2025 (1) TMI 1517 - HC - GST

Refund of the amount paid as tax under the Central Goods and Services Tax (CGST) Act 2017 following the insertion of Section 128A into the Act - HELD THAT - The Department have duly taken into consideration the queries so raised by this Court in its order dated 17.12.2024 and more particularly at paragraph Nos. 5 and 6 which have been already quoted herein above. It has been further mentioned in the said affidavit that the Respondent Department would be adjusting the amount paid by the petitioner to the tune of Rs.33, 69, 271/- by using the credit in the PLA account towards the returns filed on 31.10.2017 under the CGST Act 2017. It is further mentioned that the amounts so deposited by the petitioner in pursuance to the order dated 21.12.2023 would be refunded to the petitioner. The instant writ petition therefore stands closed thereby granting liberty to the petitioner to file application for refund of the amount of Rs.33, 69, 271/- which was deposited by the p

ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Court was whether the petitioner was entitled to a refund of the amount paid as tax under the Central Goods and Services Tax (CGST) Act, 2017, following the insertion of Section 128A into the Act. This provision stipulated that if the tax amount for a specified period was paid in full, no interest or penalty would be payable, and related proceedings would be deemed concluded. The Court also considered the implications of the petitioner's entitlement to a refund under Section 11B of the Central Excise Act, 1944, and whether the principle of revenue neutrality could be applied to adjust the amount paid by the petitioner.

ISSUE-WISE DETAILED ANALYSIS

1. Entitlement to Refund under Section 128A of the CGST Act, 2017

Relevant legal framework and precedents: Section 128A of the CGST Act, 2017, was a statutory development that allowed for the waiver of interest and penalties if the tax amount was paid in full for the period from July 1, 2017, to March 31, 2020. The provision aimed to conclude proceedings related to such payments, subject to prescribed conditions.

Court's interpretation and reasoning: The Court noted that the petitioner had already deposited the entire tax amount, which aligned with the requirements of Section 128A. The Court queried whether the principle of revenue neutrality could be applied, allowing the amount paid by the petitioner to be adjusted against returns filed under the CGST Act, 2017, and subsequently refunded.

Key evidence and findings: The petitioner had deposited the principal tax amount of Rs. 33,69,271/- following a court order. The Assistant Commissioner, CGST, acknowledged this in an affidavit, indicating the department's willingness to adjust the amount using the petitioner's credit in the PLA account and refund the amount deposited.

Application of law to facts: The Court applied Section 128A of the CGST Act, 2017, to the petitioner's case, recognizing that the tax amount had been paid in full, thus waiving any interest and penalty. The Court also considered the petitioner's potential refund under Section 11B of the Central Excise Act, 1944.

Treatment of competing arguments: The Court addressed the potential conflict between the petitioner's entitlement to a refund and the department's obligation to pay interest if a refund application was filed. The Court's inquiry led to the department's agreement to adjust and refund the amount, resolving the issue amicably.

Conclusions: The Court concluded that the petitioner was entitled to file an application for a refund of the deposited amount, which the department should process within four weeks of the application.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Court highlighted, "The insertion of Section 128A and the fact that the Petitioner has already deposited the entire tax amount, a question therefore arises in view of the admitted position that the Petitioner is otherwise entitled to the said amount Rs.33,69,271/-..."

Core principles established: The judgment reinforced the principle that statutory amendments, such as Section 128A of the CGST Act, 2017, could retroactively affect ongoing proceedings, allowing for the waiver of interest and penalties if the tax amount was fully paid. It also underscored the importance of revenue neutrality in tax adjustments and refunds.

Final determinations on each issue: The Court determined that the petitioner could seek a refund of the tax amount paid, and the department was obliged to refund the amount within a specified timeframe. The petitioner's rights under Section 128A of the CGST Act, 2017, were affirmed, and the writ petition was disposed of, granting the petitioner liberty to file the refund application.

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