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2024 (5) TMI 408 - HC - GSTRefund of GST paid deposited by the Vendor on advance paid by the appellant since no supply was made - Return/refund of the entire advance amount - vendor did not supply goods under the contract to the petitioner and the contract was cancelled - order rejecting refund is unreasoned, cryptic, non-speaking order without assigning any reasons as to why the refund application was rejected - violation of principles of natural justice - HELD THAT - It is relevant to note that respondent No. 1 has come to the conclusion that supplier/vendor was the person ought to have issued credit note and thereafter, it was open for the petitioner to seek refund and without doing so, the petitioner is not entitled to seek refund of the GST. Respondent No. 1 has also come to the conclusion that it is for the vendor to file an appropriate application before the respondents/authorities seeking refund and only thereafter, the grievance of the petitioner can be addressed for the purpose of refund. In the facts and circumstances of the instant case viz., the payment of sum of Rs. 14,08,79,262/- paid by the petitioner to the vendor, payment of Rs. 2,53,58,268/- towards GST by the vendor to respondents and refund of entire amount of Rs. 14,08,79,262/- by encashment of the bank guarantee by the petitioner and other material on record would cumulatively indicate that there was no GST liability either by the petitioner or his vendor were concerned and by applying doctrine/principles of unjust enrichment and restitution and since the aforesaid GST amount is lying with the respondents, who are retaining the same without there being any GST liability either by the petitioner or the vendor, it is deemed just and appropriate to set aside the order dated 06.09.2021 passed by respondent No. 2 as well as impugned order dated 30.09.2023 passed by respondent No. 1/Appellate Authority and direct the concerned respondents to refund entire GST amount of Rs. 2,53,58,268/- back to the petitioner within a stipulated time frame. Refund application filed by petitioner allowed.
Issues involved:
The petitioner seeks quashing of an order rejecting their appeal against the non-refund of GST amount paid u/s 54 of the Karnataka Goods and Service Tax Act, 2017. Analysis of the Judgment: 1. Payment Dispute: The petitioner entered an agreement with a vendor, paid a substantial advance along with GST. However, the vendor failed to supply goods, leading to the cancellation of the contract. The petitioner sought a refund of the advance amount, which was recovered by encashing a bank guarantee provided by the vendor. 2. GST Refund Claim: The petitioner also paid GST to the vendor, which the vendor in turn paid to the authorities. Following the cancellation of the contract and the recovery of the advance amount, the petitioner claimed entitlement to the GST refund, as there was no tax liability on either the petitioner or the vendor. 3. Rejection of Refund Application: A show cause notice was issued to the petitioner regarding the refund application, leading to the rejection of the application without providing reasons. The appellate authority upheld this decision citing non-compliance with eligibility criteria u/s 54 of the Karnataka Goods and Service Tax Act, 2017. 4. Judicial Review and Decision: The court found the rejection of the refund application to be unjustified, emphasizing the absence of GST liability on the petitioner or the vendor. Applying the principles of unjust enrichment and restitution, the court set aside the previous orders and directed the authorities to refund the GST amount to the petitioner within a specified timeframe. 5. Court's Order: The court allowed the petition, set aside the previous orders, and directed the refund of the entire GST amount to the petitioner within eight weeks. The court clarified that the judgment was based on the unique circumstances of the case and should not be considered a precedent for future cases involving the interpretation of CGST Act and Rules. This summary provides a detailed analysis of the judgment, highlighting the key issues, arguments, and the final decision made by the court.
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