2025 (4) TMI 503 - HC - GST

Rejection of the refund claims - mode and manner of determination of the amount of budgetary support - rejection of part of the claim by adopting certain calculations which have not been made known to the petitioner - HELD THAT - From a careful reading of Para 5 of the Budgetary Support Scheme it becomes abundantly clear that an eligible unit manufacturing specified goods is entitled to budgetary support to be calculated at the rate of 58% of the central tax paid through debit in the cash ledger maintained under Section 49 (1) of CGST Act 2017 and 29% of IGST paid after utilization of the input tax credit of the central tax and integrated tax. This is so provided in Clauses 5.1(i) and %.1(ii). In the instant case the CGST on value addition would be 75% (Chapter 25 of Table of Excise Notification No. 1/2010-C.E. dated 06.02.2010) of the total amount of CGST paid for the quarter July 2021 to September 2021 which in any case would be exceeding the refund claimed. In view of the aforesaid there is no error or mistake committed by the petitioner claiming a refund of Rs. 1, 35, 632/-. There is no good reason emerging from the impugned order passed by respondent No. 3 to justify the rejection of claim of the petitioner for an amount of Rs. 31, 456/- which the respondent No. 3 has held to be an amount inadmissible on account of budgetary support. Conclusion - The rejection of claim of Rs. 31, 456/- in respect of quarter July 2021 to September 2021 and Rs.69, 684/- for quarter January 2022 to March 2022 by respondent No. 3 is held bad and contrary to the notification dated 05.10.2017. Respondent No. 3 shall take steps for release of the amount held inadmissible by it in the sanction/rejection orders impugned in this petition passed in respect of CGST paid by the petitioner for quarters July 2021 to September 2021 and January 2022 to March 2022 respectively. Petition disposed off.

Summary

ISSUES PRESENTED AND CONSIDERED

The primary legal issue considered in this judgment is whether the rejection of the refund claims by the Deputy Commissioner, CGST Division, Samba (respondent No. 3) was in violation of the notification dated 05.10.2017 issued by the Government of India, Ministry of Commerce & Industry, Department of Industrial Policy & Promotion. The core questions revolve around the eligibility and calculation of budgetary support under the CGST regime for the petitioner, an industrial unit engaged in cement production, for the periods July 2021 to September 2021 and January 2022 to March 2022.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework is primarily based on the notification dated 05.10.2017, which introduced a budgetary support scheme to assist industrial units previously benefiting from excise duty exemptions. This scheme provides for refunds of 58% of CGST and 29% of IGST paid, subject to certain conditions. The relevant legal provisions include Section 49(1) of the CGST Act, 2017, and Section 20(i) of the IGST Act, 2017.

Court's Interpretation and Reasoning

The Court interpreted the notification dated 05.10.2017 as unambiguous in its provision for budgetary support to eligible units. The Court noted that the petitioner was recognized as an eligible unit, and the major portion of its refund claims had been accepted. The dispute centered on the calculation method for the refund amount, which was not transparently communicated to the petitioner.

Key Evidence and Findings

The evidence showed that the petitioner had filed refund claims in accordance with the budgetary support scheme. The claims were partially accepted, with a portion rejected without explanation. The Court found that the rejection lacked a clear basis, given the adherence to the notification's stipulations.

Application of Law to Facts

The Court applied the notification's provisions to the facts, determining that the petitioner was entitled to the full refund amounts claimed. The Court emphasized that the calculations should align with the notification's clear guidelines, which were not adequately followed by respondent No. 3.

Treatment of Competing Arguments

The respondents argued that the rejection was based on calculations aligned with the budgetary support scheme. However, the Court found that the respondents failed to provide a transparent calculation method or justification for the rejection, leading to a conclusion in favor of the petitioner.

Conclusions

The Court concluded that the rejection of the refund claims was contrary to the notification dated 05.10.2017. The petitioner was entitled to the full claimed amounts for both contested periods.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Court stated, "The rejection of part of refund claim of the petitioner by respondent No. 3 flies in the face of clear and unambiguous language of Notification dated 05.10.2017."

Core Principles Established

The judgment reinforced the principle that administrative decisions must adhere to clear statutory guidelines and provide transparent reasoning, especially when financial entitlements of businesses are involved.

Final Determinations on Each Issue

The Court determined that the petitioner was entitled to a refund of Rs. 1,35,632/- for the period July 2021 to September 2021 and Rs. 69,684/- for the period January 2022 to March 2022. The rejection of these amounts by respondent No. 3 was deemed contrary to the notification, and steps were ordered for the release of the inadmissible amounts.