Tax authorities face prima facie contempt for defying explicit court orders to disburse GST refunds.

By | June 3, 2026
0 Comment

Tax authorities face prima facie contempt for defying explicit court orders to disburse GST refunds.

Issue

Whether the tax department’s subsequent order rejecting a GST refund claim constitutes prima facie contempt of court when a specific judicial order had already directed the sanction and disbursal of that refund with interest, and multiple deadlines for compliance had been set and ignored.

Facts

  • The Claim: The petitioner filed a refund application in Form GST RFD-01 for unutilized Input Tax Credit (ITC) covering the period from April 2020 to March 2022.

  • The Disbursal Order: On March 28, 2025, the Court issued an order directing the tax authorities to sanction and disburse the refund along with statutory interest within a period of four weeks.

  • Continued Default: The department failed to comply with the order, prompting the petitioner to file an application under Section 151 of the Civil Procedure Code (CPC). On July 16, 2025, the Court recorded the default and permitted the petitioner to file a fresh refund application with a directive for its expeditious processing.

  • Contempt Proceedings: The matter returned to the original Bench, which observed on February 13, 2026, that its initial order was clear and required no further clarification. A contempt plea was subsequently disposed of on March 13, 2026, granting the department a final three weeks to comply.

  • The Defiant Rejection: Instead of disbursing the funds as ordered by the Court, the respondent passed a fresh order on March 24, 2026, actively rejecting the petitioner’s refund claim.

Decision

  • Prima Facie Contempt Established: The High Court held that upon a plain reading of the sequence of prior judicial orders, the respondents were prima facie in contempt of the absolute order dated March 28, 2025.

  • Disregard of Deadlines: The Court took a strict view of the department’s persistent non-compliance and its subsequent attempt to bypass a binding judicial directive by passing a fresh rejection order.

  • Ruling in Favor of Assessee: The issue was decided in favor of the assessee, establishing that the tax department cannot overwrite or evade a direct court mandate to disburse a refund.

Key Takeaways

  • Judicial Orders Override Administrative Discretion: Once a High Court issues a specific directive to sanction and disburse a tax refund, the tax department loses its administrative jurisdiction to re-adjudicate or reject that same claim.

  • Consequences of Bureaucratic Defiance: Passing a fresh rejection order to counter an active court mandate to disburse funds constitutes a direct challenge to the authority of the judiciary and invites strict contempt of court proceedings.

  • Protection of Taxpayer Rights: Taxpayers are protected against endless administrative delays through contempt remedies, ensuring that final judgments for refund disbursals and accrued interest are enforced against non-compliant officials.

HIGH COURT OF DELHI
Triune Project (P.) Ltd.
v.
Commissioner of SGST Department of Trade Department of Trade and Taxes Delhi*
NITIN WASUDEO SAMBRE and Ajay Digpaul, JJ.
W.P.(C) No. 6859 of 2026
CM APPL. Nos. 33681 & 33682 of 2026
MAY  18, 2026
Siddarth Malhotra, Adv. for the Petitioner. Sumit K. Batra and Ms. Priyanka Jindal, Advs. for the Respondent.
ORDER
1. For the Financial Year April, 2020 to March, 2022, the petitioner on 30th November, 2023, took recourse to the provisions of Section 54(3) of the CGST Act, 2017 seeking refund in the Form GST RFD-01.
2. Since the said proceedings were not decided, the petitioner approached this Court through Writ Petition (Civil) No. 14121 of 2025, which was allowed vide order dated 28th March, 2025, in terms of prayer clause (i), which reads thus:
(i) Issue a writ in the seeking writ of mandamus and/ or any other appropriate writ, directing the respondent department to sanction the refund claims filed by the Petitioner under. Refund Application dated 30.11.2023 (Reference no.AA071123082463F) for the amount of Rs. 70,09,455/- for the period April 2020 to March 2022, along with the applicable interest as per the provisions of the Central Goods and Service Tax Act, 2017 and rules made thereunder;
3. Since the aforesaid order was not complied with, the petitioner took out an application under Section 151 of Code of Civil Procedure, 1908, seeking directions for compliance of the aforesaid order by the respondent.
4. The said application was considered by the Division Bench of this Court and vide order dated 16th July, 2025, the Division Bench made following observations:
“1. This hearing has been done through hybrid mode. CM APPL. 41655/2025 (for non-compliance of the order dated 28th March, 2025)
2. The present application has been filed by the Petitioner under Section 151 of the Code of Civil Procedure, 1908 seeking directions for compliance of the order dated 28th March, 2025.
3. Vide order dated 28th March, 2025, refund was directed to be given to the Petitioner within a period of four weeks along with statutory interest. Relevant portion of said order reads as under:

“5. Resultantly, the writ petition is answered in terms of Prayer (i) and stands disposed of. The Respondent is directed to ensure that the refund is given to the Petitioner within a period of four weeks from today alongwith statutory interest. ”

