# M/S Bushrah Export House v. U.O.I. & Ors

- **Citation:** (2021) 2 ILRA 724
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-02-17
- **Case number:** Misc. Bench No. 2581 of 2021
- **Bench:** Devendra Kumar Upadhyaya, Manish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-bushrah-export-house-v-u-o-i-ors-46791
- **Pages:** 8

## Headnote

A.S.G.,
Kuldeepak
Nag
(K.D.
Nag),
Mahendra Kumar Mishra

Civil Law-Petitioner-proprietorship firmexport of apparel-seeks provisional refund
and return u/R90(2) of CGST Rules,2017order withholding refund be passed only if
prerequisites of recording of opinion is
present-impugned order quashed.

W.P. disposed. (E-7)

Held, the refund can be withheld by the
authority only once he is of the opinion that
grant of such refund is likely to adversely affect
the revenue in some appeal or any other
proceedings because of malfeasance or fraud
committed by the applicant. Thus, what we find
is that for exercising the authority vested by sub
section 11 of section 54 of the Act for
withholding the refund, the officer concerned
has to form an opinion regarding refund having
the tendency of adversely affecting the revenue
in some proceedings. (para10)

## Text

724 INDIAN LAW REPORTS ALLAHABAD SERIES
satisfied that a substantial question of law is
involved in any case, it shall formulate that
question. Sub-Section 5 says that the appeal
shall be heard on the question so formulated
and the respondent shall, at the hearing of the
appeal, be allowed to argue that the case does
not involve such question. A liberty has also
been granted to the Court to hear the Appeal on
any other substantial question not formulated by
it earlier, if it is satisfied that the case involves
such question.

8. Learned counsel for the petitioners has
also placed reliance upon the judgment of Coordinate Bench in Writ Petition No.2001 (M/S)
of 2001: Mohan Singh and others Vs. The
Board of Revenue, U.P. Allahabad and others;
decided on 04.09.2009.

9. This Court was considering a similar
question where this Court relied upon an
observation made by Hon'ble Supreme Court in
V. Ramaswamy Vs. Ramachandran and
another, reported in 2009 AIR SCW 4335 and
Subramaniaswamy Temple, Ratnagiri Vs. V.
Kanna Gounder (Dead) through LRs 2009 (27)
LCD 517. The Supreme Court observed thus:-

"The High Court, while exercising its
jurisdiction under Section 100 of the Code of
Civil Procedure, was required to formulate a
substantial question of law which might have
arisen for its consideration. No question of law
was framed far less any substantial question of
law relating to identification of the property.
The High Court, therefore, in our opinion
completely misdirected itself in passing the
impugned judgment."

10. Learned counsel for the petitioner has
also placed before this Court the judgement of
Subramaniaswamy Temple, Ratnagiri (supra),
where the Court was considering the Appeal
arising out of Section 100 of the C.P.Cc.

11. This Court has gone through the
judgments as cited by the learned counsel for
the petitioner and has also gone through the
memo of the Appeal filed as annexure-4 to the
petition and the order passed by the BoR on
17.07.2019. It is apparent that no substantial
questions of law were framed in the Memo of
the Appeal.

12. At the time of the admission of the
Appeal, the Board of Revenue also did not also
feel it appropriate to frame any question of law,
much less a substantial question of law. It
admitted the Appeal, issued notices to the
petitioners, respondents therein, and stayed the
orders impugned.

13. The order dated 17.07.2019 is thus
vitiated and is set aside.

14. It shall be open for the Board of
Revenue to consider the admissibility of the
Second Appeal which has been filed without
any specific substantial question of law being
framed in the Memo of appeal and then pass
appropriate orders in accordance with law.

15. This petition is accordingly disposed
of.
----------
(2021)02ILR A724
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 17.02.2021

BEFORE

THE HON'BLE DEVENDRA KUMAR
UPADHYAYA, J.
THE HON'BLE MANISH KUMAR, J.

