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2019 (6) TMI 1585 - Commissioner - GSTRefund of unutilized input tax credit accumulated on account of inverted duty structure and debited in its electronic credit ledger equivalently - whether the Computation of refund in terms of Rule 89(5) of the Rules has to be done separately for each Head viz IGST, CGST and SGST or as a consolidated ITC and whether the amount claimed as refund under one head can be debited from another Head in light of the C.B.I. C. Circular No. 59/33/2018-GST, dated 4-9-2018? - HELD THAT - The benefit of the Circular No. 59/33/2018-GST, dated 4-9-2018 cannot be extended to the present appeals inasmuch as the procedure prescribed in the circular is applicable only to the refund applications filed after the issuance of the said circular - Furthermore, the adjudicating authority has correctly calculated the tax amount Head-wise since the payment of the respective sanctioned final amount has to be made by the respective Central and State Tax authorities independently in pursuance to the procedure laid down in Circular No. 24/24/2017-GST, dated 21-12-2017. The refund claim has been appropriately computed and sanctioned by the adjudicating authority in accordance with the provisions of law. Appeal dismissed.
Issues:
Refund claims under GST for pharmaceutical products; Computation of refund under Rule 89(5) of CGST Rules; Applicability of Circular No. 59/33/2018-GST; Cross-utilization of input tax credit; Interpretation of Circulars by Sanctioning Authority. Analysis: Issue 1: Refund claims under GST for pharmaceutical products The Appellant, a pharmaceutical manufacturer, filed four refund claims for unutilized input tax credit due to an inverted duty structure. The Sanctioning Authority rejected the claims partly based on the definition of Net ITC and turnover calculation, leading to the appeals challenging the orders. Issue 2: Computation of refund under Rule 89(5) of CGST Rules The main issue revolved around whether the refund computation should be done separately for each tax head or as a consolidated ITC. The Circular No. 59/33/2018-GST clarified the refund process, but the Appellants argued for a consolidated approach. The judgment analyzed the relevant provisions and upheld the Sanctioning Authority's decision on the calculation method. Issue 3: Applicability of Circular No. 59/33/2018-GST The Appellants sought the benefit of Circular No. 59/33/2018-GST for their refund claims, emphasizing system validations in calculating refund amounts. However, the judgment highlighted that the circular applied only to post-issuance refund applications, not retroactively. The Sanctioning Authority's decision was upheld based on the timing of claim adjudication. Issue 4: Cross-utilization of input tax credit The Appellants argued for cross-utilization of input tax credit as per the Circular dated 4-9-2018, but the judgment clarified that this facility was not available on the portal at the time. The retrospective nature of the circular limited its application to pending refund claims, not those already adjudicated, supporting the Sanctioning Authority's decisions. Issue 5: Interpretation of Circulars by Sanctioning Authority The judgment emphasized that circulars serve to clarify procedures under the law for uniform implementation. While the Appellants cited case laws to support the binding nature of circulars, the judgment concluded that the Sanctioning Authority correctly applied the provisions of the CGST law in sanctioning the refund claims, upholding their decisions. In conclusion, the Commissioner rejected all four appeals and upheld the impugned sanctioned orders, emphasizing the correct application of CGST law provisions by the Sanctioning Authority in calculating and approving the refund claims.
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