2020 (10) TMI 849 - Commissioner - GST

Refund of Input Tax Credit availed on the license fee - rejection of refund on the ground that neither exported any goods/services nor their supplies fall under the category of inverted tax structure - HELD THAT - The appellant is having a retail outlet of M/s Indian Oil Corporation for supply of Oil and Lubricant etc., and filed their refund claim under Section 54(3) (ii) of the CGST Act, 2017 in respect of unutilized Input Tax Credit of ₹ 88,850/- for the month of March-2018 accumulated on account of Inverted Tax Structure. Further, Appellant has also stated that due to lack of proper knowledge of rules and regulation they ignorantly ticked the last column Any Other Category instead of refund on account of ITC accumulated on account of Inverted Tax Structure under Section 54 (3) (ii) of the CGST Act, 2017. Section 54(3) of the CGST Act provides that refund of any unutilized ITC may be claimed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies). Further, Section 2(59) of the CGST Act defines inputs as any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Thus, inputs do not include services or capital goods. The Licence Fee paid by the appellant to M/s Indian Oil Corporation does not fall under the definition of inputs as provided under Section 2(59) of CGST Act, 2017. Further, also Licence Fee is not an input for the outward supply of lubricants, Distil water and PUC (pollution under certificate). Therefore, the refund claim filed by the appellant in the instant case does not fall under the category of refund on account of Input Tax Credit accumulated on account of inverted duty structure as provided under Section 54(3) of CGST Act, 2017. Thus the appellant is not entitled to refund. Refund not allowed - appeal dismissed - decided against appellant.

Summary

Issues:
1. Rejection of refund claim on Input Tax Credit availed on license fee paid to M/s Indian Oil Corporation.
2. Grounds of appeal challenging the impugned order.
3. Interpretation of relevant legal provisions - Section 54(3) of the CGST Act, 2017 and Rule 89(5) of the CGST Rules, 2017.

Issue 1: Rejection of refund claim on Input Tax Credit:
The appellant, a retail outlet of M/s Indian Oil Corporation, filed a refund claim under Section 54(3)(ii) of the CGST Act, 2017 for unutilized Input Tax Credit of ?88,850 accumulated due to an inverted tax structure. The adjudicating authority rejected the claim as the license fee paid to M/s Indian Oil Corporation did not qualify as inputs under Section 2(59) of the CGST Act, which excludes services. The authority found that the license fee was not an input for outward supplies, such as lubricants and PUC, hence, the claim did not fall under the category of refund on account of an inverted duty structure.

Issue 2: Grounds of appeal challenging the impugned order:
The appellant challenged the impugned order on various grounds, alleging it to be illegal, unjustified, and against the principles of natural justice. The appellant contended that due to a lack of understanding, they mistakenly selected the "Any Other" category instead of the correct category for refund on account of an inverted tax structure. Additionally, the appellant claimed that they were not given a proper opportunity to respond to the deficiency memo and show cause notice due to health reasons, which was disregarded by the assessing authority.

Issue 3: Interpretation of relevant legal provisions:
Section 54(3) of the CGST Act allows a registered person to claim a refund of unutilized Input Tax Credit if it accumulates due to the tax rate on inputs being higher than that on output supplies. Rule 89(5) of the CGST Rules provides a formula for calculating the refund in case of an inverted duty structure. The judgment emphasized that the license fee paid did not qualify as an input under the Act, and therefore, the appellant's claim did not meet the criteria for a refund under the specified provisions.

In conclusion, the Commissioner (Appeals) upheld the decision of the adjudicating authority to reject the appellant's refund claim. The judgment highlighted the importance of correctly categorizing refund claims and the necessity for compliance with the legal provisions governing Input Tax Credit refunds.