Misc. Bench No. 2581 of 2021

M/S Bushrah Export House ...Petitioner
Versus
U.O.I. & Ors. ...Respondents
2 All. M/S Bushrah Export House Vs. U.O.I. & Ors.
725
Counsel for the Petitioner:
Vibhanshu Srivastava, Jayant Kumar

Counsel for the Respondents:
A.S.G.,
Kuldeepak
Nag
(K.D.
Nag),
Mahendra Kumar Mishra

Civil Law-Petitioner-proprietorship firmexport of apparel-seeks provisional refund
and return u/R90(2) of CGST Rules,2017order withholding refund be passed only if
prerequisites of recording of opinion is
present-impugned order quashed.

W.P. disposed. (E-7)

Held, the refund can be withheld by the
authority only once he is of the opinion that
grant of such refund is likely to adversely affect
the revenue in some appeal or any other
proceedings because of malfeasance or fraud
committed by the applicant. Thus, what we find
is that for exercising the authority vested by sub
section 11 of section 54 of the Act for
withholding the refund, the officer concerned
has to form an opinion regarding refund having
the tendency of adversely affecting the revenue
in some proceedings. (para10)

(Delivered by Hon'ble Devendra Kumar
Upadhyaya, J. & Hon'ble Manish Kumar, J.)

1. Heard Shri Jayant Kumar and Shri
Vibhanshu Srivastava, learned counsel for
the petitioner and Shri K. D. Nag, learned
Standing
counsel
appearing
for
the
respondents.

2. The petitioner is a proprietorship
firm and is engaged in the business of
export of apparels. These proceedings by
the petitioner have been instituted under
Article 226 of the Constitution of India
with the following prayers:

(a) Issue a writ of mandamus or any
other appropriate writ or direction to the
respondent no.2 directing to disburse the
provisional refund in terms of Rule 90(2) of
CGST Rules, 2017 immediately.

(b) Issue a writ of mandamus or any
other appropriate writ or direction to the
respondent no.2 directing to disburse the
full return in terms of Rule 92(1) of CGST
Rules, 2017.

(c) Issue a writ of mandamus or any
other appropriate writ or direction to the
respondent no.2 directing to conclude the
refund process in a time bound manner as
per the provisions of CGST Rules, 2017.

(d) Issue a writ of mandamus or any
other appropriate writ or direction to the
respondent no.2 directing to unblock the
Electronic Credit Ledger of the petitioner.

(e) Issue any other appropriate writ,
order or direction which this Hon'ble Court
may deem just and necessary in the
circumstances of the case may also be
passed.

3. The petitioner, thus, appears to be
aggrieved by non-disbursement of the
provisional refund, non completion of the
proceedings to disburse the full refund and
also by an order whereby Electronic Credit
Ledger of the petitioner has been blocked.

4. Learned counsel representing the
respondents, Shri Nag has submitted that
after giving due opportunity of hearing to
the petitioner the Principal Commissioner,
Central Goods and Services Tax and
Central Excise has taken a decision on
13.10.2020 whereby it has been ordered
that the refund to the petitioner may be
withheld till completion of investigation in
the case. Since it appeared to us on
previous dates of hearing of this matter that
no
such
order
or
decision
was
communicated
to
the
petitioner,
we
required Shri Nag to produce the original
file containing the said decision taken by
the Principal Commissioner on 13.10.2020.
726 INDIAN LAW REPORTS ALLAHABAD SERIES
In deference to our said order the original
record has been produced by the learned
Standing Counsel today which we have
perused as well.

