2023 (2) TMI 1025 - HC - GST

Refund on account of inverted duty structure in terms of Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 - petitioner claims that the Input Tax Credit in respect of various inputs exceeds the output liability in respect of the supplies - Rejection on the ground that the periods for which refund was claimed did not correspond to the periods for which returns were filed - HELD THAT - The time period for filing the appeal has long elapsed. However, Mr. Joshi, learned Counsel appearing for the respondent, states that the respondent could not file an appeal as a tribunal has not been constituted as yet. He submits that as and when the appellate tribunal is constituted, the respondent would file an appeal. It is also material to note that whenever parties have found the need of urgent orders, the parties have filed petitions before this Court seeking such orders on the ground that since the tribunal is not constituted, the remedy of appeal is not available. The respondent has not sought any such relief - The appeal is required to be filed within a period of six months from the date of the order; however, we are not required to examine the question whether an appeal, if so filed, would be maintainable or not. The present petition is allowed and the respondents are directed to forthwith process the petitioner s claim for refund.

Summary

Issues:
1. Refund claim rejection based on filing periods not corresponding to returns filed.
2. Appeal against rejection allowed, but refund application not processed.
3. Review order directing filing of appeal not acted upon due to tribunal not constituted.

Analysis:
1. The petitioner, engaged in supplying footwear, applied for a refund under CGST and SGST for June to December 2018 due to an inverted duty structure, where Input Tax Credit exceeded output liability. The refund claim was rejected not on entitlement grounds but because the claimed periods did not align with the return filing frequency, either quarterly or monthly, as per the respondent's contention.

2. Upon the petitioner's appeal, the appellate authority allowed the appeal on 08.10.2020, setting aside the rejection order. Subsequently, a refund application was filed on 29.12.2020, but remained unprocessed despite the favorable appellate decision, as the respondent did not file the directed appeal within the stipulated time frame.

3. The review order under Section 112(3) of the Act directed the respondent to file an appeal against the appellate authority's decision, but due to the non-constitution of the appellate tribunal, the appeal was not filed. The court noted that the review order did not stay the appellate authority's decision and emphasized that the respondent cannot ignore the appellate order merely on the basis of intending to file an appeal in the future.

4. In light of the above, the court allowed the petition, directing the respondent to promptly process the petitioner's refund claim. The court clarified that the order did not prevent the respondent from seeking legal remedies, and if successful in obtaining a further order from the appellate tribunal, the respondent could recover any disbursed amount accordingly.