2021 (9) TMI 1303 - HC - GST

Refund of unutilized input tax credit (ITC) - export on the basis that where the export duty is at NIL rate and not exempted - Section 73 of the OGST/CGST Act, 2017 - HELD THAT - Issue notice. Mr. Mishra, learned Additional Standing Counsel for the Opposite Parties accepts notice on behalf of the Opposite Parties. Learned counsel for the Petitioner shall serve extra copies of the writ petition on him within three days. A reply will be filed within eight weeks and rejoinder thereto, if any, be filed before the next date - List on 16th December, 2021.

Summary

Issues:
Challenge to instructions on refund of unutilized input tax credit against export.
Jurisdiction of the officer issuing show cause notice under Section 73 of the CGTST/OGST Act 2017.
Constitutional validity of Section 168 of the OGST/CGST Act.

Analysis:
The Petitioner, an exporter of iron ore from Odisha, challenged two instructions issued by the Joint Commissioner of CT and GST regarding the refund of unutilized input tax credit (ITC) against export. The instructions stated that where the export duty is at NIL rate and not exempted, refund cannot be allowed on unutilized ITC. The Petitioner received a show cause notice under Section 73 of the CGTST/OGST Act 2017, asserting that they are not eligible for a refund and may face penalties if the refunded ITC with interest is not paid within thirty days.

The Petitioner's counsel argued that the impugned notices lack jurisdiction and the denial of ITC where export duty is NIL contradicts legal precedents, citing the Supreme Court's decision in Associated Cement Companies Ltd. v. Commissioner of Customs. The constitutional validity of Section 168 of the OGST/CGST Act was also challenged. The counsel contended that responding to the show cause notice would be futile due to the lack of jurisdiction of the issuing officer and the obligation to comply with superior officers' instructions.

The Court issued notice to the Opposite Parties and directed them not to take further steps against the Petitioner based on the impugned instructions. While allowing the proceedings to continue regarding the show cause notice, the Court ordered that the orders passed should not be enforced until further instructions. The case was listed for a hearing on 16th December 2021, and an urgent certified copy of the order was to be provided as per rules.