5. From a perusal of the file, it
appears that vide letter dated 25.09.2020
the petitioner was required to participate in
the hearing through Video Conference. The
said
letter
also
prescribed
that
the
submissions which may be made by the
petitioner/its representative through Video
Conference will be reduced in writing and a
statement of the same to be known as
"record of personal hearing" shall also be
prepared. It is not denied on behalf of the
petitioner
that
pursuant
to
the
said
notice/letter
dated
25.09.2020
the
petitioner's representative was provided
opportunity of hearing through Video
Conference and submissions made during
the said hearing were also reduced in
writing as "record of personal hearing".
The said record of personal hearing has
also been annexed as annexure-5 to the writ
petition. Thus, there cannot be any
complaint on behalf of the petitioner that
before taking the decision dated 13.10.2020
whereby the refund has been ordered to be
withheld, opportunity of hearing to the
petitioner was not provided. However, we
now need to examine as to whether the said
decision dated 13.10.2020 can be said to be
in conformity with the provisions contained
in section 54(11) of the Central Goods and
Services
Tax
Act,
2017
(hereinafter
referred to as "GST, Act") and the Rules
framed thereunder.

6. It is not in dispute that as per the
requirement of law the petitioner had made
an application on 26.05.2020 seeking
refund and acknowledgment in respect
whereof was also issued by the respondentdepartment in terms of the provisions
contained in Rule 90 of the Central Goods
and Services Tax Rules, 2017 (hereinafter
referred to as "the Rules"). It is not that the
department had noted any deficiency in the
application filed by the petitioner seeking
refund; rather the application appears to be
in order and therefore, acknowledgment
was issued. Rule 91 of the said Rules
makes a provision for grant of provisional
refund according to which the proper
officer, after scrutiny of the claim and the
evidence and on being prima facie satisfied
that the amount claimed is due to the
applicant in accordance with section 54(6)
of the Act, shall make an order sanctioning
the amount of refund on a provisional
basis. The time period provided for passing
an order for refund on provisional basis as
provided under Rule 91(2) is seven days
from the date of the acknowledgment under
sub-rule (1) or sub-rule (2) of the Rule, 90.

7. It has been submitted by the
learned counsel for the petitioner that the
application was made by the petitioner on
26.05.2020
and
after
scrutiny,
acknowledgment in Form RFD-02 was
issued by the department within 2-3 days
from the date of submission of the
application and as per the statutory
requirement of sub rule 2 of rule 91 the
proper officer ought to have passed an
order regarding provisional refund within
seven days, however, despite long period
having elapsed since the acknowledgment
was issued, no such order has yet been
passed.

8. As observed above, the submission
of the learned counsel for the respondents
is that neither orders sanctioning the
provisional refund, nor orders sanctioning
final refund in this case has been passed for
the reason that the Principal Commissioner
vide his decision dated 13.10.2020 has
2 All. M/S Bushrah Export House Vs. U.O.I. & Ors.
727
ordered for withholding the refund amount
on the ground that some investigation in the
case is pending.

9. No doubt, section 54(11) of the Act
empowers the authority concerned to
withhold the refund till such time as he
may be determined, however, there are
certain
safeguards
which
have
been
statutorily provided before passing such an
order withholding the refund. In this
regard, it would be relevant to extract sub
section 11 of section 54 of the Act which
runs as under:

"(11) Where an order giving rise to a
refund is the subject-matter of an appeal
or further proceedings or where any other
proceedings under this Act is pending and
the Commissioner is of the opinion that
grant of such refund is likely to adversely
affect the revenue in the said appeal or
other
proceedings
on
account
of
malfeasance or fraud committed, he may,
after giving the taxable person an
opportunity of being heard, withhold the
refund
till
such
time
as
he
may
determine."

10. A perusal of the aforequoted
provision of sub section 11 of section 54 of
the Act clearly reveals that the appropriate
authority of the department is vested with
the power to withhold the refund, however,
the refund can be withheld by the authority
only once he is of the opinion that grant of
such refund is likely to adversely affect the
revenue in some appeal or any other
proceedings because of malfeasance or
fraud committed by the applicant. Thus,
what we find is that for exercising the
authority vested by sub section 11 of
section 54 of the Act for withholding the
refund, the officer concerned has to form
an opinion regarding refund having the
tendency of adversely affecting the revenue
in some proceedings.

