2021 (8) TMI 1021 - Commissioner - GST

Refund of tax - zero-rated supply of goods or services or both without payment of tax - ITC on export of goods and services without payment of Tax - Section 54 of the CGST Act, 2017 - HELD THAT - The intent of Policy Wing of revenue is to restrict the refund sanction amount by considering the lower value mentioned in the shipping bill or in GST invoices. Further, it is settled position that where there is any ambiguity in the provision of law with reference to any exemption/concession provided by the Govt should be reading it down and the intention of reading down of any provision is to be provide a restricted or narrow interpretation of the said provisions. The proper officer (adjudicating authority) has rightly taken ₹ 13,09,623/- as Net ITC, the FOB value as total turnover of zero rated supply i.e. ₹ 2,89,44,004/- and Adjusted Total turnover as ₹ 4,17,91,104/-. Therefore, the adjudicating authority has decorously processed the refund application in austere compliance of provisions of law - there are no infirmity in the order passed by the adjudicating authority. Appeal disposed off.

Issues Involved:
1. Correctness of turnover and adjusted turnover for refund calculation.
2. Disallowance of ITC based on turnover of sale of services.
3. Interpretation of circulars regarding values declared in invoices and shipping bills.
4. Refund eligibility based on input tax credit (ITC) paid.

Detailed Analysis:

1. Correctness of Turnover and Adjusted Turnover for Refund Calculation:
The appellant argued that the turnover and adjusted turnover were not correctly taken for the purpose of granting a refund. According to Rule 89, the refund amount should be calculated using the formula:
\[ \text{Refund Amount} = \left(\text{Turnover of zero-rated supply of goods} + \text{Turnover of zero-rated supply of services}\right) \times \frac{\text{Net ITC}}{\text{Adjusted total turnover}} \]
The appellant claimed the turnover of zero-rated supply of goods as ?2,89,44,004.19 and the turnover of zero-rated supply of services as ?1,14,56,668.02, leading to an eligible refund amount of ?12,60,432.22 against their claimed refund of ?11,20,418. The adjudicating authority, however, took the zero-rated turnover as ?2,89,44,004 and the adjusted total turnover as ?4,17,91,104, leading to a refund of ?9,07,029 and rejecting ?2,13,389.

2. Disallowance of ITC Based on Turnover of Sale of Services:
The appellant contended that ITC was disallowed based on the turnover of sale of services amounting to ?1,14,56,668.02. They argued that they had not availed ITC on services by way of transportation of goods by air or sea from the customs station of clearance in India to a place outside India (ocean freight), thus no disallowance should arise. The adjudicating authority, however, maintained that the value of zero-rated supply of services should not be included in the calculation of the refund amount.

3. Interpretation of Circulars Regarding Values Declared in Invoices and Shipping Bills:
The appellant argued that the adjudicating authority wrongly interpreted the circulars by taking the values declared in the invoice and the value of goods declared in the shipping invoice for granting the refund. According to Circular No. 37/11/2018-GST and Circular No. 125/44/2019-GST, the lower of the two values should be sanctioned as a refund. The adjudicating authority adhered to this interpretation, taking the lower value between the GST invoice and the shipping bill for calculating the refund amount.

4. Refund Eligibility Based on Input Tax Credit (ITC) Paid:
The appellant claimed that they had paid ITC of ?13,09,623 during the relevant period, out of which ?1,89,205 was related to an invoice for which the refund was already received from the customs department. Therefore, they claimed a refund only on the net balance of ?11,20,418. The adjudicating authority, however, processed the refund application in strict compliance with the provisions of law, considering the net ITC as ?13,09,623, the FOB value as the total turnover of zero-rated supply (?2,89,44,004), and the adjusted total turnover as ?4,17,91,104.

Conclusion:
The appellate authority upheld the adjudicating authority's decision, finding no infirmity in the order. The adjudicating authority correctly processed the refund application by taking the net ITC, the FOB value as the total turnover of zero-rated supply, and the adjusted total turnover in compliance with the provisions of law. The appeal was rejected, and the original order was upheld.

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