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Can GST refund be withheld by the 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 – Section 54(10) (d) of the CGST/SGST Act
  • 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 CGST/SGST Act.

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