The Calcutta High Court has delivered a landmark ruling that strengthens the rights of taxpayers seeking GST refunds. In the case of Suraj Mangar vs. The Assistant Commissioner of West Bengal State Tax & Others, the Court made it clear that refund timelines under the CGST Act are mandatory and that refund claims cannot be rejected on irrelevant or speculative grounds, such as the small size of the taxpayer’s office.
This judgment reaffirms that administrative discretion cannot override statutory mandates and sets a strong precedent for businesses battling arbitrary refund denials.
Key Takeaways from the Judgment
1. Refund Timeline Under Section 54(7) is Binding
The Court emphasized that refund applications must be processed within 60 days as mandated by Section 54(7) of the CGST Act. Authorities cannot extend or bypass this statutory period.
Moreover, procedural lapses such as failure to issue acknowledgements under Rule 90(2) or show-cause notices under Rule 92(3) invalidate the refund rejection.
2. Extraneous Reasons Have No Place in Law
Authorities had denied the taxpayer’s refund on the basis that:
- the office premises were “too small”, and
- certain e-way bills were not generated.
The Court struck down these reasons, holding them to be speculative and unrelated to the statutory requirements of GST refund provisions.
3. Refund Plus Interest Must Be Granted
The High Court not only set aside the rejection order but also directed that the refund be issued within 30 days along with statutory interest under Section 56 of the CGST Act.
4. Broader Impact for Taxpayers
The ruling establishes a clear boundary: tax officers cannot travel beyond the four corners of the law to deny refunds. Once a claim meets statutory and procedural criteria, subjective assumptions have no legal standing.
Why This Decision Matters for Businesses
- Timelines Are Non-Negotiable
The use of the word “shall” in Section 54(7) confirms that refund processing deadlines are mandatory, not discretionary. - Procedural Safeguards Protect Taxpayers
If acknowledgements or SCNs are delayed or not issued, refund rejections are open to challenge. - No Space for Subjective Scrutiny
Factors like small office space, missing documents not mandated by law, or speculative reasoning cannot be used to deny GST refunds. - Reinforcement of Taxpayer Rights
The judiciary is sending a strong message—procedural fairness and legal mandates prevail over administrative convenience.
Practical Guidance for Taxpayers and Professionals
✅ Track refund process carefully: Maintain a record of application filing, acknowledgements, SCNs, hearings, and orders.
✅ Challenge irrelevant grounds: If refunds are denied due to issues like “small office” or unrelated compliance gaps, file an appeal or writ petition.
✅ Insist on interest under Section 56: When refunds are delayed, interest accrues automatically—taxpayers should claim it.
✅ Leverage precedents: Cite Suraj Mangar and similar High Court rulings to strengthen your case.