Alternate remedy for appeal to be exhausted before approaching the High Court

[CA Bimal Jain]

The Hon’ble Madhya Pradesh High Court in PRISM JOHNSON LIMITED VERSUS UNION OF INDIA, STATE OF MADHYA PRADESH, FINANCE DEPARTMENT, BHOPAL, ASSISTANT COMMISSIONER, CENTRAL GOODS & SERVICE TAX, SATNA [2022 (6) TMI 766 - MADHYA PRADESH HIGH COURT] held that, orders denying refund claim to the assessee for accumulated credit of Compensation Cess, where the reason of claim being time barred is absent but certain other reasons have been assigned that are sufficient to enable the assessee to know the cause for rejection of the claim for refund cannot be categorized to be non-speaking. Further, relegated the matter for avail the alternate remedy of appeal

Facts:
This petition has been filed by Prism Johnson Ltd. (“the Petitioner”) against the Show Cause Notice (“SCN”) along with consequential Orders (“the Impugned Orders”) passed by the Revenue Department (“the Respondent”) refusing claim for refund for accumulated credit of Compensation Cess, on the grounds that the refund is wrongly being denied to the Petitioner and non-speaking of the Impugned Orders. Thus, in violation of principles of natural justice.

The Respondent contended as below:

1. The Refund claim is time barred in view of Section 54(14)(2) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
2. No record under credit ledger for accumulated ITC of cess was available, nor was the Input Tax Credit (“ITC”) of cess availed by the Petitioner.
3. The Refund claim does not hold merit on account of Circular No. 125/44/2019-GST dated November 18, 2019, which discuss about the guidelines for claims of refund of Compensation Cess.
4. The Refund claim was wrongly made under the head of “any other” instead of "refund of unutilized ITC on account of export without payment of tax".
5. Maintainability of the petition is untenable as the Petitioner did not exhaust the statutory remedy of appeal available under Section 107(1) of the CGST Act.

Issues:

Whether the petition to the High Court is tenable without exhausting the appeal provision under Section 107(1) of CGST Act?

Held:

The Hon’ble Madhya Pradesh High Court in PRISM JOHNSON LIMITED VERSUS UNION OF INDIA, STATE OF MADHYA PRADESH, FINANCE DEPARTMENT, BHOPAL, ASSISTANT COMMISSIONER, CENTRAL GOODS & SERVICE TAX, SATNA [2022 (6) TMI 766 - MADHYA PRADESH HIGH COURT] held as under:

• Noted that, in some of the Impugned Orders, reason of claim being time barred is absent but certain other reasons have been assigned by the Respondent to support the Impugned Orders.
• Stated that, though the Impugned Orders was obscure, it held sufficient grounds to bring to the knowledge of the Petitioner, as to why the refund claim was denied.
• Held that, the Impugned Orders did not lack the principle of natural justice, as the order was complete and the assigned reasons which may be cryptic on bare perusal but are sufficient to enable the Petitioner to know the exact cause for rejection of the claim for refund.
• Further, held that and the reasons assigned cannot categorize the Impugned Orders to be non-speaking.
• Relegated the Petitioner to avail the remedy of appeal under Section 107 of the CGST Act.

Relevant Provisions:

Section 107(1) of the CGST Act:

“Appeals to Appellate Authority

 (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.”

(Author can be reached at [email protected])