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2023 (7) TMI 527 - HC - GSTRefund of the excess credit that has accumulated - rate of tax on inputs being higher than the rate of tax on output supplies as per the provisions of Section 54 of the Act - HELD THAT - The grievance of the learned counsel appearing for the petitioner is that the concerned respondent authority issued Circular No.181/13/2022 GST dated 10th November, 2022, copy of which is placed on record at page 62 of the compilation, whereby, it has been now clarified that the restriction imposed by the Notification dated 18.07.2022 would be applicable in respect of all refund application filed on or after 18.07.2022 and would not be applied to the refund application filed before 18.07.2022. Thus, it is submitted that the said Circular is against the provisions of law contained in Section 54 of the Act, whereby, the period of two years to file an application for refund is given. Learned Senior Advocate thereafter submitted that no retrospective effect can be given by way of the said Circular to the Notification which is issued by the concerned respondent authority. Learned counsel has also submitted with regard to the doctrine of legitimate expectation and placed reliance upon various decisions rendered by this Court as well as the Hon ble Supreme Court. A separate compilation of the said decision is also placed on record for consideration of this Court. The issue involved in this petition requires consideration. Hence, notice for final disposal returnable on 27.07.2023.
Issues involved:
The issues involved in the judgment are related to the eligibility of a petitioner company for refund of excess credit accumulated due to the inverted duty structure under the Central Goods and Service Tax Act, 2017. The main contention is regarding the applicability of Notification No.5/2017 and Notification No.9/2022 issued by CBIC, and the subsequent Circular No.181/13/2022 GST affecting the refund application timeline. Eligibility for Refund: The petitioner company, primarily engaged in manufacturing and trading activities of products under HSN codes of Chapter 15, pays tax under the inverted duty structure. The company procures inputs at varying GST rates ranging from 5% to 28%, resulting in an accumulation of Input Tax Credit (ITC) in the Electronic Credit Ledger. The petitioner claims eligibility for a refund of the excess credit as per Section 54 of the Act, where the output tax rate is lower than the inward supplies tax rate. Notification No.5/2017 and Notification No.9/2022: Initially, the petitioner's product did not fall under the restricted category mentioned in Notification No.5/2017, allowing the company to claim a refund. However, with the issuance of Notification No.9/2022, the specified HSNs of the petitioner's outward supplies were added to the restricted category. This notification restricted the petitioner from claiming a refund of accumulated duty from 18.07.2022 onwards, with prospective effect given to the notification. Circular No.181/13/2022 GST: The petitioner raised concerns regarding Circular No.181/13/2022 GST, issued by the respondent authority, which clarified that the restriction imposed by Notification No.9/2022 would apply only to refund applications filed on or after 18.07.2022. The petitioner argued that this circular contradicts the provisions of Section 54 of the Act, which allows a two-year period to file a refund application. The petitioner contended that giving retrospective effect to the circular goes against the doctrine of legitimate expectation. Final Disposal: Considering the submissions made by the learned Senior Advocate, the Court found that the issues raised in the petition require further consideration. Therefore, notice for final disposal was issued, returnable on 27.07.2023.
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