11. It is also relevant to notice that
such opinion is to be formed only if the
authority opines that refund will adversely
affect the revenue on account of some
malfeasance or fraud committed. In this
view, it is not only that the opinion of the
officer concerned needs to be recorded but
that opinion regarding refund adversely
affecting the revenue has to be based on
some malfeasance or fraud.

12. The corresponding rule for
exercise of powers under section 54(11) of
the Act is Rule 92 of the Rules, 2017 which
is extracted herein below:

"92. Order sanctioning refund.-- (1)
Where,
upon
examination
of
the
application, the proper officer is satisfied
that a refund under sub-section (5) of
Section 54 is due and payable to the
applicant, he shall make an order in Form
GST RFD-06 sanctioning the amount of
refund to which the applicant is entitled,
mentioning therein the amount, if any,
refunded to him on a provisional basis
under sub-section (6) of Section 54,
amount adjusted against any outstanding
demand under the Act or under any
existing law and the balance amount
refundable:

Provided that in cases where the
amount of refund is completely adjusted
against any outstanding demand under
the Act or under any existing law, an
order giving details of the adjustment
shall be issued in Part A of Form GST
RFD-07.

[(1-A) Where, upon examination of
the application of refund of any amount
paid as tax other than the refund of tax
paid on zero-rated supplies or deemed
728 INDIAN LAW REPORTS ALLAHABAD SERIES
export, the proper officer is satisfied that a
refund under sub-section (5) of Section 54
of the Act is due and payable to the
applicant, he shall make an order in Form
RFD-06 sanctioning the amount of refund
to be paid, in cash, proportionate to the
amount debited in cash against the total
amount paid for discharging tax liability
for
the
relevant
period,
mentioning
therein the amount adjusted against any
outstanding demand under the Act or
under any existing law and the balance
amount refundable and for the remaining
amount which has been debited from the
electronic
credit
ledger
for
making
payment of such tax, the proper officer
shall issue Form GST PMT-03 recrediting the said amount as Input Tax
Credit in electronic credit ledger.]

(2) Where the proper officer or the
Commissioner is of the opinion that the
amount of refund is liable to be withheld
under the provisions of sub-section (10)
or, as the case may be, sub-section (11) of
Section 54, he shall pass an order in Part
B of Form GST RFD-07 informing him
the reasons for withholding of such
refund.

(3) Where the proper officer is
satisfied, for reasons to be recorded in
writing, that the whole or any part of the
amount claimed as refund is not admissible
or is not payable to the applicant, he shall
issue a notice in Form GST RFD-08 to the
applicant, requiring him to furnish a reply
in Form GST RFD-09 within a period of
fifteen days of the receipt of such notice and
after considering the reply, make an order
in Form GST RFD-06 sanctioning the
amount of refund in whole or part, or
rejecting the said refund claim and the said
order shall be made available to the
applicant electronically and the provisions
of sub-rule (1) shall, mutatis mutandis,
apply to the extent refund is allowed:

Provided that no application for refund
shall be rejected without giving the
applicant an opportunity of being heard.

(4) Where the proper officer is satisfied
that the amount refundable under sub-rule
(1) [or sub-section (1-A)] or sub-rule (2) is
payable to the applicant under sub-section
(8) of Section 54, he shall make an order in
Form GST RFD-06 and issue a [payment
order] in Form GST RFD-05 for the
amount of refund and the same shall be
electronically credited to any of the bank
accounts of the applicant mentioned in his
registration particulars and as specified in
the application for refund [on the basis of a
consolidated payment advice]:

[Provided that the order issued in
FORM GST RFD-06 shall not be required
to be revalidated by the proper officer:

Provided further that the [payment
order] in FORM GST RFD-05 shall be
required to be revalidated where the refund
has not been disbursed within the same
financial year in which the said [payment
order] was issued.]

[(4-A) The Central Government shall
disburse
the
refund
based
on
the
consolidated payment advice issued under
sub-rule (4).]

(5) Where the proper officer is
satisfied that the amount refundable
under sub-rule (1) [or sub-rule (1-A)] or
sub-rule (2) is not payable to the applicant
under sub-section (8) of Section 54, he
shall make an order in Form GST RFD06 and issue [a payment order] in Form
GST RFD-05, for the amount of refund to
be credited to the Consumer Welfare
Fund."

