2023 (6) TMI 404 - HC - GST

Export - availing benefit under the Advanced Authorization Scheme without payment of integrated tax - Seeking refund or restoration of the credit for this amount in its Electronic Credit Ledger - contravention of Rule 96(10) of the CGST Rules 2017 - change of statutory provisions - demand of interest as well - HELD THAT - Because of the change in statutory provisions the petitioner s prayer for re-credit to the Electronic Credit Ledger a sum of Rs.52, 44, 57, 242/- could be re-considered and that there must be appropriate direction to the proper officer viz. the Depty Commissioner of Central Tax North West Division Bengaluru West Commissionerate Bengaluru in this regard. The third respondent has rejected the petitioner s applications for refund only on the ground that there is contravention of Rule 96(10) of the CGST Rules 2017. It remains indisputable that the petitioner upon realizing that it could not have claimed refund under Section 16(3)(b) of the IGST Act 2017 and after repatriating refund permitted in a sum of Rs.40, 31, 13, 682/- along with interest has filed applications under Section 16 of the IGST Act 2017. The provisions of Section 16(3)(a) of the IGST Act as it stood at the relevant time enabled a registered person making a Zero-Rated Supply as in the case of the petitioner eligible to claim refund without payment of integrated tax subject to conditions mentioned therein. The third respondent should have considered the indisputable fact of refund later repatriation of refund and filing of separate applications for refund later under section 16(3)(a) of the IGST Act. On this limited ground the impugned orders as per Annexure-K series cannot be sustained and the petitioner must succeed on this score lest it be an impediment for the proper officer - - the Deputy Commissioner of Central Tax North West Division Bengaluru West Commissionerate Bengaluru - to reconsider the petitioner s request for re-credit in accordance with law and in the light of the fact that the petitioner has repatriated the amount that is credited to him along with interest and that there is a direction by this Court as part of this order to consider recrediting a sum of Rs.52, 44, 57, 242/- to the petitioner s Electronic credit ledger - the petitioner would be eligible for personal hearing and must also be at liberty to file a detailed statement enclosing a certified copy of this order. Interest - HELD THAT - The petitioner s prayer for interest that would be admissible is contingent upon the consideration of the application for refund and because this is contingent the question of interest must also be considered by the Deputy Commissioner of Central Taxes North West Division Bengaluru West Commissionerate Bengaluru and is left open for consideration strictly in accordance with the law. The impugned Annexure-K series dated 22.04.2022 are quashed restoring the petitioner s application dated 15.03.2023 for reconsideration by the Deputy Commissioner of Central Taxes North West Division Bengaluru West Commissionerate Bengaluru for reconsideration after due personal hearing to the petitioner - Petition allowed in part.

Summary

Issues:
1. Refund claim under CGST Rules 2017
2. Rejection of refund application under Rule 96(10) of CGST Rules 2017
3. Repayment of refunded amount and interest
4. Re-credit of ITC in Electronic Credit Ledger
5. Legal interpretation of Section 16(3)(a) and (b) of IGST Act
6. Impact of Rule 86 4B of CGST Rules
7. Entitlement to interest on refund

Analysis:

1. The petitioner challenged the third respondent's orders dated 22.04.2022 under Rule 92 of CGST Rules 2017 regarding the refund claim for the period between April 2021 and September 2021. The petitioner sought refund of Rs.52,44,57,242/- or restoration of credit in Electronic Credit Ledger along with interest of Rs.2,35,72,225/-.

2. The petitioner's claim for refund was blocked under Rule 96(3) of CGST Rules 2017 due to alleged double benefit availed under Notification No. 79/2017-Customs. The petitioner repaid the refunded amount voluntarily during investigation proceedings.

3. The petitioner filed applications for refund under Section 54 of CGST Act and Rule 89 of CGST Rules 2017 for the period in question. The third respondent rejected the applications citing contravention of Rule 96(10) of the CGST Rules 2017.

4. The petitioner argued that the applications should have been considered under Section 16(3)(a) of the IGST Act due to the circumstances of the case. The petitioner sought re-credit of Rs.52,44,57,242/- in the Electronic Credit Ledger under Rule 86 4B of CGST Rules.

5. The legal interpretation of Section 16(3)(a) and (b) of the IGST Act was crucial in determining the petitioner's eligibility for refund. The court found that the petitioner's applications should have been considered under Section 16(3)(a) due to the nature of the transactions.

6. The insertion of Rule 86 4B of CGST Rules allowed for re-credit of erroneously refunded amounts. The petitioner argued for the benefit of this rule to restore the credit in the Electronic Credit Ledger.

7. The court allowed the petition in part, quashing the impugned orders and directing reconsideration of the refund application. The Deputy Commissioner was instructed to re-credit the amount to the Electronic Credit Ledger and consider the interest on the refund application.

In conclusion, the judgment addressed the intricacies of the refund claim under the CGST Rules, emphasizing the legal interpretations of relevant provisions and the impact of recent amendments on the petitioner's case. The court's decision provided clarity on the petitioner's entitlement to refund and interest, ensuring due process and consideration of all relevant factors.