Delhi High Court Summons GST Officer for Refund denied case.

A case that began with a routine GST refund request has now grown into a legal saga symbolizing the challenges faced by legal heirs in India’s tax system. In W.P.(C) 4551/2025, Ms. Bhavna Luthra, widow of Late Sh. Narain Das Luthra, approached the Delhi High Court for a second time, seeking justice over a refund of ₹10,45,793, stuck in the electronic cash ledger of a firm whose proprietor had passed away.

Factual Background

Case Title: Bhavna Luthra L/H of Sh. Narain Das Luthra, Proprietor of M/s Hunny Enterprises vs. Assistant Commissioner, Range 8, CGST, Delhi & Anr.
Writ Petition: W.P.(C) 4551/2025
Court: Delhi High Court
Date of Decision: 9th April 2025
Bench: Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta

• Narain Das Luthra, the proprietor of M/s Hunny Enterprises, was a registered GST taxpayer (GSTIN: 07xxxxxxxxxP).

• He passed away on 29th November 2020.

• Ms. Bhavna Luthra, his legal heir and wife, applied for cancellation of GST registration, which was granted effective 1st January 2021 via order dated 10th August 2021.

• At the time of cancellation, an amount of ₹10,45,793 was available as excess balance in the electronic cash ledger of the firm.

• Ms. Luthra applied for a refund via application ARN No: AA0xxxxxxxM, which was rejected on 10th January 2022 without proper justification.

First Legal Victory Ignored

• Ms. Luthra filed W.P.(C) 5551/2024 in Delhi High Court.

• On 9th May 2024, the Court ordered the re-credit of the refund amount into her electronic cash ledger within two weeks.

• Despite this clear directive, the refund was not processed. Instead, the GST Department passed another rejection order on 30th July 2024, claiming Ms. Luthra was not a registered taxpayer, thus not eligible for refund.

The Second Writ Petition: W.P.(C) 4551/2025

Frustrated and denied her rightful claim, Ms. Luthra filed W.P.(C) 4551/2025 in April 2025. Her counsel, Mr. Puneet Rai, pointed out that:

• The cancellation of the GST registration itself proves the death of her husband.

• The amount in the cash ledger belongs to the deceased taxpayer’s estate, now legally represented by the widow.

• The GST Department’s repeated refusal violates both the court’s earlier order and principles of natural justice.

The Respondent’s counsel, Mr. Piyush Beriwal, claimed that necessary supporting documents (e.g., the death certificate) were missing—a claim refuted by the petitioner, who had already provided those details during cancellation.

High Court’s Stern Response

The Bench made the following critical observations:

• It is deeply concerning that despite a clear order in 2024, the refund is still withheld.

• The GST Department’s insistence on the petitioner being a “registered person” post-cancellation is legally flawed.

• The amount in the electronic cash ledger is a deemed instrument, and the funds belong to the legal heir after the proprietor’s death.

The Court has now summoned the concerned officer, Mr. Sanjay Kumar Bansal, Assistant Commissioner, Old Delhi Division, to appear physically in court on 5th May 2025 and explain the department’s conduct.

Broader Implications

This case is a harsh reminder of how tax administration can become insensitive to ground realities:

• Legal heirs are being forced to litigate for legitimate refunds.

• Despite proof of death and cancellation of GST registration, refunds are blocked due to procedural technicalities.

• Even court orders are ignored, exposing deeper issues of compliance and accountability within the GST system.

The case of Bhavna Luthra is not just a fight for a refund; it’s a battle against a bureaucratic system that too often disregards empathy and efficiency. As we await the outcome on 5th May 2025, this case serves as a critical precedent and a wake-up call for urgent reform in handling GST refunds to legal heirs.

Disclaimer

The contents of this blog are intended for informational purposes only and should not be construed as legal advice. While efforts have been made to ensure the accuracy of the case details, readers are advised to consult a qualified legal professional for specific legal guidance related to GST matters, tax refunds, or succession rights. The views expressed herein are those of the author and do not represent the official stance of any government agency or legal authority.