13. Sub rule 2 of rule 92 as quoted
above, requires the proper officer or the
Commissioner to pass an order in Part B of
FORM GST RFD-07, if he is of the
opinion that the amount of refund is liable
2 All. M/S Bushrah Export House Vs. U.O.I. & Ors.
729
to be withheld under sub section 10 or sub
section 11 of section 54, as the case may
be. Since GST RFD-07 is appended with
the rules and as such the said form also has
a statutory force. Part B of FORM GST
RFD-07 is also extracted herein below:

"Part-B

ORDER
FOR
WITHHOLDING
THE REFUND

This has reference to your refund
application
referred
to
above
and
information/documents furnished in the
matter. The amount of refund sanctioned
to you has been withheld due to the
following reasons:

Refund Order No.:

Date of
issuance
of Order:

Sr. No.
Refund
calcula
tion
Integ
rated
tax
Ce
nt
ral
Ta
x
Stat
e/U
T
Tax
C
es
s
i.
Amoun
t of
Refund
Sanctio
ned

ii.
Amoun
t of
Refund
Withhe
ld

iii.
Amoun
t of
Refund
Allowe
d

Reasons for withholding of the refund

<<Text>>
I hereby, order that the amount of
claimed/admissible refund as shown above
is withheld for the above mention reasons.
This order is issued as per provisions
under sub-section (...) of Section (...) of
the Act.

Date:
Signature (DSC):
Place:
Name:
Designation
Office Address:"

14. From a perusal of Part B of
FORM GST RFD-07 it is clear that the
proper officer or Commissioner has to
assign the reasons for withholding the
refund. Passing of an order in Part B of
FORM GST RFD-07 is a statutory mandate
which is binding on the department for the
reason that different forms appended with
the Rules, 2017 are part of the Rules which
are statutory in nature having been framed
under section 164 of the Act, 2017.

15. What we may observe, at this
juncture, is that recording of reasons while
passing of the order for withholding the
refund is not only statutorily requirement as
per the provisions contained in Rule 92(2)
of the Rules read with Part B of Form GST
RFD-07 and section 54(11) of the Act but it
is also required so as to make the person,
aggrieved by such an order, realize his right
of appeal as available under section 107 of
the Act.

16. Recording of reason in this case
has to be mandatory for the reasons inter
alia,
(i)
there
is
such
a
statutory
requirement flowing from section 54(11) of
the Act and Rule 92(2) of the Rules and (ii)
if any person aggrieved by such an order
intends to file an appeal then to facilitate
730 INDIAN LAW REPORTS ALLAHABAD SERIES
the appellate authority to arrive at a correct
decision, reasons are required to be
indicated by the subordinate authority.

17. We have already observed above
that the entire original record has been
perused by the Court. Office file contains
the decision dated 13.10.2020 passed by
the Principal Commissioner, however, it
only says "in the facts and circumstances of
the case, we may withhold refund till
completion of the investigation in the case".
The said decision does not assign any other
reason regarding on which basis the
Principal Commissioner has arrived at his
opinion that the refund claimed by the
petitioner is likely to adversely affect the
revenue in the investigation (which is said
to be pending) and such opinion is based on
some material indicating some malfeasance
or fraud said to have been committed by
the petitioner. Moreover, the order as
mandated by sub rule 2 of rule 92 has not
been passed in Part B of Form GST RFD07 which as observed above, also has a
column where the officer concerned has to
indicate "reasons for withholding the
refund". We also notice that the decision
dated 13.10.2020 was not communicated to
the petitioner.

18. At this juncture, Shri Nag, learned
counsel representing the respondents has
stated that the authorities will communicate
the decision in Part B of Form GST RFD07.

