Facts of the Case

The petitioner, Bhavna Luthra, is the widow and legal heir of Late Mr. Narain Das Luthra, proprietor of M/s Hunny Enterprises. After his demise on 29 November 2020, the GST registration of the firm was cancelled effective 1 January 2021.

At the time of cancellation, an amount of ₹10,45,793/- remained in the electronic cash ledger. The petitioner applied for refund of this amount. However, the GST Department rejected the refund application on 10 January 2022.

Subsequently, the petitioner approached the High Court earlier (W.P.(C) 5551/2024), where the Court directed re-credit of the amount into the electronic cash ledger within two weeks.

Despite this direction, the refund was not processed. Instead, the GST Department passed another order dated 30 July 2024 rejecting the refund on the ground that the petitioner was not a registered person.

Aggrieved, the petitioner filed the present writ petition. 

Issues Involved

  1. Whether a legal heir of a deceased proprietor is entitled to claim refund from the electronic cash ledger.
  2. Whether GST authorities can deny refund on the ground of non-registration of the claimant.
  3. Whether repeated non-compliance with court directions by the GST Department is legally sustainable.
  4. Whether procedural deficiencies can override substantive entitlement to refund.

Petitioner’s Arguments

  • The petitioner is the lawful legal heir and entitled to the refund amount.
  • The amount in the electronic cash ledger belongs to the proprietor and, upon death, to the legal heir.
  • The earlier High Court order clearly directed re-credit/refund, which has not been complied with.
  • The death of the proprietor was already established through GST cancellation records.
  • The rejection on the ground of non-registration is arbitrary and untenable. 

Respondent’s Arguments

  • The petitioner failed to provide sufficient supporting documents, particularly proof of death, along with the refund application.
  • Since the petitioner was not a registered person under GST, the refund could not be processed.
  • The rejection was based on procedural non-compliance.

Court’s Findings / Order

  • The Court observed that this was the second round of litigation, reflecting serious administrative lapse.
  • It noted that despite a prior judicial direction, the refund had still not been granted.
  • The Court expressed concern over the “harrowing experience” faced by a genuine claimant.
  • The reasoning given by the GST Department was found to be prima facie unsatisfactory.
  • The matter was adjourned, and the concerned officer was directed to personally appear before the Court on the next date.

Important Clarifications

  • The Court emphasized that amounts in the electronic cash ledger are effectively the taxpayer’s money and cannot be unjustifiably withheld.
  • Administrative authorities cannot ignore or circumvent prior binding court orders.
  • Technical or procedural objections should not defeat substantive rights, especially in cases involving legal heirs. 

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/68909042025CW45512025_162749.pdf 

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