GST Refund cannot be Blocked merely because Department plans to challenge Appellate Order: Telangana HC

Telangana High Court has held that an appellate order remains operative and binding unless stayed, modified or set aside, and a refund authority cannot disregard it merely because the Department proposes to challenge the order before the GSTAT. The Court held that where an Order-in-Appeal setting aside the underlying GST demand gives rise to a consequential refund, the refund authority cannot use proceedings u/s 54 of the CGST Act, 2017, to indirectly reopen the substantive ITC issue already decided by the appellate authority. It was further ruled that if the Department seeks to withhold such refund pending further proceedings, it must strictly comply with Section 54(11), including the Commissioner’s opinion that refund may adversely affect revenue on account of malfeasance or fraud, along with an opportunity of hearing to the taxpayer. Thus, the Court quashed the refund-rejection order and remanded the matter for fresh consideration. 

ADV Industrial Services vs. UOI - Telangana HC (Sep 08, 2026).pdf