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2023 (12) TMI 237 - HC - GSTDoctrine of merger - Refund of IGST - zero rated supply - export of services - reverse charge mechanism - adjustment of interest amount - time limitation. Adjudicating Authority had allowed the petitioner s claim for the refund of IGST of ₹24,33,20,306/- but, had adjusted an amount of ₹5,08,03,767/- on account of interest liability. Whether, in the given facts, the stipulated time for filing the appeal is required to be reckoned from 24.09.2019? - HELD THAT - The said question is required to be answered in the negative - It cannot be accepted that the appeal filed by the Revenue against the Order-in-Original dated 24.10.2018 was within the period of limitation for several reasons. First, it is found difficult to accept the Revenue s explanation regarding delayed communication of the Order-in-Original dated 24.10.2018. As noted above, there is no explanation as to how the concerned officer became aware of the Order-in-Original dated 08.08.2019. It is also relevant to note that although, the Revenue had placed on record orders seeking certified copies of the Orders-in-Original dated 24.10.2018 and 08.08.2019 from respondent no. 2, there is no communication, issued by the Principal Commissioner (respondent no. 1), either protesting or calling for an explanation as to why the Orders-in-Original dated 24.10.2018 and 08.08.2019 were not communicated to the Commissioner by respondent no. 2. The petitioner had filed an appeal against the said Order-in-Original dated 24.10.2018. The Revenue had notice of the said appeal but no one had appeared on behalf of the Revenue at the hearing held by the Appellate Authority on 29.03.2019. There is no allegation that the Order-in-Appeal dated 30.04.2019 disposing of the appeal was passed without affording the Revenue any opportunity to contest the same. The Revenue had taken no steps to challenge the Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority. Whether the order-in-original dated 24.10.2018 merges with the appellate order? - HELD THAT - It is apparent that the Appellate Authority had upheld the admissibility of the petitioner s claim for refund of IGST as well as the order adjusting the interest on delayed payment of IGST on inputs and IGST on exports. The matter ought to have concluded at that. However, the matter was remanded to the Adjudicating Authority. The Appellate Authority has found no fault with the admissibility of the petitioner s claim for refund, the matter was remanded to the Adjudicating Authority for a limited purpose and the proceedings before the Adjudicating Authority on remand were confined to the examination of the provisions of law under which any adjustment on account of any unadjudicated interest liability was permissible - there is no doubt that the Order-in-Original dated 24.10.2018 stood merged with the Order-in-Appeal dated 30.04.2019. The Revenue s contention that the matter was set at large in view of the remand order is unmerited. Consequently, the Revenue appeal in respect of matter determined in the Order-in-Appeal dated 30.04.2019 was not maintainable. Whether adjustment of interest liability is permissible? - HELD THAT - In case there are contentious issues, which require to be adjudicated, a proper notice is required to be issued to the taxpayer and the quantum of interest payable is required to be adjudicated. In the present case, the adjudicating officer has adjudicated the interest payable and there is no dispute as to the material facts on the basis of which said interest is calculated. In these circumstances, the principles of natural justice are satisfied and there was no requirement for the Adjudicating Authority to issue any further notice. The petitioner has also availed of remedy of an appeal under Section 107 of the CGST Act - there are no infirmity with the process of adjusting interest as payable on the admitted tax against the amount refundable to a tax payer. Whether the petitioner is liable to pay interest as determined by adjudicating authority - HELD THAT - The assumption that since the transaction of imports and exports is revenue neutral, the same would absolve the petitioner from payment of GST or any interest thereon is contrary to law. It is not open for the assessee to plead that since the supply imported was required to be exported, the petitioner was absolved from the statutory levy under the IGST Act. Refund of unutilized ITC or GST is available only in terms of the relevant statutory provisions. A claim for refund of tax collected in accordance with law is a statutory right and is circumscribed by the statutory provisions. There is little scope for imputing principles of equity in matters of tax, which are covered by the statutory provisions. The interest liability on delayed payment of IGST is the statutory consequence of the assessee s claim that the exports made