Uttarakhand High Court Quashes GST Refund Rejection Order Passed in Haste

The Uttarakhand High Court has set aside an order rejecting the refund claim after observing that the department acted prematurely by rejecting the refund claim despite the assessee seeking additional time to furnish a reply and supporting documents.

M/s Cholayil Pvt. Ltd had filed an application dated 24 February 2026 seeking a refund of accumulated Input Tax Credit under the GST regime, and the Department issued a show-cause notice on 09 April 2026 for rejection of the refund claim and granted four days‘ time to furnish a response. On the very next day, the petitioner sought an extension of time to submit a proper reply. However, without considering the request, the Department passed an order dated 15 April 2026 along with Form GST RFD-06 rejecting the refund application.

The petitioner approached the Uttarakhand High Court challenging the order. The court observed that the facts of the case clearly indicated that the petitioner had sought extension immediately after receipt of the show-cause notice with a view to placing the relevant documents on record. The Court held that the haste exhibited by the Department in rejecting the refund claim was wholly unwarranted and inconsistent with the principles of fair procedure.

The Court observed that rejection of the claim in undue haste without affording an effective opportunity of hearing is unsustainable and liable to be set aside. Administrative discretion must be exercised fairly and in consonance with the principles of natural justice. Accordingly, the High Court quashed the order that rejected the refund application and gave the petitioner 14 days‘ time to submit its reply and documents to the show-cause notice dated 09 April 2026. The Court also directed that the Department would be at liberty to pass a fresh order on the refund application in accordance with law after the receipt of the relevant documents.