  1. Whether an Assistant Commissioner, an authority subordinate to the Appellate Authority, can revisit and reject a refund claim on grounds already considered and decided in the taxpayer's favour by the Appellate Authority.
  2. What is the appropriate remedy for the department if it disagrees with an Appellate Authority's order — can it be unilaterally disregarded by a subordinate officer, or must it pursue the statutory review/appeal mechanism?

Petitioner's Arguments

  • The petitioner argued that the Assistant Commissioner had patently erred by effectively sitting in appeal over the Additional Commissioner (Appeals)'s order dated 11.10.2022, which had already examined and accepted the very same FIRC correlation issue and allowed the refund.
  • Reliance was placed on Globus Petroadditions Pvt. Ltd. v. Union of India [2022(64) GSTL 54 (Bom.)], where a coordinate Bench set aside a similar order and directed compliance with the appellate order within a time-bound period.

Respondent's Arguments

  • The Revenue submitted that the Commissioner had decided to seek review of the Appellate Authority's order under Section 112(3) of the CGST Act and had directed filing of an appeal before the GST Appellate Tribunal, though the Tribunal itself had not yet been constituted, so no appeal had actually been filed at the relevant time.

Court Order / Findings

  • The Court held that once the entire fact-finding exercise had been subjected to scrutiny in appeal resulting in the appeal being allowed, the Assistant Commissioner had no authority or jurisdiction to revisit the Appellate Authority's concluded findings; the only remedy available to the department, if aggrieved, was to pursue the review mechanism under Section 112(3), not to unilaterally disregard the appellate order.
  • Applying the Supreme Court's binding ruling in Union of India v. Kamlakshi Finance Corporation Ltd. [1991 (55) ELT 433 (SC)], the Court reiterated that revenue officers are bound by the decisions of appellate authorities in the hierarchy, and that mere disagreement with an appellate order — even if under challenge — furnishes no ground for not following it unless its operation has been suspended by a competent court.
  • The impugned order dated 27.01.2023 was held to be passed in patent lack of jurisdiction and was quashed, following the ratio in Globus Petroadditions.
  • The respondents were directed to sanction the refund of Rs.11,69,07,326/- with appropriate interest under Section 56 of the CGST Act within two weeks.

Important Clarification

Subordinate tax officers are bound by the decisions of appellate authorities higher in the departmental hierarchy and cannot pass fresh orders that effectively re-adjudicate or overturn findings already recorded in the taxpayer's favour in appeal. If the department disagrees with an appellate order, its only remedy is to pursue the statutory review or further appeal mechanism (such as under Section 112(3)) — not to have a subordinate officer independently revisit the same issue in a subsequent proceeding.

Sections Involved

  • Section 112(3), CGST Act, 2017 — empowers the Commissioner to examine the legality or propriety of an Appellate Authority's order and direct an officer to apply to the Appellate Tribunal for setting it aside.
  • Section 56, CGST Act, 2017 — provides for interest on delayed refunds.
  • Form GST RFD-06 — the refund sanction/rejection order form under which the original and subsequent rejections were issued.

Decision – In Favour of

The decision is in favour of the Assessee. The subordinate officer's rejection was quashed and refund with interest was directed to be sanctioned.

Case Details

Court: High Court of Judicature at Bombay
Case No.: Writ Petition No.5808 of 2023
Coram: Justice G. S. Kulkarni and Justice Jitendra Jain
Date of Order: 31.07.2023

Link to Download the Order

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