2021 (11) TMI 229 - HC - GST

Refund of CGST SGST wrongly paid - Interpretation of the term subsequently held u/s 77 of the CGST Act, 2017 - period i.e. from April 2018 to December 2018 - HELD THAT - Doubts have been raised regarding the interpretation of the term subsequently held in the aforementioned sections, and whether refund claim under the said sections is available only if supply made by a taxpayer as inter-State or intra-State, is subsequently held by tax officers as intra-State and inter-State respectively, either on scrutiny/ assessment/ audit/ investigation, or as a result of any adjudication, appellate or any other proceeding or whether the refund under the said sections is also available when the inter-State or intra-State supply made by a taxpayer, is subsequently found by taxpayer himself as intra-State and inter-State respectively. It is clarified that the term subsequently held in section 77 of CGST Act, 2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-State or intra-State supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-State or interState respectively or where the inter-State or intra-State supply made by a taxpayer is subsequently found/ held as intra-State or inter-State respectively by the tax officer in any proceeding. Accordingly, refund claim under the said sections can be claimed by the taxpayer in both the above mentioned situations, provided the taxpayer pays the required amount of tax in the correct head. In normal case this may have been an appropriate order to pass but in the present case it cannot be lost sight of that there is no dispute about the amount of tax, rather it was on the requirement of the respondents that the petitioner paid an additional amount of ₹ 108 crores approximately - respondents are directed to fund ₹ 108 crores approximately which was deposited earlier by the petitioner towards CGST and SGST along with applicable interest within a period of one month - Petition allowed.

Summary

Issues involved:
1. Challenge to order declining refund of CGST & SGST amounting to ?108 crores approximately.
2. Interpretation of the term "subsequently held" in Section 77 of the CGST Act and Section 19 of the IGST Act.

Analysis:
1. The petitioner challenged an order declining the refund of CGST & SGST amounting to ?108 crores approximately, wrongly paid for the disputed period from April 2018 to December 2018. The petitioner, a joint venture with a nationalized bank, issued credit cards and paid taxes assuming transactions were intra-state. Later, it was discovered that these were actually inter-state transactions. Despite paying additional tax as required by authorities, the refund was denied based on the interpretation of the term "subsequently held" in Section 77 of the CGST Act. The core issue was the tax amount paid, not disputed by the GST Department, leading to a circular clarifying the refund conditions. The Court held that once the petitioner paid the additional amount under IGST on the respondents' requirement, the liability to refund the wrongly deposited amount cannot be disputed. The Court directed the respondents to refund the amount along with applicable interest within a month.

2. The interpretation of the term "subsequently held" in Section 77 of the CGST Act and Section 19 of the IGST Act was crucial. The circular clarified that the term covers cases where a taxpayer identifies transactions as intra-state or inter-state themselves or when tax officers determine the nature of transactions in any proceeding. This clarification was pivotal in resolving the issue of refund eligibility. The Court considered this clarification in conjunction with the petitioner's compliance with tax payment requirements under the correct head to determine the refund entitlement. The Court emphasized that the lack of dispute regarding the tax amount and the extended duration the money remained with the respondents favored the petitioner's refund claim, leading to the direction for refund issuance.

In conclusion, the judgment addressed the challenge to the refund denial and provided a detailed analysis of the interpretation of the term "subsequently held" in the relevant GST Acts. The Court's decision favored the petitioner, emphasizing compliance with tax payment requirements and the undisputed nature of the tax amount. The detailed analysis and application of legal principles ensured a fair resolution of the issues at hand.