Facts of the Case

M/s ABB India Limited, holding GSTIN 29AAACA3834B1Z4, had applied for a refund of Rs. 1,93,17,280 under Section 54 towards excess payment of tax for March 2020, arising from credit notes issued to a demerged group entity (Hitachi Energy India Limited) for services that were not, in substance, taxable supplies. The refund claim was rejected by an order in Form GST RFD-06 dated 28.01.2022, followed by an endorsement dated 14.02.2022 detailing the reasons — chiefly that the credit notes were issued beyond the timeline in Section 34 and that the underlying returns had not been revised in time. The petitioner's statutory appeal before the Joint Commissioner of Commercial Taxes (Appeals-6) was dismissed as not maintainable, on the ground that it was filed against a mere 'endorsement' rather than an appealable 'order' under Section 107.

Issues Involved

  1. Whether the communication comprising the RFD-06 order, screenshot, and endorsement together constituted an appealable 'decision or order' under Section 107, or a non-appealable endorsement.
  2. Whether the First Appellate Authority erred in summarily dismissing the appeal without examining the merits of the refund rejection.

Petitioner's Arguments

  • The First Appellate Authority erred in treating the composite communication as a mere endorsement; in substance, a detailed refund rejection order (Form GST RFD-06) had been passed by the original authority, giving reasons and figures, and was clearly appealable.
  • The refund itself was rightly claimed under Section 54 read with Rule 89, since the credit notes were issued only to reverse tax mistakenly charged on transactions between ABB India and its demerged entity that were not supplies under GST at all, so Section 34's timeline for ordinary credit notes ought not to apply, and the claim fell within the two-year Section 54(1) limitation from the date of payment of tax.
  • The petitioner relied on rulings including Nam Estates Pvt. Ltd. vs Joint Commissioner and its own appellate reversal, and other precedents, to argue the refund ought to be allowed.

Respondent's Arguments

  • The department maintained that the credit notes for the December 2019 to March 2020 period were issued only on 31.10.2021/28.10.2021, well beyond the Section 34(2) deadline (September following the financial year, or the date of the annual return, whichever is earlier), so the refund claim itself, though nominally under Section 54, was in substance time-barred and rightly rejected.

Court Order / Findings

  • The Court examined the full text of the RFD-06 order, the screenshot of the refund-rejection status, and the endorsement, and found that respondent no.2 had in fact passed a detailed order rejecting the refund giving elaborate factual and legal reasons — contrary to the Appellate Authority's premise that no order existed.
  • Holding that the First Appellate Authority misconstrued the record and summarily dismissed the appeal without recording any finding on merits, the Court set aside the impugned order, held the appeal to be maintainable, and remitted the matter to the First Appellate Authority for reconsideration on merits, directing disposal within four months.
  • The petitioner was directed to appear before the Appellate Authority on a fixed date without awaiting further notice.

Important Clarification

  • An 'endorsement' that in substance records a detailed rejection of a refund claim under Section 54 — reasoning, quantification, and rejection of the taxpayer's reply — is an appealable order under Section 107, regardless of its label; appellate authorities cannot dismiss an appeal as not maintainable purely on nomenclature.
  • The Section 34(2) timeline for issuing credit notes is aimed at ordinary post-supply adjustments; whether it applies where the underlying transaction was never a taxable supply at all is a substantive question that must be examined on merits, not brushed aside on a maintainability technicality.

Sections Involved

  • Section 54, CGST Act, 2017 – governs refund of tax, including sub-section (8) on categories eligible for direct payment rather than crediting the Consumer Welfare Fund.
  • Section 34, CGST Act, 2017 – governs issuance and time limit for credit notes, central to the department's rejection.
  • Section 107, CGST Act, 2017 – governs appeals against decisions or orders, the maintainability question at the heart of the dispute.
  • Rule 89, CGST Rules, 2017 – prescribes the refund application procedure under Section 54.

Decision – In Favour of

The writ petition was allowed in favour of the assessee on the maintainability question, with the appeal restored for a merits hearing; the substantive entitlement to the refund itself remains open for the First Appellate Authority to decide.

Case Details

Court: High Court of Karnataka at Bengaluru. Case No.: Writ Petition No. 17454 of 2025 (T-RES). Neutral Citation: 2025:KHC:47533. Coram: Hon'ble Mr. Justice S.R. Krishna Kumar. Date of Order: 14th November, 2025.

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