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2019 (12) TMI 1048 - HC - GSTRefund of Input tax credit - Form GST TRAN-1 - migration to GST regime - carry forward its electronic ledger account of unutilized ITC in terms of Section 140 of the CGST Act, 2017 - grievance of the Petitioner is that due to the inaction of the Respondents and their failure to allow smooth migration of the credit standing in the Petitioner s account of unutilized input tax, the Petitioner could not use and exploit the Input Tax Credit while making exports in the months of July and August, 2017 - HELD THAT - The Petitioner cannot be made to suffer on account of failure on the part of the Respondents in devising smooth transition to GST regime w.e.f. 01.07.2017, from the erstwhile indirect taxation structure. The Petitioner, being an exporter under the GST regime is entitled to undertake zero rated supplies. Unfortunately, even after passage of over two years, the Respondents have not remedied their omissions and failures by taking corrective steps. They continue to take shelter of the limitations in, and the inability of their software systems to grant refund, despite the same being justified. The rights of the parties cannot be subjugated to the poor and inefficient software systems adopted by the Respondents. The Respondents are directed to refund the amount ₹ 1,37,37,029/- to the Petitioner within four week from today - petition disposed off.
Issues:
Refund of unutilized Input Tax Credit (ITC) under GST regime for exports made in July and August 2017. Analysis: The petitioner, engaged in the sale and purchase of mobile phones, sought a refund of ?3,05,09,355/- claiming unutilized ITC in the transition to the Goods and Services Tax (GST) regime. The petitioner's grievance was the inability to use the accumulated transitional credit due to the unavailability of Form GST TRAN-1 on the web portal of the Respondents until 25.08.2017. Consequently, the petitioner had to make cash deposits for exports in July and August 2017, despite being entitled to CGST credit of ?3,13,06,050/- as of 01.07.2017. The Respondents argued that the petitioner uploaded Form GST TRAN-1 in December 2017, although it could have been done from 28.08.2017. They contended that no unutilized credit was available in the petitioner's ledger for July and August 2017, hence no refund was due. The Respondents cited Rule 86(3) of the CGST Rules, stating that a refund claim requires unutilized ITC credit in the electronic ledger for the respective months. The Court acknowledged the petitioner's inability to utilize the ITC due to system limitations and the Respondents' failure to ensure a smooth transition to the GST regime. The Court rejected the Respondents' technical objections, emphasizing that inefficiency in the software systems should not deprive the petitioner of rightful refunds. The Court directed a partial refund of ?1,37,37,029/- for the cash deposit made during July and August 2017, with the remaining refund subject to the Respondents' review based on documents submitted by the petitioner. In conclusion, the Court ruled in favor of the petitioner, ordering the Respondents to refund the cash deposit amount within four weeks and to consider the remaining refund claim promptly. The judgment highlighted the importance of ensuring a seamless transition to the GST regime and upheld the petitioner's right to claim refunds for unutilized ITC, despite system limitations and inefficiencies on the part of the Respondents.
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