Can refund be withheld by the GST department?

Yes, the proper officer can withhold refund of accumulated ITC under Section 54(3)  in the following circumstances:

i. If the person has failed to furnish any return till he files such return;

ii. If the registered taxable person is required to pay any tax, interest or penalty

  which has not been  stayed by the appellate authority/Tribunal/ court, till he pays   such tax interest or penalty;

The proper officer can also deduct unpaid taxes, interest, penalty, late fee, if any, from the refundable amount .

The Commissioner can withhold any refund, if, the order of refund is under appeal and he is of the opinion that grant of such refund will adversely affect revenue in the said appeal on account of malfeasance or fraud committed – Sec.54 (11) of the GST/SGST Act.

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