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2021 (2) TMI 924 - HC - GSTWithholding of Provisional/ Final refund on the ground that investigation is pending - Seeking disbursal of provisional refund - section 54(11) of the Central Goods and Services Tax Act, 2017 - Rule 90(2) of CGST Rules, 2017 - non completion of the proceedings to disburse the full refund - HELD THAT:- A perusal of the provision of sub section 11 of section 54 of CGST 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 - 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. 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 - 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. 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. 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 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 - Petition disposed off.
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