2021 (4) TMI 939 - Commissioner - GST

Refund of excess GST paid - GST paid twice over or not - lawful bar or any impediment under procedural law, to justify availing of the refund claims - Section 54 of the CGST Act, 2017 - HELD THAT - The appellant issued invoice No.1 to M/s RITES of taxable value ₹ 11,74,98,541/- and GST ₹ 1,40,99,825/- and also issued Debit Note of taxable value ₹ 9,53,12,728/- and GST ₹ 1,14,37,527/-. In this regard they issued Credit Note No.1 and 2 of that much of amount to negate effect of invoice and debit Note. The appellant further issued invoices No.2 in the name of MOHFW of taxable value of ₹ 11,83,89,351/- and GST ₹ 1,42,06,722/-. The appellant mentioned wrong place of supply in the invoice, therefore, the appellant issued credit Note 3 against invoice No.2. Thereafter the appellant issued invoice No.3 to MOHFW of the same value and GST. In this case, the appellant has issued 3 Credit notes and one debit note, therefore this case is covered under the provisions of Section 34 of the CGST Act, 2017. Further it is found that the appellant has reported credit notes involved GST amount of ₹ 3,98,70,298/- in GSTR-1 of Sept.,2018 (which has been filed after 30.09.2018) but from GSTR-3B of Sept.,2018, it appears that they did not adjust liability as per Section 34(2) of the CGST Act, 2017. The similar issue has been dealt by the Central Board of Indirect Taxes and Customs, New Delhi vide Circular NO.137/07/2020-GST dated 13.04.2020, wherein it has been clarified that liability may be adjusted subject to time limit and conditions as per provisions of Section 34 (2) of the CGST, Act, 2017 - the appellant should adjust the tax liability in the GST return for the month of June, 2018, August, 2018 and September, 2018, but the appellant has failed to do so, therefore, he is not entitled to claim refund as it is not a case of excess payment of tax. Whether the Appellant entitle to claim refund of excess paid tax in terms of Section 54 of the CGST Act, 2017? - HELD THAT - In this case 3 credit notes/ one debit note has been issued for value and GST amount against one supply of goods, therefore it is covered under the provisions of Section 34 of CGST Act, 2017 and the appellant was required to adjust such excess payment of tax in GST returns of those particular month (s). Therefore, this case is not related to refund of excess payment of tax as per provisions of Section 54 of CGST Act, 2017. Appeal disposed off.

Summary

Issues Involved:
1. Whether the appellant factually paid GST twice over.
2. Whether there is a lawful bar or any procedural impediment to justify the rejection of the refund claims.
3. Whether the appellant is entitled to claim a refund of excess paid tax in terms of Section 54 of the CGST Act, 2017.

Detailed Analysis:

1. Whether the appellant factually paid GST twice over:
The appellant, engaged in the manufacture and supply of pharmaceutical products, filed refund claims under Section 54(3) of the CGST Act, 2017, citing excess payment of tax. The adjudicating authority issued show cause notices proposing rejection of these claims based on the issuance of multiple invoices and credit notes, which purportedly negated the excess tax payment. The appellant argued that due to clerical and human errors, they issued multiple credit and debit notes, resulting in the inadvertent double payment of GST, as evidenced by their GSTR-3B forms. The adjudicating authority, however, concluded that the appellant did not pay excess tax as they had issued credit notes to negate the effect of the invoices/debit notes.

2. Whether there is a lawful bar or any procedural impediment to justify the rejection of the refund claims:
The adjudicating authority referenced Section 34 of the CGST Act, 2017, which deals with the issuance of credit notes and the adjustment of tax liability. According to Section 34(2), any registered person issuing a credit note must declare the details in the return for the month during which the credit note was issued but not later than September following the end of the financial year or the date of furnishing the relevant annual return, whichever is earlier. The authority found that the appellant failed to adjust the tax liability in the GST returns of the relevant months, thus disqualifying them from claiming a refund as it was not a case of excess payment of tax.

3. Whether the appellant is entitled to claim a refund of excess paid tax in terms of Section 54 of the CGST Act, 2017:
The appellant contended that the adjudicating authority did not appreciate the factual situation and the documentary evidence showing duplicity of GST payment. They argued that the excess payment of tax should be refunded as per Section 54 of the CGST Act, 2017. However, the adjudicating authority held that since the case involved the issuance of credit notes and the adjustment of the corresponding tax liability, it fell under Section 34 of the CGST Act, 2017, and not Section 54. Therefore, the appellant was required to adjust the excess payment in the GST returns of the relevant months, which they failed to do.

Conclusion:
The appeals were disposed of with the conclusion that the appellant did not factually pay GST twice over as they had issued credit notes to negate the effect of the invoices/debit notes. The procedural law under Section 34 of the CGST Act, 2017, required the appellant to adjust the tax liability in the GST returns of the relevant months, which they failed to do. Consequently, the appellant was not entitled to claim a refund of excess paid tax under Section 54 of the CGST Act, 2017. The cited case laws by the appellant were found to be irrelevant to the instant case.