Facts of the Case

The petitioner sought a mandamus declaring illegal the rejection of its claim for the balance amount of Rs.1,31,574 from its electronic cash ledger, contending that the rejection in Form GST RFD-06, pursuant to a notice in Form GST RFD-08, was passed without following procedure or affording an opportunity of hearing, contrary to Article 300A of the Constitution. The petitioner also sought a direction for refund of the amount with interest at 9% per annum under the proviso to Section 56 of the SGST Act from 05.04.2021. During the pendency of the petition, the petitioner made a fresh application on 03.08.2022 seeking refund under CBIC Circular No.166/22/2021 dated 17.11.2021.

Issues Involved

  1. Whether the petitioner was entitled to a direction for expeditious disposal of its pending refund application made under CBIC Circular No.166/22/2021, given the earlier rejection of its refund claim without following due procedure or granting a hearing.

Petitioner's Arguments

  • The rejection of the refund claim in FORM GST RFD-06, following a notice in FORM GST RFD-08, was arbitrary and without jurisdiction, as it did not follow the procedure contemplated under the statute or grant any opportunity of hearing.
  • The petitioner was entitled to refund of Rs.1,31,574 with interest at 9% per annum under the proviso to Section 56 of the SGST Act from 05.04.2021, and had since made a fresh application dated 03.08.2022 invoking CBIC Circular No.166/22/2021.

Respondent's Arguments

  • The Government Pleader for Commercial Tax represented that, in view of the circular dated 17.11.2021, the petitioner was entitled to refund and that the necessary application could be made, while noting that the petitioner's request was under process with some dispute remaining over the payment of interest.

Court Order / Findings

  • Having regard to the Revenue's own representation that the petitioner was entitled to refund under the applicable circular and that the request was already under process, the Court did not adjudicate the original rejection or the interest dispute on merits.
  • The writ petition was disposed of directing respondent No.1 to consider the petitioner's application dated 03.08.2022 seeking refund within two weeks from receipt of the order, in accordance with law.
  • No order as to costs was made.

Important Clarification

Where the Revenue itself concedes, during the pendency of a writ challenging a refund rejection, that a subsequent refund application under a clarificatory CBIC circular is under process, courts will typically decline to adjudicate the original rejection's legality and instead direct time-bound disposal of the pending application — leaving disputed questions such as interest entitlement to be resolved administratively in the first instance.

Sections Involved

  • Section 56, SGST Act, 2017 – interest on delayed refunds, with a proviso prescribing 9% per annum in specified circumstances.
  • CBIC Circular No.166/22/2021 dated 17.11.2021 – clarifies procedure for processing certain categories of GST refund claims.

Decision – In Favour of

Disposed of with directions rather than a merits finding, broadly in favour of the Assessee — the Department was directed to decide the pending refund application within two weeks, though the interest dispute was left open for administrative determination.

Case Details

High Court of Andhra Pradesh; Writ Petition No.13597 of 2021; Coram: Hon'ble Sri Justice C. Praveen Kumar and Hon'ble Sri Justice A.V. Ravindra Babu; Order dated 21.09.2022; CNR not indicated on the order copy.

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