19. We are unable to agree with the
said offer given by Shri Nag for the reason
that Part B of Form GST RFD07 is not a
form for the purposes of communicating
the decision; rather it is a form in which an
order has to be passed keeping in view the
requirement of section 54(11) of the Act
read with Rule 92(2) of the Rules. The said
form contains a separate specific column
where requirement is to record reasons for
withholding the refund and those reasons
are
to
be
in
conformity
with
the
requirement of section 54(11) of the Act
and Rules 92(2) of the Rules. The order
withholding the refund can be passed only
if the prerequisites of recording of the
opinion in terms of the aforesaid provision
is found present in a particular case.

20. Learned counsel representing the
petitioner has also stated that apart from the
application which has been submitted by
the petitioner on 26.05.2020 the petitioner
had furnished three other applications as
well. However, in respect of these three
applications, the department has issued a
deficiency memo in Form GST RFD-03,
but the petitioner is unable to make good
the deficiency for the reason that on
03.12.2020 the department has blocked the
Electronic Credit Ledger of the petitioner
which has rendered the petitioner unable to
remove the deficiency pointed out in the
said application by the department. Learned
counsel for the petitioner has also stated
that the matter is pending consideration
before the department for the last about
eight
months
and
because
of
nonfinalization of the proceedings for refund,
the petitioner-firm is suffering in its
business.

21.

Having
regard
to
the
aforementioned facts and circumstances as
also the legal position discussed above, this
petition is finally disposed of with the
following directions:

(i) The decision by the Principal
Commissioner, dated 13.10.2020 as is
available in the record produced by the
learned
counsel
representing
the
respondents
is
hereby
quashed.
The
2 All. Mahesh @ Mahesh Kumar & Ors. Vs. State of U.P. & Ors.
731
Principal Commissioner or any other
competent authority will take a decision in
respect of withholding of the refund
amount afresh within 15 days from the date
a certified copy of this order is produced
before him.

(ii) We also provide that the fresh
decision under this order shall be taken
by the competent authority of the
department on the basis of record already
available before it as the opportunity to
the petitioner had already been provided
and the submissions of the petitioner have
also been reduced in writing as "record of
personal hearing".

(iii) Once any order under section
54(11) of the Act is passed, keeping in
view the observations made herein above,
the same shall be communicated to the
petitioner forthwith and shall be served
upon the petitioner through appropriate
mode of service.

(iv) The investigation said to be
pending against the petitioner shall be
expedited and completed as far as
possible within a period of four months
from today. Once the investigation is
completed, the requisite orders for final
refund shall also be passed by the
competent authority.

(v) While deciding the matter afresh
under this order, the authority concerned
shall also pass an order on the prayer
made by the petitioner for provisional
refund.

(vi) For unblocking of the Electronic
Credit Ledger, the petitioner shall make
an
application
to
the
Principal
Commissioner within 10 days from today.
Once any such application is made, the
Principal Commissioner or any other
competent
authority
shall
take
appropriate decision which shall be
communicated to the petitioner forthwith.
----------
(2021)02ILR A731
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 10.02.2021

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.

Misc. Single No. 2992 of 2021

Mahesh @ Mahesh Kumar & Ors.
 ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
Ajay Kumar Pandey

Counsel for the Respondents:
C.S.C., Dilip Kumar Pandey, Mohammad
Ehtesham Khan

Civil Law-Proceeding for cancellation of
lease initiated after more than 5 yearswithout delay condonation applicationrevision -rejected-Chief Revenue Officer
recorded satisfaction after examination of
documentary
evidence-that
rules
not
followed-no prior permission taken from
the
Collector-this
fact
not
disputedImpugned order need no interference.

W.P. dismissed. (E-7)

List of Cases cited:-

1. Ghanshyam Vs St., reported in 2004 (97) RD
691,

2.1986 RD 137,

3. 2000 RD Supp 77

4. 2001 RD 476,

5. Suresh Giri & ors. Vs Board of Revenue, U.P.
Alld. & ors., 2010 (2) ADJ 514

6. Ram Pher Singh Vs Additional Collector,
Gonda, 2014 (122) RD 168