The Bombay High Court has held that GST authorities cannot refuse to comply with an appellate order directing a refund merely because an appeal against the order is contemplated. Such refusal is impermissible unless the appellate order is stayed or set aside.
A Division Bench of Justice M. S. Sonak and Justice Advait M. Sethna was hearing a writ petition filed by Ma Agro Proprietor alleging non-compliance with an appellate order directing refund of GST along with interest.
The court observed, “As long as the Appellate Authority's order dated 21 August 2025 is not set aside or stayed, the first Respondent cannot refuse to comply with the same.”
The court noted that by an order dated August 21, 2025, the Appellate Authority had directed the department to refund Rs 72,783,010 along with applicable interest under Section 56 of the Central Goods and Services Tax Act, 2017.
The company approached the department for a refund but was informed that it was being withheld because an appeal against the appellate order was contemplated.
The bench noted the taxpayer's reliance on the Delhi High Court's decision in Brij Mohan Mangla v. Union of India & Ors. (2023), which held that authorities cannot ignore appellate orders merely because they intend to challenge them in appeal.
Accepting this position, the High Court held that the pendency or mere contemplation of an appeal does not entitle the department to withhold compliance with an operative appellate order. Allowing the writ petition, the Court directed the department to refund Rs 72,783,010 to the petitioner within 10 days from the date of uploading of the order.
The court further directed that if the refund is not made within this period, the department shall be liable to pay interest at the rate of 6% per annum, over and above any statutorily payable interest.
It was clarified that this additional interest must first be paid to the petitioner and thereafter recovered from the officer or officers responsible for the delay. The court expressly directed that “under no circumstances should the State/Central Exchequer be made accountable” for payment of the additional amount from taxpayers' funds.
Case Title: Ma Agro Proprietor & Anr. v. Dy Commissioner of State Tax, Sanpada 501
Case Number: WRIT PETITION NO. 15764 OF 2025
Citation: 2026 LLBiz HC(BOM) 24
For Petitioner: Advocate Keval S. Shah
For Respondent: Advocates S D Vyas (Addl. GP) and V.R. Raje (AGP)