M/S Alok Traders vs Commissioner Commercial Taxes And 2 ... on 27 April, 2022

Here's a summary of the judgment:

1. Outcome
The High Court allowed both writ petitions, directing the respondents to pay interest to the petitioner on the delayed refund amount of Rs. 4,70,400/- (and Rs. 5,60,000/- in the connected petition) for the period from September 9, 2018, to March 31, 2022, at the rate notified under Section 56 of the CGST/UPGST Act, 2017, within one month.

2. Core Issue
The core issue was whether the petitioner was entitled to interest on a refund amount that was ordered by the Appellate Authority in June 2018 but only refunded in April 2022, after significant delay primarily attributed to the tax authorities' actions, including the creation of a temporary ID without providing its access details and subsequent "technical glitches."

3. Key Facts
* Petitioner: M/S Alok Traders, a registered tobacco dealer from Gujarat.
* Interception & Demand: On December 30, 2017, the Assistant Commissioner, Mobile Squad Unit-5, Jhansi, intercepted goods and issued an order under Section 129(3) of the U.P. Goods and Service Tax Act, 2017, demanding tax and penalty totaling Rs. 4,70,400/- (and Rs. 5,60,000/- in another case) for release of goods.
* Irregular Deposit: Despite the petitioner being a registered dealer from Gujarat (implying IGST applicability), the Assistant Commissioner created a temporary ID and recorded the bank draft deposit under the U.P. GST Act. The password for this temporary ID was never provided to the petitioner.
* Appellate Order: The petitioner's appeal under Section 107 was allowed by the Appellate Authority on June 30, 2018, setting aside the demand and directing the refund of the deposited amount.
* Refund Application (Physical): On July 9, 2018, the petitioner submitted a physical refund application along with a copy of the appellate order.
* Persistent Delay: Despite numerous reminders (Dec 2020, Jan 2021, June 2021, July 2021, Feb 2022), the refund was not processed. The respondents cited the need for an online application (RFD-01) with an ARN, and admitted technical issues and lack of access to the temporary ID's password on their end.
* Court Intervention & Refund: Only after the High Court issued orders on March 28, 2022, and April 4, 2022 (noting "high-handedness, abuse of power and harassment" and an attempt to mislead the court with a "procured" withdrawal letter), the refund was sanctioned on March 31, 2022, and paid on April 4, 2022, but without interest.
* Respondents' Admission: The respondent no.1's personal affidavit dated April 25, 2022, admitted that due to "technical glitches" and the "development stage of GST Portal," the temporary ID was not available at the proper officer's login, making it impossible to provide the password to the petitioner earlier.

4. Arguments (Taxpayer vs Revenue)
* Taxpayer (M/S Alok Traders):
* Entitled to refund and interest under Section 56 due to the Appellate Authority's order and the prolonged, unjustified delay by the department.
* Could not file an online refund application (RFD-01) as the department unilaterally created a temporary ID, deposited the amount under the wrong Act, and failed to provide the necessary password, preventing access to the online portal.
* The physical application for refund on July 9, 2018, was valid and the department's inability to process it was its own fault.
* The department attempted to procure a letter to withdraw the writ petition to avoid adjudication on merits and the imposition of exemplary costs.
* Revenue (Commissioner Commercial Taxes):
* Refund could only be processed upon the filing of an online application in Form RFD-01/RFD-01A as per statutory rules (Rule 89(1) and 97A, and Section 54(1)).
* Claimed the petitioner did not initially inform them of technical issues in filing online.
* Admitted "technical glitches" at the development stage of the GST Portal made the temporary ID unavailable at the proper officer's login, thus making it impossible to provide the password to the petitioner.
* Argued that after the Commissioner became aware, efforts were made with GSTN, enabling the temporary ID's activation and password provision, leading to the online RFD-01 filing on March 31, 2022, and subsequent refund within the 60-day period of Section 56, implying no interest liability.
* Tendered an unconditional apology for the "procured" letter.

5. Court’s Reasoning
* Department's Fault: The Court unequivocally held that the respondent no.3 acted "mischievously" by creating a temporary ID and incorrectly applying the U.P. GST Act instead of the IGST Act, and then failing to provide the petitioner with access (password) to this ID.
* Impossibility of Compliance: It was "wholly impossible" for the petitioner to file an online application without the password, and the legal principle "law does not compel a man to do what he cannot possibly perform" applied. The physical refund application of July 9, 2018, was therefore valid.
* Arbitrary Withholding: The Court found the respondents deliberately withheld the refund for over 33 months despite the clear appellate order and the petitioner's consistent follow-ups.
* Relevant Date for Interest: Applying Explanation 2(d) of Section 54, the "relevant date" for refund was July 9, 2018 (date of communication of the appellate order). As per the proviso to Section 56, interest becomes payable if the refund is not processed within 60 days from this date.
* No One Can Benefit from Own Wrong: Citing precedents, the Court emphasized that the respondents could not take advantage of their own wrong (creating the temporary ID, not providing access, technical glitches) to deny interest on the delayed refund.
* Online Application Relates Back: The belated online RFD-01 filing on March 31, 2022, only occurred due to the Court's intervention and must relate back to the original physical application date of July 9, 2018.
* Procured Letter: The Court strongly condemned the attempt by the respondents to procure a letter for withdrawal, viewing it as interference with court proceedings, but did not initiate contempt proceedings due to the unconditional apology.

6. Statutory References
* U.P. Goods and Service Tax Act, 2017:
* Section 129(1), 129(3) (Detention, seizure, and release of goods)
* Section 107 (Appeals)
* Section 56 (Interest on delayed refunds)
* U.P. Goods and Service Tax Rules, 2017:
* Rule 89 (Application for refund)
* Central Goods and Service Tax Act, 2017:
* Section 54 (Refund of tax)
* Section 56 (Interest on delayed refunds)
* Section 49(6), 39, 55, 33, 57, 77, 107(6), 112(8), 2(112), 27(2), 31 (Various provisions related to refund, returns, and other procedural aspects)
* Central Goods and Service Tax Rules, 2017:
* Rule 89 (Application for refund)
* FORM GST RFD-01, RFD-01A, RFD-06 (Refund forms)
* GSTR-3, GSTR-4, GSTR-7 (Return forms)
* Rule 46 (Invoice rules)
* Integrated Goods and Services Tax Act, 2017:
* Section 16(3) (Zero-rated supply)
* Other Acts:
* United Nations (Privileges and Immunities) Act, 1947
* Special Economic Zone Act, 2005

7. Precedents Cited
* Commissioner of Customs (Prev.), Mumbai vs. M. Ambalal, 2010 (260) ELT 487 (para-11): Emphasized that a construction permitting one to take advantage of one's own wrong under a Statute should be disregarded, and interpretation should be beneficial to suppress mischief and advance remedy.
* Union of India vs. Shakti LPG Lt., 2008 (223) ELT 129 (SC) (para-9): Reaffirmed the settled principle that no one can take advantage of his own wrong.