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2019 (4) TMI 1496 - HC - GSTRecovery of refund sanctioned while the appeal was pending - Refund of the drawback sanctioned comprising the customs portion of All Industry Rate - allegation of excess refund to the extent of 10% representing CGST and IGST - HELD THAT - In the present case, the petitioner has admittedly remitted 10% of the amounts demanded in order dated 14.06.2018 on 09.08.2018 as pre-deposit and no recovery shall be effected in regard to the balance of the demands that shall be deemed to be under an order of stay. The adjustment of the refund is not proper. Mr.Sundar, learned counsel for the respondent, fairly, does not defend the impugned order but only requests some time to refund the amount wrongly adjusted - petition allowed.
Issues:
1. Claim for refund of drawback sanctioned under the Goods and Service Taxes Act, 2017. 2. Rejection of refund claims by the Assistant Commissioner of GST & Central Excise. 3. Filing of appeals challenging the rejection orders. 4. Provisional refund orders issued without prior opportunity to the petitioner. 5. Interpretation of Section 107(7) of the CGST Act, 2017 regarding stay of recovery proceedings. Issue 1: Claim for refund of drawback sanctioned under the Goods and Service Taxes Act, 2017 The petitioner, an exporter of tea and an assessee under the Act, purchased sacks and tea remitting IGST, CGST, and SGST. Exports were done without payment of IGST under a Letter of Undertaking and for drawback. The petitioner sought a refund of the drawback sanctioned, which was paid over to them. Issue 2: Rejection of refund claims by the Assistant Commissioner of GST & Central Excise After provisional sanction of refund amounts, a show cause notice was issued stating that the claims were erroneously sanctioned regarding IGST and CGST. The petitioner objected, stating that the drawback represented the Customs Duty component alone. However, the authority confirmed the proposal in the show cause notice, reversing the refunds sanctioned and ordering recovery. Issue 3: Filing of appeals challenging the rejection orders The petitioner filed appeals challenging the rejection orders before the Commissioner of GST & Central Excise, Coimbatore, along with a statutory pre-deposit of 10% of the disputed amount. The appeals are pending consideration. Issue 4: Provisional refund orders issued without prior opportunity to the petitioner While the appeals were pending, the petitioner filed refund claims for unutilized credit. The respondent passed provisional refund orders without prior opportunity to the petitioner, restricting the refunds and adjusting outstanding dues. Issue 5: Interpretation of Section 107(7) of the CGST Act, 2017 regarding stay of recovery proceedings The respondent erroneously claimed that there was no stay of the order of reversal of the refunds granted. However, as per Section 107(7) of the Act, where 10% of the disputed amount is pre-deposited, recovery proceedings for the balance amount shall be deemed to be stayed. The petitioner had made the pre-deposit, and thus, no recovery should be effected. In conclusion, the court allowed the Writ Petitions, directing the respondent to refund the amount wrongly adjusted within three weeks from the date of the order, highlighting the importance of complying with the legal provisions regarding stay of recovery proceedings.
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