4. According to the Petitioner, the refund amount has not been disbursed to the Petitioner.
5. Accordingly, let the concerned Official of the Respondent Department be present before the Court on the next date of hearing.
6. At this stage, Mr. Abhinav Sharma, ld. Counsel for the Respondent submits that the Petitioner’s application had inadvertently been sent to a wrong ward officer which resulted in the delay in the refund being disbursed.
7. Considering the same, let the Petitioner file a fresh application seeking the refund within one week. Once the application is filed, the refund shall be processed expeditiously, without fail.
8. List on 12th September, 2025.”
5. Since, vide aforesaid order, this Court permitted the petitioner to file a fresh application in view of default of the respondent in the matter of processing the earlier application, and the refund was directed to be processed.
6. Thereafter, the matter was again listed before this Court on various occasions and on 12th December, 2025, the Court again considered the application of the petitioner in regard to the prayer for non-compliance and passed the following order:-
“1. This hearing has been done through hybrid mode. CM APPL. 41655/2025 (seeking intervention) in W.P.(C) 14121/2024
2. This is an application filed by the Petitioner under Section 151 of the Code of Civil Procedure, 1908 seeking compliance of the order dated 28th March, 2025. Vide the said order, refund was directed to be issued to the Petitioner in the following terms:

“5. Resultantly, the writ petition is answered in terms of Prayer (i) and stands disposed of. The Respondent is directed to ensure that the refund is given to the Petitioner within a period of four weeks from today alongwith statutory interest. ”

3. In response to this application, a status report has been filed on behalf of Respondent No.1 where it appears that the stand of the Department is that there is a discrepancy in the returns filed by the Petitioner.
4. In the reply to the status report, as per the Department, the said mistake is admitted by the Petitioner.
5. The question as to what procedure should be followed if there is a mistake in the return does not appear to have been brought to the notice of the Bench when the order dated 28th March, 2025 was passed.
6. Accordingly, subject to orders of Hon’ble the Chief Justice, list this matter before the same Bench which passed the order dated 28th March, 2025 on 17th December, 2025.
7. At this stage, Mr. Garg, ld. Counsel for the Petitioner is willing to file an amended manual return.
8. Let the said request be made before the said Bench on 17th December, 2025.”
7. As a sequel of the aforesaid order dated 12th December, 2025, the matter was again placed before the Court who has passed the earlier order dated 28th March, 2025.
8. The Bench dealing with the matter on 13th February, 2026, has refused to go into the clarification, saying that the order is quite clear and no further clarification is required, and it was directed that the present petitioner can take appropriate steps in the matter.
9. This led to the petitioner filing the Contempt proceedings, being CONT.CAS(C) 402 of 2026. The said contempt petition was disposed of vide order dated 13th March, 2026, and the order passed in the Contempt proceedings reads thus:-
“1. The present petition alleges wilful disobedience of the judgment/order dated 28.03.2025, passed in W.P.(C) 14121/2024. The same reads as under:
image
image
2. Subsequently, an order dated 13.02.2026 was passed in CM APPL.41655/2025 in the aforesaid proceedings. The same reads as under:

“CM APPL. 41655/2025

1. This is an Application filed by the Petitioner under Section 151 of the Code of Civil Procedure, 1908 seeking compliance of the Order dated 28.03.2025.

2. In the opinion of this Court, the Order dated 28.03.2025 does not require any clarification, since the Writ Petition was disposed of in light of the Judgment passed by a Co-ordinate Bench in M/s Jian International versus Commissioner of Delhi Goods and Services Tax, 2020 SCC OnLine Del 2606.

3. Needless to state, it is open for the Applicant to take necessary steps in accordance with law for compliance of the Order dated 28.03.2025.

4. With the above observations, the Application is disposed of.”

3. The petitioner is aggrieved by the fact that the requisite refund has still not been granted to the petitioner, despite the aforesaid directions.
4. Learned counsel for the respondent submits that the matter is under active consideration of the department and that the requisite steps shall be taken to furnish the refund due to the petitioner, in terms of the directions contained in the judgment / order dated 28.03.2025 read with order dated 13.02.2026, and in accordance with law.
5. Let necessary compliance be done within a period of three weeks from today.
6. The petition is disposed of in the above terms.”
10. It appears that subsequent to the aforesaid order, the impugned order came to be passed by the respondent on 24th March, 2026, thereby the request of the petitioner for refund came to be rejected.
11. The counsel for the petitioner submits that in the wake of the order of this Court on 13th February, 2026 based on CM Appl. No. 41655 of 2025 (referred above), and the order of this Court that no further clarification is required, particularly, recorded in the order dated 13th February, 2026. The option left with the respondent was to comply with the order in terms of prayer clause (i) as directed vide order dated 28th March, 2025.
12. As regards the issue of shortfalls is concerned, the same issue was duly gone into by the Division Bench of this Court while passing the aforesaid order dated 28th March, 2025. In spite of above, when there were positive directions to refund the tax to the petitioner, the respondent, by passing the order dated 28th March, 2025 and the subsequent orders, have chosen to reject the claim of the petitioner for refund of tax.
13. Prima facie, upon a plain reading of the aforesaid orders, we are of the view that the respondents are in contempt of the order dated 28th March, 2025.
14. Be that as it may, since the counsel for the respondent has sought time to file a response, we grant time of four weeks, as prayed by the counsel for the respondent, for the same.
15. Rejoinder, if any, be placed on record within two weeks thereafter.
16. Post matter for consideration on 30th July, 2026.
Category: GST