by it were on payment of IGST. There is no dispute that the IGST on the exports during the months of July, 2017 to March, 2018 was liable to be paid on various dates in August, 2017 to April, 2018 as mentioned in the tabular statement as set out by the Adjudicating Authority in the Order-in-Original dated 24.10.2018 - It is evident that the petitioner has been mulcted with the huge interest liability on delayed payment of IGST, which in one sense is unwarranted, however, that is the consequence of the course adopted by the petitioner. Denial of refund in entirety an account of amendment in return/invoices is impermissible? - HELD THAT - The revenue s contention that any claim for refund of ITC would be barred is also not persuasive. If the refund of IGST on exports was rejected on the ground that petitioner could not amend the invoices, it would follow that its claim would be required to be considered for the ITC utilised to pay such IGST. It is difficult to accept the Revenue s contention that the petitioner had forfeited its right to claim refund on account of an attempt to amend its option as available under Section 16(3) of the IGST Act, as in force at the material time - It is not necessary for this Court to examine the aforesaid contentions in any further detail as the same relate to the appeal filed by the Revenue, which as stated above, was beyond the period of limitation. It is directed that the refund sanctioned by the Adjudicating Authority in terms of the Order-in-Original dated 08.08.2019 be disbursed to the petitioner along with applicable interest - petitioner s claim that the adjustment of interest amounting to ₹5,08,03,767/- is illegal is rejected - impugned Order-in- Appeal dated 14.10.2020, to the extent it denies the petitioner s claim for refund in entirety is set aside - petition disposed off.
Issues Involved:
1. Whether the Revenue's appeal against the Order dated 24.10.2018 was barred by limitation. 2. Whether the Order-in-Original dated 24.10.2018 merges with the Appellate Order. 3. Whether adjustment of interest liability is permissible. 4. Whether the petitioner is liable to pay interest as determined by the Adjudicating Authority. 5. Denial of refund in entirety on account of amendment in return/invoices. Summary: 1. Limitation of Revenue's Appeal: The court examined whether the Revenue's appeal against the Order-in-Original dated 24.10.2018 was filed within the prescribed time limit. The court found the Revenue's explanation for the delayed communication of the order unconvincing and noted that intra-departmental delays cannot extend the limitation period. The appeal was deemed beyond the prescribed period of limitation as the statutory framework requires strict adherence to the time frame for filing appeals. 2. Merger of Orders: The court held that the Order-in-Original dated 24.10.2018 merged with the Appellate Order dated 30.04.2019. The Appellate Authority had upheld the admissibility of the petitioner's claim for refund of IGST and the adjustment of interest on delayed payment. The remand to the Adjudicating Authority was for a limited purpose, and the Revenue's appeal on this matter was not maintainable. 3. Adjustment of Interest Liability: The court found that the adjustment of interest liability from the refund amount was permissible. It stated that as per Section 75(12) of the CGST Act, interest on self-assessed tax is recoverable without the need for a notice under Section 73. The petitioner was given full opportunity to contest the interest claim, satisfying the principles of natural justice. 4. Liability to Pay Interest: The court rejected the petitioner's contention that it was not liable to pay interest on delayed payments of IGST on inputs under RCM, stating that the statutory levy of interest cannot be avoided even if the transaction is revenue neutral. The petitioner was liable to pay interest on delayed payment of IGST on exports as well, as it had amended its returns to reflect exports made after payment of IGST. 5. Denial of Refund on Amendment of Returns: The court noted that the petitioner's claim for refund had been accepted by the Adjudicating Authority and affirmed by the Appellate Authority. The Revenue's contention that the petitioner could not amend its returns to reflect exports on payment of IGST was not persuasive. The petitioner was entitled to a refund of the IGST paid, and any denial of refund on the basis of amended returns was impermissible. Conclusion: The court directed that the refund sanctioned by the Adjudicating Authority be disbursed to the petitioner along with applicable interest. The adjustment of interest amounting to Rs. 5,08,03,767/- was upheld as legal. The impugned Order-in-Appeal dated 14.10.2020, to the extent it denies the petitioner's claim for refund in entirety, was set aside. The petition was disposed of accordingly.
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