The Delhi High Court criticized the GST Department for unjustifiably delaying a widow’s refund in the Bhavna Luthra case, highlighting issues with GST refunds after business registration cancellations.

Introduction

In a significant judgment, the Delhi High Court recently addressed the plight of a widow, Bhavna Luthra, who faced repeated hurdles in securing a rightful refund from the Goods and Services Tax (GST) Department. The case highlights serious lapses in the refund process, especially when business ownership changes due to the death of a proprietor.

Background of the Case

Following the death of Sh. Narain Das Luthra, proprietor of M/S Hunny Enterprises, the company’s GST registration was canceled. Subsequently, Bhavna Luthra, his widow, sought a refund of ₹10,45,793/- that remained in the company’s Electronic Cash Ledger.

Despite a straightforward claim, the Department initially rejected her refund request and withdrew the money without crediting it back to the ledger or returning it to the petitioner.

Legal Battle and First High Court Petition

Frustrated, Bhavna Luthra approached the Delhi High Court, arguing that the funds in the cash ledger were her rightful property and the GST Department had no authority to withhold them.

In a hearing dated May 9, 2024, the Department assured the Court it would recredit the amount into the Electronic Cash Ledger within two weeks. Based on this commitment, her petition was dismissed.

Continued Struggles: Second Court Petition

However, contrary to the Department’s assurance, Bhavna’s refund was once again denied. This time, the GST Department claimed that since she was no longer a registered GST taxpayer, the refund could not be processed.

Feeling betrayed, Bhavna Luthra returned to court, filing a second writ petition to reclaim her rightful refund. The Court immediately noted with concern that the petitioner was forced to litigate once again over the same refund.

Court’s Observation and Response

The Court emphasized that it was “regrettable” that despite clear instructions in the earlier order, the refund amount had not been issued.
The bench pointed out that the sum clearly appeared in the Electronic Cash Ledger, making the delay completely unjustified.

When asked, the Department contended that the refund application lacked proper documentation verifying the death of the petitioner’s husband.
In response, Bhavna argued that the death had already been acknowledged while canceling the GST registration — making the Department’s stance baseless.

Taking serious note of the issue, the Court ordered the Assistant Commissioner involved to personally appear in court on May 5 to explain the delay.

Legal Representatives

• For the Respondent (GST Department): Advocate Piyush Beriwal

• For the Petitioner (Bhavna Luthra): Advocates Mr. Puneet Rai, Mr. Sushil Gaba, Mr. Kapil Sharma, and Ms. Srishti Sharma

Conclusion

The Bhavna Luthra case highlights major flaws in the handling of GST refunds post-cancellation of registrations due to the proprietor’s death.
The Delhi High Court‘s strong remarks send a clear message about ensuring justice, efficiency, and empathy in dealing with vulnerable individuals like widows within the taxation system.